Importance of Creating Sustainable Businesses
Increased investment in sustainable business practices can boost a company’s profitability. According to Liang et al (2018), evidenced-based studies show that the most sustainable companies are also the most popular, competitive and profitable brands. But there are numerous examples of companies competing at the top despite their historical records of unethical practices such as Volkswagen (gas emission), Toyota (faulty Takata airbags), Shell BP (pollution from gas flaring and illegal waste disposal) etc. Huawei has been criticized for sponsoring theft of copyrighted materials and violating customers’ privacy, too. Yet, organizations and stakeholders need to understand sustainability as an essential element of a healthy society and an effective tool for driving innovative change—not compromising human lives. Doing well and doing good are linked; and successful implementation of business strategies require proper maximization of opportunities for shared value results.
Is the circular economy relevant in contemporary business world?
The answer is yes and no. There are arguments that a circular economy does not necessarily promote sustainable business and ethical practices for the following reasons:
- The circular economy concept is so diffuse and sprawling that it is impossible to measure its impact. It includes everything from recycling systems, renting, replacing products with services, developing apps for the sharing economy, and so on.
- Circular economies tend to ignore the vast amount of materials and products that people have already accumulated. The concept is reduced to a question of choosing between linear and circular products while disregarding physical laws about the physical limitations of materials as well as the complexity of the waste. These issues are crucial if a circular economy is to become a reality.
- Some businesses only develop circular activities for parts of their operations. This may be due to the difficulty of scaling up pilot projects. In most cases, only a tiny part of the operation characterizes a circular economy while the core activities continue as usual.
- Contrary to what researchers claim, there is limited awareness about how a circular economy can transform utilization of resources and growth. This makes it difficult to measure the environmental impact, especially in the long term and over larger geographical scales. Some scholars claim that a circular economy only delays, rather than eliminates the adverse ecological effects of the linear economy (Julian & Ralf, 2019).
- Although proponents of the circular economy claim to contribute to a socially sustainable future for all, the concept tends to be source of controversies and arguments about resource consumption and distribution. There is no connection to how the idea would lead to more significant social equity.
Role of the Market
Researchers do not agree on the relevance of a circular economy. It has been argued that CE depoliticizes industrial and environmental policies while advancing the power of the market and businesses. The concept suggests that everyone will benefit from the implementation of a circular economy because its proponents envisage synergies, win-wins and possibilities rather than compromises, problems, and limitations.
However, it is pertinent to note that widespread criticisms of the circular economy will never challenge relevance of the circularity concept. The main issue is how to identify the most effective framework for distributing its supposed benefits. But based on the conceptual and practical inconsistencies, the questions we need to ask are: (a) How do we know that a circular solution is good for the environment? (b) Who benefits from it, and who does not?
CONCLUSION
Issues related to the ESG impact of business have attracted global attention in the last decade, with highlight on the huge benefits of sustainable business. Also, circular economy has both theoretical and practical support from multinational corporations and policymakers who are integral to its recognition as a model for material and sustainable policies. However, it has been criticized by professions in various domains for the following reasons:
- CE literature is biased due to focus on developed countries.
- CE indicator analysis is mainly on the manufacturing sector.
- Lack of empirical analysis on the CE theory and practice.
- Academic works on CE lack advice (Julian & Ralf, 2019).
- There are no clear contributions to social and economic sustainability.
There is no one-fits-all solution to profit maximization. But everyone has a role to play toward developing and protecting the world around us. The agenda for global sustainability demands focus, collaboration and investments, not just from the government and corporate organization, but the society at large. According to Ali et al (2019), the world needs a holistic institutional approach for advancing the circular economy.
RECOMMENDATIONS
- There are many challenging issues in global business. But the focus on climate and disregard for the complexity and interaction between different sustainability issues has to change—starting with corporate governance and societal structures.
- To attain the United Nation’s 2030 Agenda for Sustainable Development Goals (SDGs), policymakers and organizations should recognize the interactions, trade-offs and mutual benefits between goals. This highlights the importance of information sharing and calls for a more holistic ‘integrated thinking.’
- Companies can leverage innovation to produce eco-friendly products while individuals, groups and governments should provide financial support for global sustainability as well as participate in global campaigns for using safe, recyclable eco-friendly products.
- Governments should also implement policies that encourage innovation, reduce poverty and youth unemployment, as well as institutionalize frameworks that empowers businesses to align with system-wide changes.
- The world needs valid and reliable data on efforts being made by companies to reduce GHG emissions and negative ESG impact, not only climate change. Access to monthly reports presented in a standardized way that will provide more insights on priority areas—for governments, organizations and key stakeholders.
- Combating global sustainability issues is not limited to greening operations. Lasting transformation can be achieved by establishing a social movement and pressuring politicians to implement change at scale. At the moment, organizations are committed to climate change while neglecting a more important action—advocacy and investments toward educating both customers and employees.
FUTURE STUDY PLAN
I look forward to studying Business Sustainability Management because a comprehensive understanding of global ESG impact will empower me to argue business case for circular economy and sustainability. The skills and knowledge will be utilized to apply design, innovation and leadership competencies such as creating and implementing effective action plans for integrating sustainability across my organization’s value chain, thereby enabling consistent value creation for all stakeholders.
FURTHER READING:
Del Vecchio, P., Secundo, G., Mele, G. and Passiante, G. (2021), “Sustainable entrepreneurship education for circular economy: emerging perspectives in Europe”, International Journal of Entrepreneurial Behavior & Research, Vol. 27 No. 8, pp. 2096-2124.
Del Giudice, M., Chierici, R., Mazzucchelli, A. and Fiano, F. (2021), “Supply chain management in the era of circular economy: the moderating effect of big data”, The International Journal of Logistics Management, Vol. 32 No. 2, pp. 337-356.
Anaruma, J.F.P., Oliveira, J.H.C.d., Anaruma Filho, F., Freitas, W.R.d.S. and Teixeira, A.A. (2021), “The first two decades of Circular Economy in the 21st century: a bibliographic review”, Benchmarking: An International Journal, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/BIJ-01-2021-0029
Sehnem, S., Lopes de Sousa Jabbour, A.B., Conceição, D.A.d., Weber, D. and Julkovski, D.J. (2021), “The role of ecological modernization principles in advancing circular economy practices: lessons from the brewery sector”, Benchmarking: An International Journal, Vol. 28 No. 9, pp. 2786-2807.
Sharma, Y.K., Mangla, S.K., Patil, P.P. and Liu, S. (2019), “When challenges impede the process: For circular economy-driven sustainability practices in food supply chain”, Management Decision, Vol. 57 No. 4, pp. 995-1017.
Burmaoglu, S., Ozdemir Gungor, D., Kirbac, A. and Saritas, O. (2022), “Future research avenues at the nexus of circular economy and digitalization”, International Journal of Productivity and Performance Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJPPM-01-2021-0026
REFERENCES