Freeman Cebu Business

Do you deliver sustainable products and services?

INTEGRITY BEAT - Henry Schumacker - The Freeman

Delivering a sustainable product or service should be the ultimate goal for every organization, but if the processes used to create that product or service are themselves unsustainable, then we may be losing more ground than we are gaining. As a matter of principle and integrity, every organization needs to look at its own operations to assure that it is living up to the standard that consumers expect.

Two good examples in Cebu come to mind: Nature's Legacy, a global manufacturer of home furnishings and garden accessories and maker of Sustainable and Innovative Materials (MOSIM); and Bantayan Bamboo Innovation Workshop, a sustainable social enterprise using eco-friendly bamboo treatment practices and creates organic bamboo products.

Organizations should evaluate their own internal processes, which include operational effectiveness, employee relations and even cost and revenue models, to be able to answer the following questions:

How do we minimize our footprint?

Operational efficiency and waste minimization are not a new business concern. Surprisingly, despite the effectiveness of this movement, sustainability has revealed even more sources of waste and operational risk.

Some of this takes the form of materials that, while cheap to purchase, create additional, hidden costs related to health and environmental impacts. Toxic materials require protective gear as well as special handling and disposal, and can result in lost productivity from illness or injury. These costs get buried in line items on the ledger sheets.

One company that has minimized its footprint is San Miguel Corp., informing us about their designed reduction of water consumption and converting plastic waste into road-making materials. May I encourage other companies that have been successful in minimizing their footprint to inform me about it so that I can include you as a positive example in next week’s column?

Beyond saving energy and reducing waste, organizations should closely examine their purchasing records to uncover looming costs and risks.

What externalized costs make us vulnerable to future risks?

Current regulatory policies and standard business practices allow business in all industries to externalize some of the costs of their operations. By "legalizing" pollution, for example, we have passed on the cost of harmful effects of emissions and effluent to the public.

Similarly, businesses are seldom held responsible for the "end of life" expenses related to the products they put on the market. What would happen to the bottom line if public sentiment changed and organizations suddenly were expected to bear these burdens? Puma famously calculated its externalized costs and was sobered to discover there would be no profit if it had to bear these costs.

The question to ask here is: How would you operate if you had to incorporate these expenses into your ledgers? What would that imply you would need to do differently to stay profitable? As with many sustainability considerations, the opportunity is in getting ahead of these risks so that they do not blindside you later.

On the energy production side, we are facing plenty of harmful effects of emissions and effluent to the public. In this context, allow me to highlight the efforts of the Lopez Group of Companies that has totally converted to renewable and clean energy production.

What is fair distribution of our revenues?

If the business model hollows out the middle class or causes customers to go into deep debt to buy its products or prevents suppliers from earning a living wage or investors from earning a fair return, the organization undermines the foundation of its success. Enterprises should consider what portion of sales ideally should go to each stakeholder group (shareholders, employees, key partners and the community, for example) to maintain the long-term viability of the entire system upon which their business model is built.

It’s good to see that the SEC is forcing publicly listed companies in the Philippines to invest into inclusive growth and improve the lives of the poor and unemployed.

How do we create an organizational culture in which employees thrive?

As employers, what can you do to create a workplace culture that people enjoy being in; where they are able to realize their best selves; a culture that makes them better humans and citizens as a result of their work experience?

Poor job design, lack of empowerment and ownership, and rigid hierarchies can undermine employee commitment, innovation and even productivity. Enterprises should design their processes and policies so that they enhance job satisfaction, not undermine it. Leaders must model in their day-to-day actions the values they profess. Committed, loyal and competent employees maximize productivity and ensure the resiliency of operations.

With up to five generations coexisting in today’s workplaces, companies must help their employees find common ground while pushing for a digital-first culture. It is time for leaders of organizations to stop debating the millennial problem, hoping that this supposedly exotic flock will get along with the programs and processes. Instead, they should see how questions and challenges from their younger employees can spark action to help their companies change for the better.

I look forward to your feedback; email me at Schumacher@eitsc.com

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