What is a business strategy? The short answer would be "What the company's focus energy in the next few years will determine the next few hundred."
The sustainability strategy is the company's torchlight towards sustainable futures. This strategy integrates economic, environmental, and social drives into organisational goals and practices and creates long-term value for the business, its stakeholders and broader society (Long 2020). However, such integration is not instinctive. The most effective sustainability strategies are fully integrated into a company's overall strategy and enable businesses to have a positive and regenerative impact on society and the environment.
Why is sustainable strategy important for businesses? Because we live on a planet with limited resources that provide critical ecosystem services such as fresh air or clean water used by society and businesses. Businesses recognised the value of natural recourses and integrated their price into the company's products/services. This recognition created opportunities for companies to incorporate sustainable strategies when designing new products/service concepts while giving enterprises more influence in managing these resources. Businesses being in the front of production makes them accountable for the social and environmental impacts produced inside and outside organisational boundaries.
In this article, I want to focus on sustainable strategies with shared value creation that positively influences socio-economic systems. Besides, the shared value creation ensures a bigger 'pie', which is shared more widely and equally between stakeholders, investors, actors, employees, and society. Last, a positive, prosperous, equal and well-functioning society is crucial for effective business.
A shared value creation perception proposes that business performance can be enhanced alongside solving global challenges like e-waste by increasing the shared value for everyone. Creating economic value by creating societal value can be created by implementing the following sustainable strategies:
1. Re-design products/services and markets by producing products that solve societal challenges, like textile waste, by developing responsible textile material made from second-hand recyclable textiles. A relevant example of such a business is the Finnish textile company Infinited Fibre, which identified societal needs that could be met through more sustainable textile recycling processes. They commercialised innovative textiles, gaining income and creating broader value for the textile industry, society, and the planet.
2. Redefining productivity in the value chain involves the creation of societal value by eliminating production practices harmful to the environment and people, like untransparent waste management processes or inadequate labour practices diminishing human rights. These wrongdoing practices also damage organisational internal production processes, severely affecting the corporate brand image and negatively affecting local communities. This sustainable strategy can significantly reduce energy use, make logistics and resource use more economical, implement sustainable procurement, and even relocate the company if necessary. A pertinent example of a company would be Fairphone, which has the most transparent value chain I have ever seen.
3. Ecosystem collaboration, meaning building supportive industry and trade collaborations. Productivity and innovation are strongly related to other companies, supporting services, suppliers, investors, universities, innovation labs, experts, etc. These service ecosystems enable companies to share infrastructure and have access to highly-skilled employees, innovation, patents, and funding. At the same time, local communities get value-added employment possibilities and infrastructure and can make societal progress. This strategy has immense potential; however, at least in Finland, it has yet to be utilised to its full potential. An optimistic prospect was identified in the textile industry.
Shared value-creation strategies push innovation beyond known boundaries with innovative circular business models. An excellent example of a company embracing shared value creation is the Finnish company Swappie. Swappie is, according to Financial Times, the fastest-growing start-up in Europe, which reduces e-waste by repairing, refurbishing and extending the life of I-phones. Product-life-extension circular business model enabled Swappie an increase growth rate of close to 500%.
To conclude and remember, businesses could often be more effective than governments at solving societal issues if they embrace an appropriate sustainable strategy.
What is your company's sustainable strategy? Where is your torchlight pointed?
References
This article was inspired by Thomas B. Long's (2019) Sustainable Business Strategy. In Leal Filho, W., Azul, A.M., Brandli, L., Özuyar, P.G., Wall, T. (Eds.) Encyclopedia of the UN Sustainable Development Goals: Decent Work and Economic Growth. Springer, UK.
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