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Sunday Sep 22, 2024
Wednesday, 27 November 2013 00:00 - - {{hitsCtrl.values.hits}}
Sustainable business management involves anticipating potential issues that could arise in the future, and readying organisations to deal with these before they emerge. In a nutshell, sustainable business management is a process of holistic risk management. It is not about green initiatives or philanthropic projects, contrary to the common misconception on the subject in Sri Lanka.
Some of these issues which have been faced at home include the Rathupaswala incident, the milk powder health scare, and more recently, the Piliyandala gas leak. Internationally, yet still close to home, issues have included the Bangladesh factory building collapse and fires which have had far reaching consequences both for the Bangladeshi garment manufacturing community as well as for the apparel retailers in the West who have faced pressure from their own stakeholders to enhance their supply chain responsibility and pay compensation for losses faced by factory workers.
Business continuity: Onus on management
Whilst in some cases these incidents involved a breakdown in the management of a particular aspect of the business, in other instances the companies were operating in adherence to all requirements and standards, but was yet faced with a shutdown.
The fundamental onus of ensuring business continuity however lies with the management, and in order to foresee problems ahead of time, there have to be sufficiently robust systems and measures in place which can anticipate issues before they emerge.
The failure to recognise potential issues of a business operation will eventually result in the management having to react to situations, by which time it could well be too late to diffuse the crisis, and, depending on the volatility of the issue, this can very quickly get out of control, as we have seen for ourselves.
Maintain a close ear to the ground
Instead, there are many initiatives that organisations can embark on in order to ensure they maintain a close ear to the ground so that they operate in a manner that makes them sensitive to the realities and begin to understand perceptions and even stakeholders’ misconceptions.
Businesses need to understand this vulnerability and must come to terms with the fact that sometimes even mistaken beliefs from a minority can be a powerful force that could be unleashed against them, however high they may believe their reputations have been in the past.
These breakdowns have significantly affected the reputations of the organisations involved (including parent companies and international partners or buyers), causing financial and operational consequences in the form of closures of plants and removal of operating licenses, as well as significant investments in order to begin to repair the damage and regain the lost reputation.
Integrated approach to sustainability focus
The actual and potential risks associated with the everyday operational aspects of running a business must therefore be on the sustainability agenda of the boards of companies and their management as an ongoing discipline. This approach goes way beyond looking at one off projects or the ‘CSR media mileage’ that the majority of businesses are currently so focused on.
Through the Corporate Accountability Index (which is published in LMD) and the assessment reports that it has provided organisations, STING Consultants has adopted an integrated approach to its sustainability focus which includes the identification of business risks, advocating a mechanism that pre-empts and even possibly mitigates these risks before they emerge.
This approach is underpinned by the expectations and changing needs of stakeholders (who are the drivers of the sustainability agenda), as businesses cannot continue to operate in the long term without the full support and consent of their stakeholders, whether employees, customers, investors, the supply chain, or the communities in their areas of operation.
STING Consultants’ approach seeks to embed a sustainable approach to business management through six core ingredients. In light of the recent issues highlighted above, it is now essential that businesses integrate these core ingredients into their organisations in a way that permeates all facets of their operations.
Sustainable business management
Sustainable business management cannot be confined to a specific department, but must instead be considered across every function of an organisation if risks are to be realised and mitigated in time.
Businesses must accept the reality that stakeholders now have the influence in deciding whether or not they will continue to operate unhindered, and must therefore seek to engage with them as a core component of their risk management procedures. It is only this that will ensure that organisations are prepared to face the challenges associated with the current state of doing business in an environment where power has dramatically shifted to the citizens at large.
It is worth reflecting on Warren Buffett’s words which truly are prophetic, but possibly still only to those companies that have had to face up to the arduous task of rebuilding their lost reputations.
[STING Consultants (www.stingconsultants.com) is a specialist marketing, brand and CSR consulting firm, established in 2002. The company has worked on over 120 projects with many of Sri Lanka’s blue chip clients on strategic initiatives for marketing, branding as well as enhancing corporate reputation through accountability and sustainability. The authors can be contacted via e-mail [email protected]&[email protected].]
