4 reasons why sustainability should matter to your startup



Amidst a massive rethink of how we do business, global markets have begun embracing sustainability as an integral part of strategy and a driver of profitability.

Although there are pockets of hope, we in the Arab world lag relatively behind.

I was reminded of this as I recently joined 1600 sustainability leaders and practitioners—in a perfect and rare 50:50 gender equality ratio—representing 80 countries, at the Global Conference on Sustainability and Reporting, organized by the Global Reporting Initiative (GRI) in Amsterdam.

The virtually paperless and high-tech conference saw the launch of the latest version of the GRI’s Sustainability Reporting Guidelines G4 at the Amsterdam Stock Exchange, as sustainability nerds—myself included—waited in anticipation.

The highly energetic and charismatic GRI Deputy CEO, Nelmara Arbex, reminded delegates that, “We didn’t start this initiative 10 or more years ago because we enjoy reporting. Reporting is not fun. But reporting is vital for change, and we don’t have much time.” 

Essentially, sustainability reporting is an audit of an organization’s social, environmental and economic performance. Referencing over 90 indicators, it is a topic that can become a mere box-ticking exercise.

Ernst Ligteringen, GRI Chief Executive highlighted the need for transparent and relevant information in supporting the development of sustainable business and markets. "A lot of progress in this respect has been made but there's still a lot of work to be done. Reporting will only become standard practice beyond the world’s very largest companies when it has the backing of everyone," Ligteringen said.

Currently, over 4,000 organizations worldwide report their sustainability performance and impact using GRI guidelines. These companies do indeed include 80% of the world's 250 largest corporations, but they also include businesses as small as a nine-person company.

In the Arab world, less than 100 organizations report according to the GRI framework. The UAE is in the lead, and other countries include Saudi Arabia, Jordan, Egypt, Palestine, Kuwait, Oman and Bahrain.

Following COP 18 UN Framework Convention on Climate Change in Doha, Qatar now requires industrial companies to report, with 44 expected to report this year.

Although momentum is building, I fear that companies will overlook the true benefits of integrating sustainability into strategy.

Here are four takeaways from the conference on how sustainability can improve business, especially in the Middle East.

  1. 1. Sustainability brings opportunity

    We are facing dire planetary limits, and doom and gloom scenarios abound. But as entrepreneurs who capitalize on solving problems, we should take note. Some Arab companies already have.

    Karm Solar created a solar energy-based water pumping system—that is cheaper than those that use diesel—to ensure the sustainability of domestic agriculture in Egypt.

    Dubai-based Liquid of Life provides sustainable and cost effective solutions to meet the increasing demand for quality drinking water, across the Arab world through an innovative technology that generates drinking water from air.

    Untapped challenges and opportunities abound for Arab entrepreneurs: food and water security; renewable energy; recycling and waste management…what sustainability challenges could your startup solve?
     
  2. Sustainability doesn’t have to come at a cost

    Dismantling the notion that sustainability and profitability are at odds, Michel Barnier, European Commissioner said, “Transparent companies have lower financing costs and are more profitable.”

    In addition to transparency, sustainability presents opportunities to reduce costs.

    Although energy is heavily subsidized in many Arab countries, energy audits are growing in popularity for large and industrial businesses for this reason.

    In 2011 for instance, Dubai Airport’s energy and fuel saving initiatives reduced CO2 emissions by 72,793 tons and achieved $4.33 million in fuel savings.

    Even smaller scale savings in a company’s energy consumption or throughout the supply chain, are worth making. Consider a US$25,000 reduction in annual costs, which could be diverted to R&D or used to employ, retain, or reward staff.

    As Digital Lumens founder says, “I’d rather fire a kilowatt than a person.”
     
  3. Sustainability Manages Risk
     
    I learned that Puma not only reports—it has begun asking suppliers to comply with sustainability reporting standards as well.
     
    Given the public scrutiny of global retailers exploiting workers in sweatshops, Puma’s requirement represents an important aspect of preserving human rights down its supply chain, as well as risk management—both reputational and legal.
     
    References were made to the recent garment factory tragedies in Bangladesh claiming over 1000 lives.
     
    In the Arab world, soon will come the day when the construction industry—and others notorious for violating human rights—will be held accountable, and faced with public pressure.

    In fact, Achim Steiner, Executive Director of UNEP, warned that ultimately, the day when consumers will use smartphones to make purchasing decisions based on a company’s integration of environment, social and governance (ESG) factors is not far off.
     
  4. Sustainability is essential to competiveness

    The European Commission recently adopted a proposal, which would require all large companies to disclose information on the major economic, environmental, and social impacts of their business as part of their annual reporting cycle.

    If the proposal passes, this could be a game-changer for sustainability, and it’s only a matter of time before other countries and regions are forced to follow suit.

Companies in the Arab world have the opportunity to start being proactive and leapfrog into a more sustainable and competitive business landscape, or risk missing the sustainability bandwagon and becoming fossils.

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