In recent years, there has been a push for companies to look further than the traditional bottom line. While profit metrics such as net income seem to have some of the strongest reaction in the market, firms have now begun to see that their value should extend past that. As a KPMG report on corporate sustainability defined, “…corporate sustainability is defined as: ‘adopting business strategies that meet the needs of the enterprise and its stakeholders today while sustaining the resources, both human and natural, that will be needed in the future.” (pg.12) It shouldn’t be taken to mean that corporate sustainability is simply a “green”, or environmentally friendly, strategy. It encompasses more than the natural environment. Rather it creates long-term consumer and employee value by taking into consideration the social, economic, and cultural environment in which the firm operates. As more companies begin to adopt these sustainable business practices, studies are being released showing how positively significant the effects are on the firms earnings due to increased profitability and cost reductions. This paper will attempt to explain the overarching concept of sustainability, the widespread adoption of sustainable business practices, the effects on profitability for these firms, and finally the controllership function in directing this new revolution.
As mentioned in the preceding introduction, corporate sustainability looks further than simply the preservation of the natural environment and focuses on what some have called the “triple bottom line”. The term was coined in 1994 by John Elkington, the founder of a British consultancy agency called “SustainAbility”. The first bottom line refers to the traditional line item that is u...
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...gy efficiency. A focus on energy efficiency and the corresponding stewardship of the firm’s resources also has the additional benefit of mitigating the firm’s future dependency on an unstable energy market. This has convinced many top executives of the importance of this initiative since it can easily be ascertained that this will have a significant impact on future profitability when energy sources become scarce and the market responds with much higher prices. In mitigating this risk now through sustainable practices, a firm ensures a better more stable future. In the next few sections this paper will show two leaders in corporate sustainability, Anheuser-Busch InBev and Walmart, who have made some of the biggest strides in reducing their impact on the environment while investing in projects to reduce their consumption of resources to become more energy efficient.
One thing is for sure, large number of companies are starting to face problems and trying to come up with solutions to this crisis. Many suggestions have been made towards companies and some include changing more environmental friendly supply chain. (Carbon dioxide supply chain reporting in a Swedish multinational corporation, 2010). Swedish multinational corporation Entra has stated the fact that there is a relationship between their costs and energy sourcing. Since they are sometimes supplier to their suppliers, the environment pushes Entra and all organizations to look into how they can influence their supply channels. BP Amoco as many other companies, have set a target on reducing Greenhouse gasses. One step that they took was...
...onetary value, but in the end would make them fully sustainable. Third and finally, by continuing to offer financing and capital for new green energy sources and other companies to improve sustainability would not only help them reach their own green goals, but provide others with the ability to be fully sustainable.
With forward movement in society, it is important to consider not just what will propel most toward success, but also what will help to sustain the environment along the way. What may have been considered appropriate decades ago, may no longer be socially acceptable due to the changes observed in both the business world and the environment (Fiske, 2010). Therefore, it is important for organizations thriving in today?s economy to consider how they may capitalize most effectively from their product or service of choice while minimizing or eliminating any damages along the way (Knoke, 2012).
Supplying eco-friendly products has been on the Walmart agenda since the early 1990s. After a failed first attempt and much criticism, the company decided to try again. In a speech made in October of 2005, CEO of Walmart, H. Lee Scott Jr., declared Walmart would devise a “business sustainable strategy” to reduce the environmental impact the company had. Walmart could not pull this off alone. If they only focused on the confines of themselves, rather than all that they were involved with, it was estimated that they’d only reduce their impact by about 10%. To reach that goal of 100%, Walmart had to involve stakeholders to make networks which achieve sustainability. These networks proved to be vital in not only Walmart’s goal in minimizing its environmental impact, but recovering their reputation, avoiding criticism, saving money, raising awareness, improving customer satisfaction, and creating incentive for other businesses to work towards sustainability.
