Transforming business challenges into opportunities

Managing a small or medium size company these days can prove quite challenging. Think about the uncertain economic growth perspectives in the UK, Europe and many other areas of the globe, alongside a growing worldwide political instability, the rate of technology and digital evolution, increasing economic factor prices, tightening access to finance and difficulties in recruiting and retaining talent.

It may seem enough to consider yourself successful if you continue to be profitable and grow the business against such a challenging backdrop.

But what about the role of business in contributing to a better world, one where alongside economic sustainability other social and environmental aspects are important?

It may look enough to achieve economic sustainability, while subordinating those other areas in the hope the economic system will somehow and indirectly generate the right impact for them, as classical economic and business theories have defended. Additionally, the perceived costs of considering environmental and social aspects in business could derail the quest for economic achievement.

Additional to the moral and ethical drive that should inform the ways of running businesses, one needs to question if economic, social and environmental aspects are really conflicting. Is it possible that through building a business that creates value in many fronts a significant competitive advantage can be created? Moreover, if a business does not adapt to consider social and environmental factors will it be able to survive in the long term, or even sooner?

There are many paths a company or business can follow. I will consider here three basic ones. First, a business may continue its old ways of operating, focusing on keeping clients satisfied and shareholders happy. Given ever increasing regulations, shifting consumer demands, technology evolution, stricter access to finance and a more demanding talent market, this will prove to be an unsustainable path, as the company will eventually lose its market, its workforce or its license to operate.

Secondly, a company might opt only to meet all regulatory requirements. To the extent that regulations are issued in the right manner and with the right timing – a big challenge in itself - this could prove to be a workable solution, and the benefits to society and environment will be visible. Think, for example, of increasing reporting requirements and the need to divulge what is being done and the positive impact being achieved.

Thirdly, a business may decide to integrate economic factors with environmental and social concerns and build a competitive advantage through combining in a clever way reimagined products and services, clean and efficient production processes, technology and other factors, upholding good practices along the whole value chain, satisfying conscious customers, caring about the environment, in order to thrive economically and create value for all its stakeholders.

The third option is the one to be taken by any business that wants to lead the way in long term value creation, including economic. It will require the right vision, purpose and values, translating into an aligned strategy and operational roadmaps, a strong governance and all-stakeholder involvement and a well managed implementation process, all geared to produce the desired positive impact on all relevant counts: Profit, People and Planet.

It should start by focusing on the main material areas that generate the more meaningful impact. Keeping things as simple and focused as possible can only be of help.

After a long career in banking, where I started to appreciate the potential the financial system

has to help and make the right changes happen in this world, I got further interested in understanding the potential the business community possess and can deploy to ensure long term economic thriving, reducing social inequalities and build a better society and treat our planet in a way so that future generations can continue to appreciate its beauty.

This belief eventually led me to co-found a management consultancy firm focusing on integrating sustainability principles and practices with commercial business imperatives, or as I usually say, to simply manage business with common sense.

I hope business leaders chose the right option and embrace cooperation with all stakeholders to make good things happen.

Ricardo Pires