Sustainable development is based on three pillars:
Pillar 1: Environment sustainability (Planet)
Pillar 2: Economic sustainability (Profit)
Pillar 3: Social sustainability (People).
Environmental sustainability awareness has grown lately but social sustainability still seems like a buzzword without any real raison d'être in business success.
So, what exactly is it? And why should social sustainability be part of your business?
1. The deadly cost of doing business
Do you remember the tragedy that has happened on April 24th, 2013?
Rana Plaza, a garment factory building in Bangladesh burned down and collapsed.
More than 1100 men, women and children died, more than 2500 were injured.
This building was holding factories for all players in the fast fashion industry.
They were making the garments that we buy in all those well-known fast-fashion shops everywhere in the world.
To this day, people are still missing, their bodies haven’t been found! [1]
Who takes responsibility for this?
Who takes responsibility for the loss of income and medical costs?
You might think: "Yeah, that was an accident, somewhere far away, what can we do?"
The problem here is that the workers were made to work in this building, even after inspectors considered it unsafe.
2. So what is social sustainability ?
Social sustainability is one of the components of the 3Ps: environment sustainability (planet), economic sustainability (profit), social sustainability (people).
Organizations have implemented the 3Ps method to assess results. These three factors work together to influence a company's results.
Social sustainability entails recognizing how companies affect individuals and society.
This approach includes several topics such as: social equity, quality of living, health equity, community development, social capital, social support, human rights, labour rights, social responsibility, social justice, cultural competence, community resilience, and training.
3. That sounds promising, but what good does it do to my business performance?
According to Amartya Sen, Nobel laureate in Economic Sciences in 1998, 5 pillars should be considered to know if a business is socially sustainable.[2]
A) Equity
B) Diversity
C) Social Cohesion
D) Quality of life
E) Corporate Governance
A) Equity
A business is equitable if its social impact ensures that all members of society, especially the poorest and most vulnerable, have equal access to its products and services.
That means if products or services which help the target audience gain more social and economic influence are delivered without prejudice and in a way that promotes fairness, search for ways of minimizing disadvantage and injustice by identifying the cause.
Microfinancing may serve as a pertinent example.
Microfinancing is a form of money lending that has a big effect, especially in developing countries.
Qualifying for a business loan is not easy, even if you are a healthy business.
If you are considered as high risk obtaining a loan becomes practically impossible.
People are considered as high risk just because of their background, their origins, or just their postal address , etc.
Businesses in extremely poor regions, in developing countries, people with low incomes or with diverse backgrounds, are often the hardest hit by this issue.
People from these groups may find it difficult to start a company, and they may not have access to conventional banking options in their area or even country.
This is where microfinance comes into play.
Microfinance is characterized as the provision of small loans to entrepreneurs.
Aspiring entrepreneurs may use this form of loan to generate revenue, create assets, handle risks, and meet their basic needs.
The end goal of microfinance is to have its users outgrow these smaller loans and become ready for a traditional bank loan.
said Yuliya Tarasava, co-founder and COO of CNote.
Although microfinance started for developing countries, there are several lending institutions in each country that provide this service to increase economic opportunities in local communities.
Another example is given by the brand Abercrombie & Fitch.
In 2013, the CEO Michael Jeffries has been caught out for not wanting to sell his products to XL and XXL women, claiming that he wanted to sell his cloths only "to cool thin people". Protest from costumers was so important that he had to resign from the CEO position after 20 years of running the company.
So are your products or services available to anyone in your target market❓
Are they delivered impartially❓
Do they promote fairness❓
B) Diversity
What has diversity got to do with sustainability?
When a crisis occurs (e.g., Covid-19), a company's adaptive capacity determines how well it performs.
This is the system's ability to withstand stress and reorganize and transform before the stress becomes too much, while maintaining business continuity.
Environmental efforts frequently necessitate bold actions such as rethinking product design, supply chain, and changing organizational behaviour towards more sustainable choices.
It has been demonstrated that ethnic and gender diverse companies are 20% more innovative and 35% more likely to outperform more homogenous teams; when it comes to taking bold actions and solving problems, diverse teams are more productive.[3]
Environmental sustainability also requires innovation.
Innovation is a key component of global success and it is best fostered through a diverse workforce and, because diverse perspectives are the climate in which ideas grow, the very ideas that lead to innovation.[4]
Diversity matters to build the reputation for your brand.
When it comes to brand reputation, diversity matters in two ways: (i) your image as an employer, and (ii) your image for the consumer.
Your business branding represents how your current employees and prospective candidates look for new opportunities.
Professionals often prefer diversity-enhancing organizations because they know that it is an important part of a business' culture.
You are more likely to be seen as an employer of choice when you highlight diverse employees or different initiatives that focus on inclusiveness.
This can boost your retention efforts, increase the chance that professionals will find and stay with a company for the long term.
