Corporate sustainability is a term much used but inconsistently understood. To some, it conjures notions of corporate philanthropy, charitable giving or public relations. To others, it is a mandate whereby companies carefully operate within legal requirements and prevailing social norms. Increasingly, however, it is being seen as a new core business model that sustains a company’s success over time and is the hallmark of its overall business health.
Properly understood and executed, corporate sustainability increases top-line and bottom-line value. It breaks down traditional lines and trade-offs between the interests of the private sector, the public sector and wider civil society. It embraces new models of transparency and stakeholder engagement while driving innovation and market growth.
Environmental, societal, regulatory drivers are creating a new challenge for corporations. Many leading firms have been addressing these changes through sustainable practices and have managed to achieve higher business performance. Most fundamentally, incorporating sustainability strategies can be a source of competitive advantage.
And there is perhaps no greater source of both opportunity and risk for companies seeking to integrate sustainable practices into core business strategies than the topic of energy. Rising populations, expanding middle class populations and increased urbanization will increase demand for modern energy services and the resources upon which they rely. These demands will have consequences for national and world economies, geopolitical relations as well as the environment.
Growing concerns about climate change as well as the social and economic costs associated with poor air quality are leading to stricter regulatory regimes in many parts of the world. Leading companies and investors, however, are not just reacting to new or anticipated regulatory mandates. They are recognizing that enhancing energy efficiency and developing newer, cleaner sources of energy will create value.
Yes, there have been some very high profile failures – in the U.S. and elsewhere – of clean technology companies. But it is important to keep a few things in mind while considering whether these failures indicate a counter-narrative to the one about the increasing importance of clean energy and sustainable practices. First, one must not confuse the poor business models, high-cost supply chains, or other reasons for the failure of individual companies with the lack of a market. In the solar sector, for example, it is very success of the market that has weeded out a number of less competitive companies and technologies.
Second, it is the nature of the press (and perhaps people) to focus more on high-profile failures and less on the many successes of companies embracing clean energy and sustainability. The key for corporate leaders and investors is to distinguish tactical matters from the strategic drivers that will define markets in the 21st century. I had the pleasure of serving again on the Selection Committee for the Zayed Future Energy Prize, an annual prize for excellence in the fields of renewable energy and sustainability in Abu Dhabi last month. We were presented with a lengthy list of companies and other market influencers who are driving the adoption of clean energy technologies and practices. While these success stories may not garner the headlines of the far more infrequent ’failures‘, smart companies and smart investors know to keep their eye on the ball, and on the future innovators of our time.
Roger Ballentine is President of Green Strategies, Inc. and a member of the Zayed Future Energy Prize Selection Committee. Previously, Roger was a senior member of the White House staff, serving President Bill Clinton as Chairman of the White House Climate Change Task Force and Deputy Assistant to the President for Environmental Initiatives.
This post was originally published at Sustainablog