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Why every board needs to consider a sustainable agenda

June 02, 2015
Written by UP Blog Staff

The fact that water is crosscutting global macro trends such as energy and climate change, security, population growth and urbanization, amongst others, has created an increasing and urgent need to discuss business in this context.

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I have spent the last 25 years or so in the water arena encouraging and supporting a real dialogue between scientists, legislators and business leaders. My hope and vision has been that business leaders will understand and act on the vast opportunities that are in front of them. But also addressing the challenge to mitigate the affects of disruptive innovations and the threats of not taking the right measures specific to water and energy.

The lack of these resources is a real financial risk. However, very few companies take water and other natural resources into account when making decisions on investment. The financial sector including businesses own finance departments are critical partners to engage in the dialogue, both to protect the sustainability of their investments as well as to mobilize capital and know how to stimulate development.

The thirst for clean water

The competition for both water and energy is rapidly increasing. The cost for delivered useable water is rising. New costs are occurring. When most businesses established their production facilities and their supply chain, neither water accessibility nor energy delivery was an issue. Over time, the production footprint has been consolidated to fewer and bigger locations. But now, it is probably high time to review this strategy and think of smaller and more agile units that make you less vulnerable and better prepared for fast reconfiguration.

Case in point - a couple of years ago the Alps were not providing the water they previously had, this caused factory shut-downs and other disruptions due to the dramatic reduction of water and energy. We see this happening around the world.

Climate change is definitely affecting us, and that is at the same time as our populations are rapidly growing.

To sustain our businesses’ livelihood we need to use our resources better. This cannot be done without also focusing on the ethics of our actions – are we good neighbors? Good citizens? And even if I am, do I trust my neighbor? What are the new rules? How can we enforce them? Do we have the laws and the “carrots” that will drive the necessary changes as fast as we need them? And do we have the leaders that we can trust to be brave enough to drive change?

Sustainability and business practices

Lawmakers, non-for–profit organizations and businesses need to fully understand that sustainability will depend on pooled resources and collaboration to spark action. We need to listen to the leaders in thinking organizations such as the International Water Association (IWA) and the World Business Council for Sustainable Development (WBCSD). We, in business, need to encourage more open idea exchange and engage and drive collaboration. We also need to include those who are outside of our subject-matter circles in order to truly address critical issues such as the water and energy issue in a holistic and sustainable manner.

I know that leading international businesses are aware of their role, their risks and understand their responsibilities, but many are still uncertain about the opportunities and the clever next steps that will fast track them to a more financially and environmentally sustainable existence. A big challenge is to include small and medium sized companies and find ways for them to make the necessary investments and the changes that will put them on a sustainable track.

Certainly, our actions must build long-lasting results – improving our lives and mitigating the effects of our presence. The only way I see we can do that is by setting visible long-term goals for our actions and measuring our progress. Failing to follow this path will jeopardize our reputation and customers, employees and shareholders trust. This is why all Boards need to take full responsibility and drive their organizations to real change through the means of long-term strategies, goals and rewards.

 

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