The Sustainability Concept in Organization Context
Chapter Objectives
- • Define sustainable development as a discipline.
- • Explain the frame and basics of sustainable organization.
The concept of sustainable business is relatively new. In 1987, the Brundtland Commission coined the phrase sustainable development, defining it as a development that “meets the needs of the present without compromising the ability of future generations to meet their own need” (Goldemberg 2007, p. 808). This concept was highlighted during the 1992 United Nations Conference on Environment and Development in Rio de Janeiro. Since this summit, organizations worldwide have adopted practices for sustainable development, economies, and societies. These practices converge around a concern for the environment, economic growth, and development of the world’s poor. Sustainability is gaining increasing importance in the organizational context (e.g., Gitsham et al. 2009; McWilliams and Siegel 2001; Matten and Moon 2005; Pava and Kruausz 1996; United Nations Global Compact and Accenture 2010). “We define sustainability as organizational approaches aimed at achieving a balance between short-term organizational goals and long-term enterprise and social responsibility” (Pearce et al. 2013).
The following sections aim to provide a better understanding of the sustainability concept in the organizational context, as well as the relationship between business and the environment in context of that concept. In addition, they attempt to highlight the issue and probable solutions concerning the disparity between business profitability and the existence of sustainability leader in the SME and the organizational financial results.
Companies that have not adopted a sustainability concept will most probably have a main goal of growing and sustaining profitability and depend solely on financial indicators in monitoring performance. Hence, it is obvious that the practices of such companies will need a paradigm shift in order to adopt sustainability strategies. In addition, reporting schemes that can capture the company’s all-inclusive performance indicators become of great value for decision makers to better forecast its future performance based on that strategic shift.
Maximizing human welfare is only possible if there are structures that encourage development, innovation, conservation, and discovery of new resources, where growth and increasing wealth through these methods lead to improved social and environmental quality. This suggests that sustainability can be achieved in this new era of responsibility only if a company is meeting the challenge and does what is right for the environment and society.
Hardman (2010) carried out a two-year grounded theory study of 24 successful leaders of increasingly sustainable organizations in education, business, and community. He found that sound stakeholder management from a social performance perspective positively correlates with the corporation’s financial performance. This suggests that applying sustainability in companies has become an important competitive edge, where economic, social, and environmental indicators are more frequently presented, generating useful management scenarios for anticipation of new risks and market opportunities. If large corporations ignore social and environmental aspects, they put their profit at risk. “European citizens support the government’s coordinating, and regulating role to reconcile the economic, environmental, and social dimensions of sustainability” (Zubir and Habidin 2012, p. 131) and, therefore, sustainability has become a primary competitive factor for many manufacturing companies in Europe. Moreover, Dutra et al. (2011) state that “sustainability is often linked to innovation management as an approach to creating competitive advantage or delivering long-term shareholder value” (p. 1). Following that line of thought, global sustainability challenges and economic opportunities may be presented to their companies. However, to capture such opportunities and gains a company needs to be able to manage aspects related to sustainability or, for that cause, be able to control it, which arouses concerns about how performance related to sustainability can be measured.
Conclusion
A sustainable organization or in another word business sustainability is a concept that suggests that it is the responsibility of the organizations and corporations operating within society to contribute toward economic, social, and environmental development that creates a positive impact on society at large. Although there is no fixed definition, the concept revolves around the fact that corporations need to focus beyond earning just profits. The inclusion of business sustainability is an attempt by the government to engage the businesses with the national development agenda. This calls for tools enabling sustainability activities within the organizations.