Running a business in a sustainable manner is a key objective for those who embrace a long-term vision. A sustainable model which allows a business to grow in a calculated and predictable manner has over the years become more enticing than those registering volatile results, even if the short-term would guarantee higher profitability. In this interview, we speak with Simon Attard, Founder and CEO of MYC, to discuss with us his views about running a sustainable business model.
What are the key elements in running a sustainable business?
There are several components which contribute towards a sustainable business model. One of the key elements which I deem as amongst the most important is that of value delivery. A business cannot ascertain its sustainability and long-term growth or survival without offering some form of value to a targeted or selected customer base. Another important aspect is the diversification of revenue sources. A business cannot hope to achieve a sustainable status if it relies solely on one or a few sources of income that are difficult to replace. In this respect, it is better to generate lesser yet more diversified income to ensure the security of the organisation.
What are the benefits of sustainability in business?
Running a sustainable business brings to the fore several benefits. One of which is the fact that such a business would be in a much better position to effectively predict future performance. When a company adopts this approach there is lesser leeway for volatility and unexpected shocks. In today’s economic reality, investors are also more keenly inclined to place their funds in such businesses due to the anticipated returns, which are more probable than when dealing with volatile organisations.
How does a sustainable business model handle staff members?
Those who have been involved in business for a significant period of time can appreciate the value of good employees. Having skilled employees that contribute to the business can set a company apart from the competition and enable a bright future. A business that embraces a sustainable future invests in high performing employees, maintaining the right environment for their growth. The right employees need to be trained regularly, being given the opportunities to expand on their existing skill sets. Employees who are not engaged will seek other opportunities, and potentially impact the operations of a company.
Is sustainability only related to the internal operations of a company?
In order to achieve a sustainable business model, companies must align their internal operations with a consistent strategy. In a wider sense, sustainability extends beyond profitability and revenue figures and seeks to allow business growth without negatively impacting the environment we operate in and hence society as a whole. When sustainability is ignored by businesses and executives are not held accountable, we face issues such as environmental detriment, inequality and social injustice. Businesses with a sustainable mindset consider numerous factors pertaining to economics, environmental and social elements. This is done to ensure that short-term profits do not transition into long-term liabilities. Apart from catering for important global issues which have already started to impact our lifestyle, sustainability is viewed positively by investors as they use Environmental, Social and Governance (ESG) metrics to review performance. Such metrics relate to a company’s carbon footprint, water usage, community development efforts and board diversity amongst many others.
A lot is being said about ESG and sustainability. Can you elaborate on this subject?
ESG stands for the three broad categories of Environmental, Social and Governance. As time progresses, investors are becoming more conscious in relation to these categories rather than just considering profit and risk. Each category under ESG comes with its own concerns which are not likely to be applicable for each context. Let us take the Environmental category as an example. This is likely to be applicable for companies that produce more pollution and waste that can impact climate change. This category delves into the business’ use of renewable energy sources, the waste management programme and what it is doing to minimise pollution and deforestation from an operational point of view.
The Social category also delves into a number of issues. One of the key metrics for this is a business’ relationship with its employees. These include concerns such as whether employees are paid fairly and how their salaries fare when compared to market rates. Other considerations include whether retirement plans are offered by the employer, together with any other benefits.
The Governance category revolves around how a company is managed by senior executives. This includes the interaction with shareholders, partners, employees, suppliers and other stakeholders. It is related to the level of contributions that the business provides for the community. Good corporate governance is heavily intertwined with transparency and measures in place to avoid conflicts of interest. Board members must also embrace diversity and inclusivity.
In view of the key learnings gathered throughout the years, sustainability’s pivotal role is expected to be further accentuated. Focus on the long-term and moving away from one-off successes will continue to increase in importance as businesses seek to cement their standing.