Comprehensive Sustainable Business Management for Progress

Published by MBA Skool Team, Published on April 01, 2017

Looking at the coveted Fortune 500 companies list about 88% of the companies from 1955 no longer featured in the 2014 list with most of them going bankrupt and the business models collapsing. Whilst there is a school of thought which says that this churn is a sign of creative destruction and the Darwinian Theory of survival of the fittest is the way of life, the critique which our business face is in terms of their sustainability. With a pool of Management graduates joining the workforce every year we are adding on to the finance, marketing and operations acumen in the workforce but the sustainability angle in each of these avenues is the cause of concern. A new era of management science is now looking into sustainable business management, design thinking and disruptive innovation and looks like that is the way forward.

Sustainable Business Management is about building a holistic approach towards managing business and not to mistake it only with the environmentalist approach. Economics says that our wants are limited and resources are scare and allocation of these scarce resources is important. Businesses speak the language of money and money drives the resource allocation but what is being advocated is that while the profit motive behind businesses is not being critiqued upon, the idea is to build business models which last and uses resources judiciously. In the recent past the environment has been a cause of major concern and its depletion has led to toppling strong business in the past. Core business areas are obviously Finance, Marketing, Operations, IT and Human Resources, the intent is to understand the sustainability angle in each of these domains.

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If we go by the mere definition Sustainable finance is integrating environmental, social and governance criteria into the business decision for the lasting and symbiotic benefit of both the business and society at large. Finance is synonymous with the banking world and so what do banks have to do in terms of sustainable business management and sustainable development? Banks are an integral part of our system today and they perform the basic function of transforming money in terms of magnitude, time, duration, place and risk factor. Risk is the space where the sustainability issue is of utmost importance. The lending operations in banks is a massive business and one advantage which banking institutions enjoy is the access to extensive information. In principle banks have immense information about the environmental and sustainability issues which they can leverage to reduce information asymmetry. Interest rate differentiation among sustainability aspects is justified from risk perspectives. Banking institutions can adopt interest rate differentiation with the objective to stimulate sustainable development and hence sustainable business models. By means of their financing policy, banks can then take specific measures to contribute to sustainable entrepreneurship. The government of Netherlands has something similar in place, they call it the Green Tax ruling i.e., a tax incentive for green projects. Sustainability in finance is not limited to the interest and tax rates, other ways and means could also be explored.

Sustainability in running Operations is an interesting and emerging field. Increasingly we see organizations addressing sustainability issues through their Operations Management practices. The trigger has been the ever-increasing environmental issues that the world is witnessing. Sustainability in Operations Management has the objective of achieving the social, economic goals, addressing the triple bottom line i.e., people, planet and profit. The idea is to expand the Operational linkages beyond the boundaries of the firm and create ethical networks and sustainable value chains. Sustainable Operations management encompasses process improvement, leaning, compliance to environmental and social standards, product design, eco design, risk management etc. It is all about building sustainability in running the business operations.

Now we come to sustainability in the marketing domain, sales and marketing domain have an important role in driving sustainable businesses. So, can he massive sales and advertising campaigns sell us the idea of green products, waste free living. Brands are increasingly focusing on higher value rather than higher profits. The sales and marketing domains are the touch points with the customers and they have immense capability to drive sustainable businesses and promote the idea around. But the question being if we are doing enough? Although No wouldn’t be a befitting reply but there is a long way to achieve. The cherry on the top is that consumers prefer brands and companies that “care” which is an added incentive.

Human Resources as a domain has also not stayed away from the purview of sustainability. Sustainable organization designs are the current buzz words. Designing an organization which fosters the culture of sustainability and which has a structure which is meant to last is an area of prime concern in Human Resource Management sustainability.

There is no avenue in business which has been left out from the sustainability purview. The idea is to have a holistic approach to business management in all wings. Beginning from a sustainable business model building to sustainable running of operations, a business which ingrains the culture of sustainability and innovation in its structure is likely to flourish. Sustainable Business Management paves the way for Sustainable development. Sustainable development is where we meet the demands of the current generation without compromising on the wants of the future generation. The core of the concept under discussion is balance, development in business is always driven by one particular need underestimating the future impacts. This has led us to the soup many a times with massive businesses like Lehman Brothers collapsing, the world entering into a huge financial crisis, the rainforests depleting causing a threat to businesses which depend on it for raw materials. The focus of a sustainable business management model is far beyond the environmental concerns only, it’s about ensuring a strong, healthy and just society. Sustainability is not a socialist concept. It is very much a part of the profit driven capitalist mindset that businesses thrive on. It is all about looking at the larger picture rather than a myopic view.


This article has been authored by Sampriti Mahanty from XIMB

Views expressed in the article are personal. The articles are for educational & academic purpose only, and have been uploaded by the MBA Skool Team.

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