Study proposes strategies for managing corporate sustainability

Managing sustainability is a challenge for companies, especially when there are conflicts between economic, social and environmental aspects. In an article published in business journal GV-Executive, José Guilherme Ferraz de Campos, a professor at Sao Paulo Engineering and Management School (ESEG) with a doctorate in business administration, discusses trade-offs in relation to corporate sustainability and presents strategies to overcome inconsistencies between the three main elements of sustainability.

Trade-offs in corporate sustainability involve situations in which, in order to gain in one dimension, others are harmed. The article highlights three types of common trade-offs in organizational sustainability decisions: choice of objectives, periods and stakeholders. The first type involves the prioritization of economic objectives over others, the second refers to the choice between immediate or future results, and the third type concerns difficulties in managing relationships with various stakeholders and maintaining social legitimacy.

According to the author, to overcome potential conflicts between different facets of sustainability, it is necessary to adopt an integrative perspective, considering social, environmental and economic aspects simultaneously, even when there are contradictions between them. Companies generally prioritize the economic aspect, but looking at impact businesses and hybrid organizations can help us understand how companies can accommodate these trade-offs.

This is because hybrid organizations have sustainable business models and they consider social and environmental impacts as an inherent part of their nature and operations. In order to understand the strategies that these organizations use to accommodate sustainability trade-offs, qualitative research was carried out, based on multiple case studies of 10 micro, small and medium-sized hybrid organizations in the food, fashion and textile sectors, classified as impact enterprises or companies with sustainable business models.

Data was collected from interviews with the managing partners or main managers of the organizations and analysis of internal and public documents disclosed by them. An analytical progression structure was used to identify situations in which companies were faced with decisions involving sustainability trade-offs and to generate conclusions from analysis of individual companies’ actions until they arrived at their chosen approaches.

Companies use five approaches to deal with sustainability trade-offs: compensate, rank, differentiate, redirect and subsidize. Each of these approaches involves making a decision about the trade-offs between different dimensions of sustainability. Strategies can occur in conjunction and some of them can only be applied to certain products, processes or markets. Businesses typically adopt a situational perspective, applying strategies to accommodate one-off trade-offs rather than an overall company-wide strategy.

In short, overcoming sustainability conflicts is a challenge for companies, but it is possible by using an integrative perspective and applying specific strategies to deal with trade-offs. Companies that manage sustainability more effectively will enjoy long-term economic, social and environmental benefits, ensuring a sustainable future for all.

“The strategies presented reveal the complexity of the dilemmas that arise for businesses that seek to have social and environmental impacts. Decisions are not always between the economic dimension and the social and environmental dimensions, and when this is the case, we find that there are many ways to preserve positive business impacts over time. There are also choices between the social and environmental aspects and between different areas of focus in each dimension. For all trade-offs, there are viable ways forward, as long as they are accommodated and not suppressed in favor of the economic dimension,” the author says.

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