WSJ: Sustainable Businesses Succeed

22 Jun

I am determined to use an article that does not come from TreeHugger. This post is summary of an article in the Wall Street Journal titled “Sustainable Success.” This article explains how companies know that when they are branded as a company that exploits workers or damages the environment their customers and investors will no longer support them. What companies do not know is that if they improve the social and environmental conditions in the developing countries, where they operate they will maximize profits and these operations will grow. This conclusion was drawn after reviewing 200 companies that engaged in social and environmental sustainability. 

Sustainability is defined as a company that is constantly doing the following things and when improvements are available they are acquired.   

Materials: recycled or renewable materials

Energy: from environmentally friends sources

Design: uses water and energy efficiently and promptly replaces obsolete machinery 

Waste: looks for opportunities to reduce waste, minimizes harmful emissions into air and water


Now you may think that following these guidelines is very expensive and it is hard to see how they can be advantageous. The benefits of being socially and enviromentally sustainable was measured in six ways: 

A sterling reputation: Consumers care about a companies reputation when buying products. The people that will boycott a company because they have a bad reputation will also reward companies that give back to the communities they are located in. 

Better Employees: In developing countries, employees are proud to work for sustainable companies. This gives the companies an advantage when hiring employees, trying to retain employees and trying to motivate their employees. 

More-efficient production: In order to achieve this level of sustainability production needs to be very efficient which will reduce the amount of waste. 

A smoother relationship with authorities: Legal and regulatory systems change depending on what country you are operating in. When Western companies are helping develop business in these countries their presence is seen as advantageous and local authorities want to help the businesses. 

Better coordination (internally and with suppliers): Developing a sustainable operation requires a lot of communication and collaboration. Improving lines of communication leads to more talk about issues and more people understand how the business runs. 

Suppliers that are more reliable and flexible: “Suppliers that work with companies to improve sustainability become more efficient and reliable, because they exert greater control over their production processes.”


For Further Reading

See these related articles from MIT Sloan Management Review

Sustainability Through Servicizing 

Sandra Rothenberg (Winter 2007) 

In an increasingly environmentally conscious and cost-conscious world, suppliers can make their business both more sustainable and more profitable by focusing on services that extend the efficiency and value of their products.

Global Sustainability and the Creative Destruction of Industries 

Stuart L. Hart and Mark B. Milstein (Fall 1999) 

Managers should consider three economies—consumer, emerging, and survival—when evaluating new business opportunities.

The Roots of Sustainability 

John R. Ehrenfeld (Winter 2005) 

The real business case for sustainability requires more radical, fundamental and difficult change than most are ready to consider, but anything less ignores the real problem and may, in fact, contribute to it.

Creating Sustainable Local Enterprise Networks 

David Wheeler, Kevin McKague, Jane Thomson, Rachel Davies, Jacqueline Medalye and Marina Prada (Fall 2005) 

In developing countries, examples of successful sustainable enterprises often involve informal networks that include not-for-profit organizations and communities as well as businesses themselves.

The Challenges of Innovating for Sustainable Development 

Jeremy Hall and Harrie Vredenburg (Fall 2003)

To foster sustainable development, an innovation strategy must have a vision that transcends a maelstrom of complex, and sometimes contradictory, demands.

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Posted by on June 22, 2009 in sustainability


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