For a career enthusiast who takes passion in business, Business Sustainability is not a new term as the word has been quite in use in recent days where more and more businesses are looking towards being sustainable and still earn profits. The article shall hep understand the basic definitions of business sustainability from different perspectives:
Definition of Business Sustainability
There have been numerous definitions of business sustainability. There have also been various versions of indicators and ways to define sustainability. Here, we would focus on two most used definitions of business sustainability.
Accounting based definition:‘Business Sustainability is defined as management (mitigating the risks, capturing the opportunities and answering the obligations)of environmental, social and economic variable to optimizethe triple bottom line (the economic, social and environmental profits)’
Time- based definition: ‘Business Sustainability is building resilience in the business processes via connecting those to healthy environmental, economic and social systems so that business can survive shocks in the long term’
For either of the definitions, the focus of the business sustainability is to improve the triple bottom line via building resilience into the system.
Stakeholder is the party with vested interest in a business. Various stakeholders in a business can be categorized as:
- Customer: The party which requires and buys the product/service offered by the business. The value proposition of the final product or service must be tailored to solve a pain or add a benefit to the customer. Sustained competitive advantage would be enjoyed by the business as long as the customer feels or gets incremental value out of buying the product or service which is not provided by the competitors’ products or services.
- Supplier: Supplier is the one supplying the raw materials for production. For a production business which is next in step from nature, environment can be considered as a supplier. For example, for any agricultural production, land or sea can be considered as a supplier. Similarly, for a mining company which extracts ore from underground, land is a major supplier.
- Internal Community: The employees working for the business would comprise of the internal community. Along with them, the contractor people inside the business can also be considered as a part of internal community.
- External Community: The community in and around the business would be the external community. Even though the name mentions external, care must be taken to not consider it as an externality, as business and the external community has profound impact on one another.
- Environment: Any elementary inputs or outputs such as raw materials or emissions are to and from environment. Hence, environment is one of the most important stakeholders. Environment is comprised of complex interdependence between elements of nature, flora and fauna. Hence, immediate impact on the environment as well as global impact has to be measured to get a clear view of the stakeholder relationship
- Investors: Investors are parties which have invested money in the business with a view to reap profits. As investors are most important for inception and growth of business, interests of investors are protected via various accounting standards and corporate regulations
- Management: The management should play the role of link between all the various stakeholders. Due to this linkage, management of the business is considered as a separate stakeholder to avoid any confusion in vested interests. Similarly, due to this linkage, management is expected to optimize the interests of all the stakeholders.It is important to note that, being a stakeholder themselves, management shall also have vested interests in the business.