A2.6.1 Competitive Advantage

A2.6.1 Competitive Advantage

Source: To Whose Profit? Building a Business Case for Sustainability”, WWF UK, 2001.

 

 Sustainable development often involves addressing a complex set of relationships, where benefits may be long-term, indirect or intangible. It may also involve looking beyond current market conditions and defining strategic options that do not lend themselves to traditional forms of business evaluation. It is not always possible to demonstrate ’cause and effect’ in standard business terms. There are nevertheless many good justifications for improved company performance in ethical, environmental and social dimensions, including:

  1. It makes good financial sense.
  2. Resource availability, consumption and assimilation.
  3. Regulatory or compliance-led imperatives.
  4. Stakeholder expectations.
  5. Specific core ideology.

 

1. It makes good financial sense

Many aspects of current business practice may already be consistent with the principles of sustainable development, but may not be recognised as such because the potential benefits have not been expressed in standard business terms. For these activities, additional benefits may be achievable, if alternative evaluation tools are applied.

 

2. Resource availability, consumption and assimilation

There is now wide acknowledgement that the demands for resources are outstripping supply in many parts of the world. There is also growing concern that the levels of consumption by richer nations may not be supportable if repeated on a global scale. This applies not only to natural resources, such as petroleum, but also to human resources, such as skilled labour. By anticipating the opportunities and threats imposed by sustainability issues, companies may be better placed to adapt or innovate.

 

3. Regulatory or compliance-led imperatives

The experience of many businesses would suggest that the potential for value creation is higher when the requirements of prospective legislation are anticipated in advance of their implementation. Strategies that rely on retrofitting improvements after the regulations have been imposed merely conserve value.

 

4. Stakeholder expectations

Many argue that a company’s ‘licence to operate’ is conditional upon business being consistent with the values and expectations of society. Improved dialogue with policy-makers and other stakeholders can provide a valuable means of achieving consensus-based goals for business.

 

5. Specific core ideology

A number of companies have adopted an ethical stance on specific subjects as part of their core ideology. Where this is the case, companies typically state how such ideologies relate to their strategic direction and decision-making.

 

Source: To Whose Profit? Building a Business Case for Sustainability”, WWF UK, 2001.

 

The expanding human population on earth has resulted in more people competing for resources, land and income.  To many, the disproportionate distribution of wealth between poorer and richer nations presents one of the greatest threats to global sustainability. At one extreme, excessive poverty can result in runaway population growth, low life expectancy and environmental degradation, whilst at the other, excessive wealth can lead to a disproportionate use of natural resources, levels of consumption and use of space.

It is also an area where major corporations can exert a significant influence. Decisions about where to locate production units, what technology to employ, where to source materials, products and labour, and what markets to exploit are increasingly made within a global context.

Some examples of strategic opportunities and threats may include:

  • Wealth Distribution and Poverty
  • Government and Regulation
  • Environmental Concerns

 

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