Key Business Sustainability Concepts

Part 2/13 of the Business Sustainability in Nigeria Series by Adiya Atuluku and Jennifer Uchendu

The business sustainability concepts we talk about here are tools, ideas and models that can be used to achieve business sustainability. There are so many of these concepts, and each of them is a way of breaking down sustainability in business into manageable and actionable steps to help in implementation.

A business may adopt a concept based on which stakeholder they want to focus on (first), their internal capability with regards sustainability, and the issues they assess to be material to their organisation’s products, solutions and processes.

Each of these concepts require varying levels of commitment; but despite what concept a business chooses to follow, each one guarantees different paths to business sustainability…if well implemented.

So let’s look at five key business sustainability concepts, where they have been applied globally, and how well they are being applied in Nigeria.

Corporate Philanthropy:

With corporate philanthropy, a company carries out acts of charity, primarily through voluntary financial donations. They may also align themselves with nonprofits and charities to dispense their financial contributions. These days, charitable giving is not limited to finance – it may include employee time, product donations, or the free use of the company’s facilities.

A good example of corporate philanthropy can be found in Apple. Since 2011, they instituted an employee donation program, encouraging employees to donate money to their favored charities around the world – but the catch is, Apple matches every employee donation made. Since then, employees have donated about $25 million, with Apple donating about $25 million more!

Corporate philanthropy is easily replicated in Nigeria and as with the West, is usually seen with corporations. It is probably the most mature sustainability concept in the country with several organizations focused on the concept, e.g. the Committee Encouraging Corporate Philanthropy (CECP) and Philanthropy Nigeria which maps charitable giving patterns. Arguably the best example of philanthropy in Nigeria has been by Dangote Group, which has donated almost $200 million in Nigeria and Africa. The Group donates finances which are disbursed/implemented by the Dangote Foundation; donations have gone towards the development of a Nigerian business school, micro grants to women in Kogi state, relief materials to Internally Displaced Persons (IDPs), etc.

Commitment needed: 5/10

Corporate Social Responsibility (CSR):

As you search for a definition for CSR, you soon find that there really isn’t one. Different people, and different organizations, define it differently. Sometimes these definitions include corporate philanthropy, and sometimes they don’t. Sometimes they take on the whole business model, and sometimes they don’t. It’s essentially what you make it out to be. But recurring themes for CSR is the business being conscious about the social issues in their local communities and amongst their workforce, being concerned about the environment,  being ethical, positively impacting communities, etc. To be honest, anything goes in CSR; how far each company takes it (from simple donations to business model re-vamps) really depends on them.

A good example of CSR is what Lego has been doing! The company, in a bid to be more environmentally conscious, is investing $15 million on R&D to make their toys more environmentally-friendly. What’s more, they’re reducing the size of their packaging, investing in renewable energy (wind farm), increasing their recycling, and encouraging customers to donate their toys instead of throwing them away. We can see that Lego’s CSR is well geared towards being concerned about the environment.

In Nigeria, CSR has taken much the same route as it has in the global space. Several companies of different sizes (though mostly corporations, and notably banks) are involved in a myriad of activities in their local communities, though perhaps at relatively smaller scales. For example, Fidelity Bank has their Helping Hand Programme which carries out several activities, including building/maintaining green parks, supporting environmental advocacy groups, and using recyclable biodegradable cash bags instead of the standard non-degradable polyethylene bags. We should note that there is still a heated debate in Nigeria about whether companies should carry out CSR at all, and also, whether they even do it sincerely (but more on this later).

Commitment needed: 6/10

Ecological Footprint:

People have realized that human activities, both personal and business, consume the Earth’s resources and produce waste, many of which are not biodegradable; and this puts pressure on the planet. The Ecological Footprint concept emerged from this, and it helps companies understand just how much pressure their specific activities put on the planet. It can tell a company how many planets we would need to have if the they continued with business as usual. This now helps companies plan and manage their ecological assets better.

Several companies are now beginning to do this. Take Sun Microsystems for example. The company has found ways to reduce, and then manage, their ecological footprint. First, they started with measuring just how much waste and carbon they omit through their activities. And then they undertook activities to reduce their footprint, e.g. reducing air travel, encouraging employees to take mass transit or carpool, improve their logistics to take advantage of short routes, reduce their energy use, etc.

