Taking into account the accererating problems created to our nature environment in the strategy process of any firm and intergating sustainability to business strategy is becoming increasingly important. To secure the long term profitability and positive company valuation develoment this is becoming a must.
Sustainability is commonly defined as development that “meets the needs of the present without compromising the ability of future generations to meet their own needs” (World Commission on Environment and Development (WCED), 1987). Sustainability aims to secure intergenerational equity. Expressed in this way, the principles of sustainability are indisputable – also in business.
Climate change, the overuse of the earth’s natural resources and the accelerated destruction of biodiversity threaten the preservation of living conditions on the entire earth. The measures to change the trend are progressing much more slowly than, for example, the critical goals set in the Paris climate agreement regarding climate emissions. Globally, less than 10% of the annual virgin materials of more than 100 billion tons taken from nature are recovered for reuse, and the rest end up as waste in the ground and waterways or in the air as harmful gases.
Three groups influence the targeted occurrence of necessary systemic change in terms of environmental responsibility are 1) politicians and authorities (EU and national organizations), 2) citizens and 3) companies and their owners. Although everyone’s contribution is needed, I claim that companies are in the most central position here, because solving these demanding issues require new innovations and the renewal of all production chains and material use. Without companies’ actions that cannot happen.
The importance of companies in the implementation of the systemic change for the sustainable use of essential natural resources is central. Companies are those, who manufacture, supply and develop new products, business solutions and services. Regulation based on political decision-making and citizens’ actions set boundary conditions, in the implementation of which companies play an essential role. In the corporate field, it has already been several years when actions have been taken related to corporate responsibility. For example, the developing ESG regulation has become part of the reporting and development activities of large companies. Companies are increasingly under pressure to change through investors, customers, partners, and public authority regulations. Responsibility actions are considered to increase company’s long-term value as well.
However, in most companies, sustainability reporting and activities are still organized for a separate group or person focused on sustainability activities and reporting, and sustainability activities have largely remained separate from the companies’ strategy and its core purpose. Recently, however, more and more companies have tried to include the diminishing of climate emissions and the implementation of actions required by the circular economy as part of the company’s strategy and building a competitive advantage. This change in companies is of key importance so that we can develop and implement solutions to these problems that threaten our world.
In companies, the attitudes and actions has moved forward quickly in recent years. However, the real and sufficient change requires a change in the strategic thinking of companies and the actions of the top management. This is linked to the desire and ability of the owners and investors to look at things on a longer-term basis than on a quarterly or annual basis. Sustainability must be adopted as part of the strategy in the business field: in large and small growth companies.
In order to achieve fast enough change to save our planet for current and future generations, companies’ strategic thinking and its principles must develop. Sustainability should always be built into companies’ strategic work and implementation. This also means the development and pioneering research on the integration of sustainability to corporate strategy in universities as well as business and management education. With my long lasting background on strategic management I am eager to dedicate my time and effort to this area.