I’ve spent a lot of time in Singapore over the last few months, presenting at sustainability and energy conferences. From SMU and SIEW, to EnviroAsia and the ‘Eco Ideas’ forum, I’m greeted with the same query, “what is a sustainable business?” Good question!
To answer it though, we need to look at the alternative question, “what is an un-sustainable business?” Any business, process or industry that isn’t sustainable won’t survive. It’s that simple. Sure, it may survive in the short-term but it won’t survive long-term. Any business that wants a long-term future needs to be sustainable and durable, otherwise its unsustainable activities will contribute to its own demise.
If your business practices are depleting a finite resource over a short period of time, you can’t expect to be around for very long. By resource I mean anything which is used over time to operate the business – energy, staff, water, lighting, cash, etc.
Any analysis of the Fortune 500 list will reveal that fact. In the average person’s lifespan, the world’s top listed companies (ranked by revenue) will change dramatically. If a company is to survive beyond that period, for say more than 100 years, it has to adapt, grow with market trends and effectively address the triple bottom line of People, Profit and Planet.
A great way to illustrate this is to look at today’s Fortune 50 list over my own lifespan of 55 years. How many of those companies were listed on the NYSE back in 1956? A total of 22 companies, which means 56% of this year’s Top 50 companies weren’t even around 55 years ago. How did those 22 remaining companies successfully navigate this journey, from ‘old’ to ‘new’? How did they remain relevant and maintain organic growth?
The answer lies with the 28 companies that failed. This year alone, we’ve seen many interesting examples of ‘un-sustainable’ businesses which failed to address the key aspects of People, Profit and Planet. There are serious doubts as to whether Rupert Murdoch’s Newscorp can last another year, while BP experienced a 50% loss in share price in a mere week. Another brilliant example, from 1995, is the unsustainable trading of Nick Gleason, who managed to totally bankrupt Barings Bank.
Studies by corporate planner and author Arie de Geus’ have revealed that the average life of a Fortune 500 company is actually less than the average human lifespan – just 40 to 50 years, with at least 50% of that time being spent on establishing the company and building it to qualify for the list. How can so many great companies fall prone to “strategic drift” and become corporately “extinct”.
Today’s corporations seek new methods for success, throwing around the latest buzz words – CSR, social entrepreneurship, climate change, etc. The reality is that the key to business survival remains the same as it always has: adapt or die! Darwinian theory is applicable to both the natural and business world. There is no doubt that being “un-sustainable” is inherently life-threatening and a real and present risk.
Quite simply, how sustainably do you operate your business? Are you setting yourself up for failure by not addressing your People, your Profit and the Planet? What’s your staff turnover? Is your revenue consistent? How do you impact the environment in which you operate? Will your key resources still be around in 20 or 30 years?