In Nigeria, admittedly, we have a lower ecological footprint than many parts of the world (as at 2012, we lived like we had 1.2 planets, as opposed to the USA who lived like they had 9 planets). So even though this model is gaining a bit of traction in the minds of business people, it has been pretty slow. Still, Total is a good example. In 2014, the company consciously attempted to reduce their ecological footprint by completely  stopping gas flaring (a highly polluting activity) in their Ofon field. Instead, they are now diverting the gas to a natural gas plant and using part of it to supply their own facilities with electricity.

Commitment needed: 8/10

Circular Economy:

A circular economy is one that produces no waste or pollution. According to the Ellen MacArthur Foundation, it is “restorative and regenerative by design, and aims to keep products, components and materials at their highest utility and value at all times, distinguishing between technical and biological cycles.” The concept essentially debunks the usual linear model of business – produce, use and dispose; and charges businesses to make this model circular – where disposed products can be put back into the production cycle. What we are also seeing is that companies are collaborating to use their waste as input into other businesses’ production line. Companies adopt this concept in different ways – through recovery and recycling, providing their products as a service, transforming their wastes/old products into totally new products and collaborative consumption (think AirBnB).

A good example of the circular economy concept ingrained into a business model is Interface. The carpet manufacturer provides their products as a service by ‘leasing’ their carpets and providing maintenance/support, making sure the carpets can last longer. They also recover customers’ old or unwanted carpets and re-use them in their production process for new carpets.

Not surprisingly, the concept of circular economy is yet to catch on in Nigeria. So a desktop search for companies practicing the concept was largely unsuccessful. But! We found a little SME called HelloTractor that’s practicing just this. The company connects tractor owners with nearby smallholder farmers on a lease basis. The farmers request the tractors through SMS and can pay via mobile money.

Commitment needed: 9/10

Stakeholder Engagement:

Stakeholder engagement is the idea that a company should consider the needs of every individual or group who can impact, or is impacted by, the implementation of decisions taken by the company. It’s the idea that none of these groups will be left behind, and instead, value will be created for each of these groups equally, without the need for trade-offs. The obvious stakeholders a business would want to consider and actively engage to ensure all are carried along, are: employees, customers, investors, suppliers, and communities. The goal of stakeholder engagement is to make sure all their interests align, and all are carried along. Many acknowledge this to be the cornerstone of business sustainability.

A good example of how this works is Coca-Cola. The company is quite open about how they engage their stakeholders – by using ongoing conversation for continuous improvement. They are expressive about the many groups of people who they consider stakeholders (from their bottling partners to communities and governments) and use what they call a Golden Triangle (public, private and civil society sectors) approach to partnerships.

In Nigeria, a good place to start when looking at stakeholder engagement (or at least how not to do stakeholder engagement) would be the Oil & Gas industry. After a dramatic ethnic clash in 2003 forced Chevron to close down their Niger-Delta operations for some time, the company reshaped their community engagement strategy (the community previously being a largely ignored stakeholder). Their new process, the General Memoranda of Understanding (GMOU) model, is based on discussions and ensuing multi-year agreements with clusters of communities (rather than short-term with individual communities), and is based on the principles of accountability, transparency, community ownership, and a single platform for dialogue with community members (not just community leaders).

Commitment needed: 10/10

In conclusion, although these models are equally maturing in the west, it does seem that CSR is the most popular business sustainability model being used in Nigeria, while Circular Economy is the least.

Still, these key business concepts/models (amongst others) are becoming more popular. And whether they are used separately or together, all can provide a framework that enables a company further their unique sustainability strategies.

Does your company or any company you know carry all its stakeholders along in its decision making and general corporate governance process? We would love to hear about them.

About the Authors:

Adiya Atuluku is passionate about helping businesses be more sustainable, and she uses her experiences in both environmental and management consulting to achieve this. She is also a believer in the role of technology and good project management in helping achieve sustainability strategies.

Jennifer Uchendu is the founder of SustyVibes and a sustainability analyst with experience working on and pioneering projects for sustainability in indigenous and multi-national organisations in Nigeria, she has a passion for helping businesses practice sustainability in the ways that best fit their size, operations and budget.