Candidates also choose companies where they think they would be not just accepted, but also fully welcomed.
Job seekers are more likely to see something that resonates with them if employers demonstrate a high degree of inclusivity and diversity in their workforce.
Customer Brand Reputation and Diversity.
A growing number of consumers (both in the B2B and B2C markets) may be hesitant to do business with if your company isn't seen as inclusive.
Your consumer base will also be broader as a result of your diversity.
You're more likely to hear about the needs and interests of different population groups if you have a diverse workforce.
This helps you to tweak your goods or services to make them more appealing to these demographics, eventually increasing your consumer base.
C) Social cohesion
Social cohesion is essential for organizational efficiency.
The word "social cohesion" refers to a mutual liking or team attraction that involves friendship, caring, closeness, and enjoyment of one another's company, and the believe that everyone works for a common mission.
In one word, this is the company culture.
The benefice of company culture
A strong positive culture can enhance employee engagement by 30%, resulting in up to a 19% increase in operating income, and a 28% increase in earnings growth.[5]
The cost of turnover of employees
When an organisation has a strong company culture, the turn over of employees is of 14%. When they don’t, it can go up to 48%. [6]
This matters because the cost of employee turnover is exceedingly high; it is projected that losing an employee would cost 1.5 - 2 times their salary.
The financial burden varies depending on the individual's level of seniority.
Entry level employees positions cost 30-50 percent of the annual salary.
The expense of professional positions rises to 100-150 percent of the salary.
C-suite turnover will cost up to 400 percent of a person's salary.[7]
D) Quality of life
As the tragedy of Bangladesh, or the Covid-crisis remind us, it is paramount to make sure that your employees are safe at work.
It starts by preventing accidents thanks to “safety and security” programs & trainings to well-being programs, via personnel development.
Have you considered the cost of absenteeism?
Though absences are almost always unavoidable, they can leave workers short-staffed and the business financially vulnerable.
Taking care of the quality of life of your employee by developing well-being & personal development programs will be beneficial for your productivity because:
They encourage employees to adopt behaviour beneficial to their health
They reduce stress
They reduce absenteeism, improve productivity and job satisfaction
They increase moral
They improve relationships
To know more on this topic, and why to develop a wellness program in your business, stay tuned, as we have interviewed Sophie Boulanger, CEO of OKUN, a company focusing on these very aspects, in our series 'Leaders in sustainability S02E01' , this will give you more insights.
E) Corporate Governance
Corporate governance is the structure that governs and runs an organization, as well as the processes that hold it and its employees accountable.
It is a key element to enhance economic efficiency, growth, sustainability strategies but also internal and external stakeholders confidence.
It entails 4 principles: transparency, accountability, stewardship, and integrity.
It makes sure that proper oversight is in place to make the organisation accountable to the standards, laws, and regulations in place.
It makes sure that the products the consumer will buy are safe, and that someone will be held accountable in case something went wrong.
It makes sure that ethical business practices are put in place and respected by everyone in the organisation.
Good governance, in the end, promotes sustainability, establishes sustainable ideals, and assists businesses in achieving their goals.
Long-term benefits include lowering risks, attracting new investors and shareholders, and increasing the equity of a business.
Above, we have highlighted some central points of social sustainability, but the concept could widened to include aspects such as:
Human rights
Improving your ecosystem
Procurement (buying local)
Helping your suppliers to be more sustainable as well.
To conclude, social sustainability is critical in your way of doing business.
At Trianon Scientific Communication, we believe that a company's success is based on its employees.
But it goes even further.
A companies' success is based on their research department, operations department, supply chains department, which are, of course, managed and served by people.
As a result, every business that wants to continue to expand and profit needs to better represent all of the people in its products/services and in the processes leading to them.
You have to think of your internal and external stakeholders, and your wider societal impact.
This is why some corporation, such as Unilever strive not only to involve their workers but also to change the lives of one billion people.
Whatever your level may be, you can do it too, and it has never been easier to practice.
Avoiding social sustainability is a liability that companies can no longer afford–for both their brand and product quality.
[1] https://www.youtube.com/watch?v=9Fkhzdc4ybw&ab_channel=TheNewYorkTimes (Last accessed on April, 11th, 2021)
[2] https://en.wikipedia.org/wiki/Amartya_Sen (Last accessed on April, 11th, 2021)
[3] https://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters# (Last accessed on April, 11th, 2021)
[4] https://images.forbes.com/forbesinsights/StudyPDFs/Innovation_Through_Diversity.pdf (Last accessed on April, 11th, 2021)
[5] https://builtin.com/recruiting/cost-of-turnover (Last accessed on April, 11th, 2021)
[6] https://www.levelingup.com/management/statistical-case-company-culture/(Last accessed on April, 11th, 2021)
[7] https://builtin.com/employer-branding/calculating-roi-employer-branding-employee-retention (Last accessed on April, 11th, 2021)
Comments