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Sustainable business


Set against a background of underlying mistrust in their intentions, major corporations have begun to realise that they need to focus on more than short-term profit maximisation.  This report examines the need for more sustainable thinking in corporate strategies and identifies the critical business model areas to concentrate on.

 

Michael Porter and Mark Kramer explored the idea of enhancing business competitiveness while simultaneously advancing the social conditions of the wider community.  They described this concept as ‘Shared Value’.  Sustainable Success: Shared Value in Practice summarises the ways Porter and Kramer suggested companies can create economic value alongside creating societal value and then  provides practical illustrations of shared value creation through five case studies:

 

►   General Electric’s Ecomagination strategy has delivered cleaner-technology products as well as impressive revenue growth and operational cost savings.

 

►   Nestle’s Sustainability Agriculture Initiative has resulted in more reliable sources of raw materials at a competitive cost with improvements in quality control and risk management.

 

►   IBM focus on cost leadership in the company’s production cycles has yielded a saving of $50m in electricity expense over two years alongside the environmental benefits to society of generating less electricity.

 

►   Unilever make a clear assessment of the benefits of a more sustainable business model:  revenue growth and cost savings and believes it makes perfect sense to have this philosophy integrated in its business strategy.

►   Johnson & Johnson believes that adopting more sustainable practices enhances their ‘total trust package’ brand as well as yielding tangible economic benefits to the company. 

 

At a time of much public debate on the value to society of the corporate model the adoption of more sustainable business practices such as Shared Value may be seen as essential to re-establish this model as a force for good.  This report provides practical illustrations of what is being done which can be considered and shaped by CGMAs working in organisations that are thinking of adopting more sustainable business practices.