IPMX @ IIM Lucknow

Sustainable development is the kind of development which satisfies the current needs without endangering the future generations to satisfy their own. Sustainable development is a complex and multidimensional issue, which combines efficiency, equity, and intergenerational equity based on economic, social, and environmental aspects. These three aspects are fundamental to the concept of sustainability and are closely linked. Businesses operate in these spheres simultaneously and hence most affected by the sustainability as a strategic and competitive force.

Sustainability is no more just an issue or a point of differentiation for the businesses. Sustainability has become megatrend which is sweeping the business world off the very foundations they were thriving on. It is no more about launching a campaign or a plan or a vision, it has to be much more deep rooted, much bigger force to reckon with. World over winds of change have already started blowing. Over the past 10 years environmental issues have steadily affected the way businesses are seen or supposed to function. Earlier the only function a business was supposed to carry out was to make profits for the owners. But now it is expected from businesses to create sustainable value for all the stakeholders in the value chain including society.

In this globalized era, workforces and worldwide suppliers are creating environmental pressures. The rise of emerging economies has fuelled the competition for scarce resources emphasising prudent use of available resources. Carbon emissions, water, energy are no more local issues of a nation; these have become global issues as actions of one country affect other nations too. Investors have started looking environmental issues central to firm’s performance and they seek information on sustainable initiatives a firm is taking up. Customers have started valuing those companies more which are genuinely concerned about environment and society. More over government concerns is ever growing over the issues of climate change, food security, energy security, industrial pollution, natural resources depletion among others. This is bound to change the regulatory environment of a business if not presently then in near future. More and more companies are now moulding their strategy and taking up investment in energy efficiency, pollution control, carbon footprint reduction, renewable power which is going to change the competitive landscape once and for all. Venture investing in clean technology reached a nearly $9 billion annually in 2008 and it is picking up again after slowdown in 2009. The private-sector investment into the clean technology marketplace has been estimated at more than $200 billion a year—with fast growth not just in the United States and Europe but in China, India, and the developing world. G20 governments have earmarked some $400 billion of their $2.6 trillion in stimulus funds for clean technology and sustainability programs.

Even if in short term businesses ignore sustainability but in long term it will not be just competitive advantage but a business imperative.

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