Lexington, KY - There's a new strategy for business competition and long-term success: sustainability. Long the stepchild of altruism, sustainability has now taken the lead in the race for creating profitability and stakeholder value. As a business imperative, sustainability has the potential to instill radical change in a business' operations at every level - a change that can help secure survival in today's tumultuous times.
The Future of Value: How Sustainability Creates Value Through Competitive Differentiation, by Eric Lowitt, is a timely, insightful look at sustainability as a principle for success. Based on intensive research and citing business examples from all types of organizations from around the globe, the book presents a practical, action-oriented approach for developing and managing sustainability as a strategic tool.
In Lowitt's terms, sustainability is not the same as "green." Instead, the author defines the term as "a continuous, unwavering commitment that companies make to balance their financial returns with environmental impact and social equity investments."
Companies' energy and water consumption, landfill waste and carbon emissions are part of what the author classifies as environmental impact. Social equity investments refer to financial, technology and knowledge resources provided to the communities in which a company operates.
Sustainability, Lowitt proposes, enables companies to change more quickly, adjusting to new realities ahead of their competition. Integrating sustainability into daily business operations allows for organizations to increase both revenue and brand value as well as reduce expenses. Sustainability creates business value as a return on investment for all stakeholders, including shareholders, employees and the local community.
The Future of Value comes at a time when U.S. business is experiencing both slowed growth and increased competition from emerging markets. Integration of sustainability principles can help to ensure the very survival of some organizations, reducing their risk exposure and identifying growth opportunities, the author notes.
Lowitt divides his book into two parts, designed to carefully examine the present and potential future of sustainability. Part one looks at how sustainability creates value in a global economy. The second part puts principles into practice, providing action items for strategic integration of sustainability principles.
Chapters end with diagnostic questions for review in examining and implementing principles of sustainability. The diagnostics are insightfully designed and comprehensive, including such areas of business as brand management, development, partnerships and an exploration of sustainability as it impacts revenue and costs.
Featured in Lowitt's book are an impressive group of sustainable market leaders -companies that he notes for their practices in this area. This widely varied collection of companies "that embrace sustainability, sharpen their strategies and strengthen their ability to execute," hold a common success in creating value for stakeholders.
Take, for example, GE's "ecomagination" line of environmental-conscious products. Since its launch in 2005, the line has created $70 billion in revenue. In the future, the company expects during the next five years that ecomagination revenue will grow at twice the rate of total company revenue.
Another company noted for sustainability practices is the online travel service provider, Travelocity. In 2009, the company began identifying "green hotels" as part of its "Travel for Good" program. Growth of green hotel bookings outgrew their peers by 65 percent during the first quarter of 2010.
Companies leading in implementation of sustainability see the need for an overall strategy. UPS in 2008 appointed full-time resources to sustainability. After careful review of metrics, tactics and principles, the global company put together a framework to organize the divergent functions of sustainability in a cohesive manner. This led to the selection of a sustainability strategy in line with UPS's core principles. By 2009, the company had developed a system for managing and coordinating all sustainability efforts.
The author concludes that sustainability is a business imperative - a new circumstance that requires radical changes in a business' strategies and operations. If an organization foregoes such change, it will fail to create value and ultimately end in failure. He notes four post-World War II business imperatives - quality, re-engineering, globalization and the Internet. Sustainability is the fifth imperative.
It is set apart from the first four by its beneficiaries. While previous imperatives largely benefited investors and employees, sustainability broadens the set of stakeholders who benefit from business activity. Society, Lowitt notes, has become a major stakeholder. Sustainability is no longer the territory of visionaries but is developing an international, broad-based community.
The impact of sustainability will be long lasting, and businesses that adapt to this new imperative will indeed find The Future of Value.