The Importance of Sustainability to Business

Discuss and analyse the importance of sustainability to business, using case study examples to illustrate and support your arguments

Sustainability can be defined as the quality of not being harmful to the environment, and thereby supporting long-term ecological balance. In a business context, it also refers to the triple bottom line: “people, profit, planet”, or adding social, economic and environmental value to business. Nowadays, global warming has reached such a level that actions are required in the business environment in order to secure the future. While some firms become sustainable because of their personal values, many still need to be convinced that there are benefits other than ethics to include sustainability in their business plan. In this essay, we will therefore analyse the positive and negative sides of including sustainability to business in order to know if it is important, in the short and long term. Firstly, the effect sustainability has on the customers and the public image will be analysed through the reputation of a business, customer backlash and consumer conscience. Secondly, we will look at the cost of becoming a green business taking into account the conservation of resources; efficiency improvement and the high cost of conversion, contrasting it with the profit making for a business, looking at the increased competitive advantage, investment opportunities as well as the short term effect. Then, the interaction with governments will be analysed through the regulations, license to operate and the possible lack of support. Finally, the effect of sustainability on employees will be discussed. The analysis of all these areas will allow us to make a fair judgement on the impact of sustainability on business.

It can be argued that one of the most important factors for a business to be successful is the way it is seen by its customers, since they are the ones buying its goods and services. Therefore, a business’s public image, or reputation, is enormously important for a business. Sustainability is a positive way to improve a business’s reputation, since customers become very aware of environmental issues and actually care about it. A very good example is the consequences of the BP oil spill in 2010, which caused the company to be worth ‘$75 billion less on the open market than it was (...) six weeks ago’ reported the online newspaper Boston soon after the disaster (Chris Khan, 2010). BP lost value as its reputation was badly hit by the oil spill events. Sustainability therefore has an impact on a business’s reputation. However, it is possible to counter argue this view saying that including sustainability in business is taking a risk of customer backlash. Indeed, firms may make false reports, on purpose or not, exaggerating the green involvement of the firm. If it were discovered, this would have a very negative effect on the reputation of the firm.