The eternal struggle for the entire business community revolves around three major concepts: People, Planet and Profit. By its innate nature, the business leaders are duty-bound to put profits at the forefront of all agendas. While at the same time, for the talent professional in an organization, it is all about the people. However, as the humankind stands at this critical juncture where the needs of the planet are intertwined with the future of mankind and work, it is crucial to hit the pause button and look at how businesses can be revamped in order to strike a balance between sustainability, people goals and the profit bottom line as well.
During a panel discussion at the Indian School of Business event in Delhi, expert leaders concentrated on a few myths about the relationship between People, Planet and Profit: The Triple Bottom Line.
Myth 1: Sustainability takes away from profitability
It is a common notion among business leaders and employees that sustainability is a “nice to have” rather than a necessity in an organization. Until about a few years ago, this belief was true among many business leaders. The sole purpose of setting up a business is to garner profits, they believed. Sustainability and lofty goals such as saving the planet was the “noise” that distracted leaders from profits and was the sole prerogative of activists, added Shilpa Ajwani.
Now that people are increasingly becoming more aware of the need to incorporate sustainability in their social responsibility agenda, the key lies in getting the business leaders on-board. Busting the age-old myth that sustainability eats into the profits is the start.
Return on Experience has become a crucial component now. According to Ajwani, RoX comprises of Customer Experience and Employee Experience. Wherever companies have focused on enhancing employee experience, there has been an increase in productivity along with a decrease in attrition. Retention levels in such companies that focus on improving their employer brand by fulfilling their social responsibilities are likely to demonstrate higher levels of profits over a considerable period of time.
“Customer experience has become all the more important now because of the rise of the influence of the millennial consumer,” said Ajwani, adding that millennials are even ready to pay a high price for a brand that stands for sustainability because they are looking for a purpose in their work and daily lives. Millennials are more likely to choose brands that reflect their value systems.
“This is quite a shift compared to the value-driven consumer/employee from a few years ago,” Ajwani said.
Citing the example of Starbucks as a company that was able to increase their earnings after adopting sustainable practices, Ajwani said that mechanisms such as third-party social audits are a way to ensure tangible results.
“Social audits and are driving businesses to adopt practices that are more sustainable. There is a direct correlation between sustainability of the business, as well as the profit that it generates,” she added.
Myth 2: Business will never understand that planet is a short-term problem.
The myth that business leaders would never grasp the gravity of the need to save the planet is something that Harjeet Khanduja, Vice President from Reliance Jio, wanted to debunk.
According to Khanduja, the way to get business leaders onboard a sustainability drive is by presenting the numbers in terms of the cost reduction which would result in higher profits.
“Changing the abundance mindset that is ingrained in our generation is the key,” said Khanduja. “Until and unless business sees that value delta in the cost, they are not going to see profits--they are always going to see planet as a cost.”
For Khanduja, just issuing a company-wide policy is not the way to instill a drive to work towards sustainability among leaders and employees. Building up a business case involves extensive research into the social responsibility project and a tangible correlation between the profit goals and the ways in which being a sustainable organization would help in achieving those numbers.
Myth 3: Investment goes to profitability and not to sustainability
It is a common myth that investors in the stock market are always looking for ways in which they can maximize their profits. However, infrastructural projects are usually the ones that go on for a couple of decades and hence fall under the category of long-term investments. It is precisely why there are some global standards and ratings that publicly funded infrastructure projects have to follow.
“More and more pension fund managers and insurance companies have realized that if an infrastructural package is not delivered in a sustainable manner, we are going to see disasters happen,” said Palash Srivastava, Deputy CEO of IIFCL Projects.
Once the framework of designing investment portfolios is turned around to focus on people and the future of the planet, profitability is likely to follow, he added, urging the business leaders to follow those projects that promote sustainability in order to make profits in the long-run.
Myth 4: Sustainability is a solo journey
Trusted people who bring a myriad of skills to the table and are able to work together are the essential ingredient to not only working towards creating a sustainable planet but also in achieving sizable profits. The myth that sustainability and social work is the responsibility of the CSR team and in turn the HR, has to be debunked.
In reality, companies need the help of a variety of external organizations and internal teams to achieve their sustainability goals, said Sunil Bajaj, Partner, Ernst & Young. The journey towards sustainable business practices is paved with multiple discussions, strategizing and restrategizing.
Once you build a strong business case and show the correlation between employees’ productivity and sustainability resulting into higher levels of profit, then the path towards the triple bottom line does not have to be one that you walk alone, Bajaj added.
The need of the hour is to collaborate with teams that have interdisciplinary skills in order to achieve the triple bottom line that strikes a balance between People, Planet and Profit.