KUALA LUMPUR: Sustainability is no longer just a buzzword. It is becoming an important business strategy as stakeholders increasingly demand to know how corporations manage the economic, environmental and social risks and opportunities of their businesses.
For global mobile operator Telenor Group, sustainability is about shared value. Telenor director (group sustainability) Jan Kristensen said it was a key element of the firm’s corporate culture, governance as well as business strategy.
“We are committed to operating responsibly in all aspects of our business,” he told Business Times.
Kristensen said telecommunications had the potential to positively impact people’s lives and help shape a sustainable future.
“At Telenor, corporate responsibility means using our business to add value to people’s lives, ensuring that our services are safe for our customers and being conscious about limiting our impact on the environment.”
Multinational conglomerate Tata Group sustainability head Shankar Venkateswaran said sustainability practices meant better business.
“In Tata Group, we encourage holistic growth among our people. This cannot be done without a work culture that embraces ethics, value systems, comfortable and safe environment and learning opportunities,” he said.
Sustainability is built into the Tata Group’s business processes through a well-defined vision, a value system committed to social expenditure and environmental preservation and a governance structure that engages employees and other stakeholders.
Asia Research and Engagement managing director Benjamin McCarron said corporate sustainability was about managing the impact the business would have on people, environment and society.
“But sustainable business is another level, which looks at the life cycle of products and services, and also beyond that.”
The key value drivers for sustainability are turnover growth, better risk management, operational saving and productivity enhancement.
Most companies adopted philanthropy and giving after they made profits, McCarron said, but corporate sustainability was all about helping others while making money.
Commitment to sustainable business practices must begin from the top and should be a key consideration discussed at the board level and integrated into the company’s business strategy, he added.
“The board needs to understand which environmental, social and economic issue is relevant to the company. And then, the board is in the position to appoint the right people and team to implement the required changes.”
At the other end of the spectrum are investors who are concerned not only about rates of return, but also how the companies they invest in can bring environmental and social benefits.
Many also realise that non-financial risks can, if not managed properly, become financial risks.
“Investors have begun to recognise that social and environmental conditions in society can have a direct impact on the business operations of a corporation and its long-term viability,” said KPMG International global citizenship head Lord Dr Michael Hastings.
He said more investors were incorporating environmental, social and governance (ESG) considerations into their investment strategies and decision-making.
“If this trend continues, with the advancement of environmental or social objectives enhancing an investment’s value, it will strengthen the commitment to sustainability that is already gaining momentum among businesses around the world.”
As the challenges become more acute, investors are starting to realise that companies that pay attention to ESG factors are more likely to be better long-term bets.
“Companies with a focus on ESG will outperform in the long term. They are able to better spot and act on long-term growth opportunities,” he said in an interview recently.
On sustainability reporting, Hastings said although it provided confidence, clarity and certainty, there was still much to be done.
He said a change in reporting was occurring that would correctly calculate the real assets of a business, and integrated reporting offered this framework for the future.
“The benefits of sustainability reporting to businesses and their stakeholders are clear. We are in a time when the idea of responsible capitalism is becoming a part of business strategy. We must continue with it.”
He added that the quality of sustainability reporting would lead to better management, brand protection, greater market share as well as bottom line.