An organization must always look within and outside of themselves to assess their internal strengths and weaknesses and realize which external factors pose a threat or an opportunity for them. These factors have direct impact on how the organization operates, allowing them to mitigate their threats and maximize their opening to create new and diverse products as the demands of the people grow and technology advances (Rothaermel, 2013). The desire to have greener options in the products people use has forced The Home Depot and Ford Motor Company to respond. However, these two companies not only enforce the environmental concerns of the people with the products they offer to the public, but also in how their plants and stores are ran under sustainable energy. This will
An increasing large number of firms are developing mission statements that also attempt to define the social and ethical boundaries of their strategic domain. Some firms are actively pursuing social programs they believe to be intertwined with their economic objectives, while others simply seek to manage their businesses according to the principles of sustainability – meeting humanity’s needs without harming future generations. For example, Unilever has launched a variety of programs to help developing nations wrestle with poverty, water scarcity, and the effects of climate change. The firm’s motives are at least as much economic as moral. As environmental regulations grow stricter around the world, the firm must invest in green technologies or its leadership
Nike is one of the biggest footwear and apparel manufacturing companies in the word. The company came into existence in 1964 by Bill Boweman and Phil Knight and named it as the Blue Ribbon Sports. The company changed the name to Nike, which is Greek word meaning victory, in 1972 after producing a good brand of shoes that became popular among the athletes (NIKE, Inc., 2001). Since then, the company has been successful, dominating the world market of athletic shoes. The company’s products are sold in more than 170 countries across the world. The company also sponsors various sports events at national and international levels. The company slogan “just do it” is catchy and attract many people tom buying its products. This makes the company to grow continuously due to wide and stable customer base.
I chose to look into General Electric for this project because they are an energy supplier and multi-national company. Energy providers have a reputation as a money hungry companies that care about the bottom line more than people and the planet. It is easy for a person to assume that a corporation of GE’s size, money would be its only concern. What I learned was that GE has a public image problem more than a Corporate Social Responsibility (CSR) problem. The company has been working to make the people of the planet more Earth friendly by creating technology that has higher efficiency with fewer emissions and lower resource demands. GE has a well-established strategy for Corporate Social Responsibility. As a result of CSR the company has reaped profit benefits as well as a perceptibly better company image. It was with great expectation that I chose GE in the hopes to find an area that a global energy supplier would need improvement. I found that GE is within the top-10 of companies that demonstrate CSR. GE shares this distinguishment with other companies such as Patagonia, Nike and General Motors. Besides continuing the course they have started, GE could further add to their repertoire by providing roadmaps for other companies to follow in order to be a business with demonstrable CSR.
Triple bottom line is defined as “a corporation’s ultimate success or health can and should be measured not just by the traditional financial bottom line, but also by its social/ethical and environmental performance” (Norman and MacDonald, 2003). There are many advantages when it comes to being a triple bottom line corporation. While incorporating the triple bottom line, you are also incorporating sustainability you’re your business. Therefore, becoming a triple bottom line corporation means it is one step higher towards helping save the planet. Becoming sustainable is cost efficient. Although it may cost a significant amount of money to convert, it will pay itself off in the long run. Additionally, it will help reduce expenses while saving
Stuart Hart, in a business article, discusses the tough task for companies to make a sustainable global ec...
1.- INTRODUCTION: Without doubt, the 20th century has changed our priorities, especially when it comes to the way we do business. Popular sustainable business models, as advertised in the media, have evolved into much more than a moral obligation or an external requirement to generate money. Essentially, they are forcing companies to reinvent the systems and approaches with which they generate value and profitability for the company.
Humans have been destroying the planet since we were able to stand on two legs. As a society, we need to work to reverse these terrible effects that our existence has on the planet. Sustainability is one way to begin reversing these effects, while still living our daily lives. In 2006, Al Gore presented his documentary, “ An Inconvenient Truth”, as a way to show the world the evidence behind global warming, climate change and the destruction of our planet. This documentary shocked the world. It was clear that changes needed to be made, but the destruction was more intense than previously thought. SInce this revelation in 2006, companies have tried to cut down on their greenhouse emissions, as well as offered sustainable products to their customers. Through a debate of morals and
In conclusion, I have to say that there is a solid invisible relationship between impacts of businesses on environments, profitability of sustainable business, and responsibility of business. When one of these ones changes, it will effect to others. When a business adapts efficient and sustainable system, it will reduce negative externalities and increase positive externalities to environment. Once the business adapted efficient business model, it will reduce cost and maximize its profits. Obviously, the sustainable and efficient business model will make the business social more responsible to environments.
The primary goal of The Walt Disney Company is to become one of the world’s leading producers and providers of not only entertainment, but also information (The Walt Disney Company, 2014). The company aims to achieve this by utilizing its immense brand portfolio so as to differentiate services, content, and consumer products. While this is the overall goal, there exist other innate milestones that essentially touch on socially responsible business in enhancing sustainability. They include, but are not limited to; zero net greenhouse gas emissions, whereby the company aims to have reduced net greenhouse gas emissions by 50% by 2020; zero waste, whereby Walt Disney hopes to achieve a 60% reduction in waste from
The sustainability of the ecosystems on which the global economy depends must be guaranteed. And the economic partners must be satisfied that the basis of exchange is equitable” (World). This quote demonstrates the complexities of sustainability. Another thing corporations should focus on when trying to be sustainable is their environmental impact.