The Four Tiers of Sustainability

Many businesses today want to understand sustainability. Sustainability is a term always hard to define. Communicating on sustainability is even harder. A bigger challenge is how to put sustainability in practice.

Sustainability in an organization is generally pursued in tiers. At the minimum, journey towards sustainability must start with compliance. Every organization that aspires to be a champion on sustainability needs to take all efforts to ensure that laws of land are fully met.

This may require complying with procedures, doing associated documentation; investing on mitigation measures, deploying qualified staff and conducting required monitoring and reporting. Fundamentally, any organization that is not compliant should not be considered as “sustainable”.

The next tier on sustainability is to go “beyond compliance”. Here the organization undertakes sustainability related initiatives as driven by its vision/mission and goals/objectives and not solely directed by needs of compliance. So, in the interest of resource conservation, the organization may install rainwater harvesting units or undertake vermi-compost of wastes to promote recycling or implement solar water heaters in the canteen to reduce consumption of fossil fuels. The organization may follow a policy to use only electric vehicles for its material transport to reduce GHG emissions. Idea is to minimize the impact footprint of the business operations.

Many of these initiatives however provide returns or operational savings given the rising costs of resources (water and energy) and help improve the resource security. Going beyond compliance is therefore more of practicing “smart sustainability”. Strategies and tools such as “cleaner production”, “green productivity” help in this endeavour. Companies may set targets for compostable, recyclable and biodegradable packaging.

The third tier on sustainability is to expand the “boundary beyond the factory gates” and address wider set of stakeholders across the supply chain or even the life cycle. The organization needs to engage here the suppliers for instance on how to improve resource efficiency and waste recycling.

Accordingly, technical/financial assistance may be provided, and partnerships may be forged. Further, vendor selection criteria may be developed and imposed asking for a code of practice on sustainability. A supplier may have to commit for instance 20% of energy use from renewable resources or 50% water recycling. On the side of consumers, the organization may operate a “take back policy” and promote recycling of packaging and used goods by setting up collection centres. Used mobile phones for instance could be returned to earn reward coupons. These efforts may fall into the realm of organizations “extended producer responsibility”.

This strategy of practicing sustainability often adds a brand value to the organization reduces risks and adds to its competitiveness over a long run.  Generally, at this tier, organizations follow the practice of “sustainability reporting”. This helps in improved internal and external communication and builds record keeping. The organization moves to the canvas of circular economy.

The fourth tier on sustainability is to widen the “social frontiers” of the organization by addressing the “catchment area” i.e. “going beyond project boundaries” but without any direct commercial motives. Here the organization addresses need of its neighbourhood (or catchment area); works with interested partners and implements projects that help improve the livelihoods and natural resources of the region. These projects are often conceived and implemented under Public Private Partnerships (PPP) focusing on “social inclusion”.

Supporting school education and primary health centres, carrying out afforestation and watershed development programmes are some examples. These projects may well be form part of organizations efforts towards corporate social responsibility (CSR). The returns on these investments are however over a long term.

Addressing of global issues like climate change is also considered at this tier – especially financing projects that assist the communities towards adaptation. On mitigation, the organizations expand sustainability reporting of the earlier tier into specialized reporting such as on Greenhouse Gases (GHGs) e.g. by subscribing to projects such as “carbon disclosure “. Practice of “integrated reporting” could be taken up where financial, environmental and social performance is put together.

Most organizations today in India belong to tier 1 and struggle even to get there! Tier 2 is generally practiced by medium to large scale organizations that have technical capacities, financial resources and enjoy support of top management. Multi-nationals with global supply chains are leaders on tier 3 and their sustainability driver is the market and competition. Tier 4 is practiced by medium to large industries. This tier is conceived, inspired and driven solely by top leadership. These leaders understand sustainability in its true sense and are recognized nationally and globally.

Figure above shows the sustainability journey for an organization in tiers with associated strategies.  Normally, sustainability should be implemented in this succession.  Check which tier you belong and aspire towards the next tier.

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Dr. Modak, Executive President, Environmental Management Centre LLP and Director, Ekonnect Knowledge Foundation, Ex- Professor at Indian Institute of Technology, Bombay is also a Member of Indian Resources Panel at MoEFCC, Member of Task Force on Sustainable Public Procurement at the Ministry of Finance. He has Drafted Report on Status on Resource Efficiency and Recommendations towards Circular Economy for NITI Aayog. Contributor to UNEP’s Green Economy report, Co-author of the Global Waste Management Outlook and Chief Editor of Asia Waste Management Outlook for the United Nations Environment.

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