Sustainability is no longer seen as a fashionable trend, but as a survival strategy. Business leaders are increasingly realizing that we must preserve natural resources and the global climate for future generations. There's no stopping or going back without being punished by society, competitors, investors, and politicians.
To promote sustainable economic and social development, government institutions at the international, especially European, and national levels have announced and, in some cases, already adopted numerous requirements and criteria. These include the resolutions from "Rio" to "Paris," the EU's "Green Deal," and the 17 Sustainable Development Goals (SDGs) of the 2030 Agenda. These regulations will gradually affect the entire business and economic value chain, in some cases having massive consequences for business models and processes.
Most companies struggle with this challenge because there is a lack of a common understanding of sustainability and also a suitable framework for strategically managing and measuring sustainability.
Thomas Riegler, NGO The Natural Step
The need for action is great, but the implementation status and maturity of the transformation leaves much to be desired. Europe-wide study is Sustainable Growth Associates shows that only 10 percent of participants see and utilize the sustainability transformation as a genuine "paradigm shift" in their industry. 24 percent have set long-term sustainability goals as part of their strategy. The rest do just as much as required by law, package it in attractive marketing campaigns (so-called greenwashing), or view sustainability merely as a cost factor. However, the study also shows that the companies surveyed feel the pressure to change and are striving for socio-ecological sustainability in the next five to seven years.
In Austria, there are already environmental pioneers in various industrial sectors, such as the portfolio companies of ÖBAG, which are all oriented towards ESG goals and whose fulfillment is part of the management remuneration.
For the necessary transformation to take place, sustainability must be integrated into the economic system, shape the purpose of companies, and their strategies and business models must be comprehensively aligned with it.
Thinking holistically and systemically about business and business models
Undoubtedly, our economic behavior to date has led to an impressive development in the quality of life in our societies, but at the expense of our environment and significant segments of society. This is demonstrated by many investigations and studies (including HDI, Planetary Boundaries).
Since we obviously “cannot solve our problems with the same thinking with which we created them” (Albert Einstein), a different perspective seems necessary as a prerequisite for the compatibility of economy, society and the environment.
The COVID-19 pandemic, as well as recent extreme weather events and flood disasters, have clearly demonstrated how dependent the economy is on a healthy society and an intact environment. The environment can exist without society, but society certainly cannot exist without the environment.
From a holistic systemic perspective, the relationships between economy, society and the environment are better understood as 'embedded' or 'nested' systems, rather than as coexisting overlapping systems.
This perspective also takes into account the fact that almost everything we do every day in our work and private lives has an impact on the natural environment and society, for which we share responsibility. It compels companies to go beyond purely economic value creation and to discover, develop, and implement a socio-ecological sustainability scenario.
This holistic approach opens up many opportunities for creativity and innovation, creating a symbiosis between economy, ecology, and society. As demonstrated by the ÖBAG Forum Sustainability as a value creation factor As discussed on June 19, 2021, sustainability can become a 'growth booster' and stimulate the economy, while at the same time orienting companies towards sustainability.
A common understanding of sustainability
Based on this holistic systemic perspective, the system conditions that must be met to achieve success in this context can now be defined. This is precisely what the non-profit organization 'The Natural Step' since 1989, and in a multidisciplinary scientific review process, developed a principle-based scientific definition of sustainability and a method for its operationalization. The resulting principles for socio-ecological sustainability and the Framework for Strategic Sustainable Development (FSSD) serve as guidelines for companies within which they can develop solutions to ensure successful transformation. You'll be happy to learn more about this in one of the next articles in this section.
From this perspective, the question is NOT about the business case for sustainability, but rather the holistic sustainability case for the business in order to be able to generate profit in the future.
Thomas Riegler, NGO The Natural Step
We must act together as a collective
The transition to a sustainable society is clearly a complex undertaking that requires comprehensive, coordinated cooperation across corporate boundaries and along value chains. The collaboration between OMV and Swiss Post on hydrogen, for example, demonstrates that this is possible.
However, these efforts cannot be undertaken solely by companies and industry. The government also needs to provide the appropriate framework, and society must also get on board. The task of politics, in turn, is to set the framework and create incentives for socio-ecological economic activity. Governments must ensure that the economic system is embedded in a regulatory environment that, in addition to incentives for environmental protection (e.g., CO2 reduction) and the use of ecological technologies, also offers economic benefits, such as tax incentives.
In this way, a 'reconciliatory' symbiosis of economy, environment and society can emerge for the benefit of all.
Thomas Riegler is a partner at taskforce – management on demand GmbH and has spent the last 15 years as a member of the board, particularly leading companies through crises and through digital and sustainable transformation processes. He is Chairman of the Supervisory Board of Sustainable Growth Associates and founder of the German representation of the non-profit NGO The Natural Step.
