Resilience vs sustainability
- 17 June 2016
- 532 views
What is the difference between resilience and sustainability, and which approach should you adopt?
“We live in an age of unprecedented change. It’s our responsibility as human beings to ensure that our businesses are as sustainable as possible,” says Jason Hammond, chief commercial officer at Matrix, a global design and procurement specialist that works with its clients – including brands such as John Lewis, Boots, New Look and Accessorize – to source high-quality products made as ethically as possible.
“It’s such an important aspect of the modern business, because it incentivises staff, saves money and can have a direct impact on your brand’s bottom line. Consumers increasingly value ethically sourced products that reinforce tenets of authenticity, trust and transparency,” he says.
Many enterprises – from global corporates to small-scale start-ups – increasingly recognise that sustainability and corporate social responsibility should be at the core of their business strategies for successful long-term growth. There are compelling bottom-line reasons to embrace this approach.
However, with many organisations also adopting a risk-based approach, establishing business resilience within an organisation is also now a key element of effective business strategy.
So are the concepts of sustainability and resilience contradictory or complementary – and should a forward-looking business prioritise one over the other?
“These are two sides of the same coin, but with important differences,” says Mike Tuffrey, co-founding director at Corporate Citizenship, a sustainability and corporate responsibility consultancy that works with a range of large multinationals to build the business case for sustainability.
“True sustainability is all about how we grow the business in the future – what opportunities exist to do better and do different? The focus is on protecting and growing revenues. Resilience is more hard-nosed and risk-orientated – how do we protect what we have and head off problems? The focus here is on preventing additional costs. Sustainability proponents are optimists, while those focused on resilience would say they are realists. The truth is, you need both.”
Davide Luzzini and Joe Miemczyk, associate professors of information systems and supply chain management at Audencia Business School in France, believe that the concepts are different, but that firms should pursue both aims as a fundamental part of their business strategy.
Luzzini explains: “Sustainability refers to the triple-bottom-line view, meaning that a firm should be able to simultaneously ensure the achievement of multiple objectives concerning environmental, social, and economic impacts. For some firms, this means going for profit without neglecting the environmental and social impact of their actions. For others, the environmental and social side has become key to differentiating within the market and developing a long-term competitive advantage.”
He continues: “Resilience, instead, refers to the capability of coping with disruptions coming from the external environment. For example, in the supply chain context, resilience means the capability of ensuring the continuity of material, information and monetary flows even in the face of business, natural or geopolitical instabilities.”
Miemczyk adds: “If the external environment ‘pressures’ are about sustainability, there can be a link between this and responsibility. So we can also argue that resilience is related to natural resources, and has a link to sustainability, at least in the long term. So, where there is a risk of non-supply because of resource scarcity, companies might consider resiliency strategies including finding multiple sources of supply and building up stock levels.”
Nowadays, firms should aim for both resilience and sustainability, argues Luzzini. “In some industries, resilience is not necessarily a priority, depending on the level of uncertainty characterising the external environment. But it is increasingly becoming key in many industries.”
At the same time, sustainability and corporate social responsibility have become priority issues for many organisations, informing decision-making among a wide range of stakeholders. While resilience may be seen as effective for dealing with short-term issues – with a possible collateral impact on the environment, operating costs or workforce – sustainability may be perceived as a longer-term strategy. Whichever approach brings the greater return on investment could, therefore, be the bottom line for some investors.
Nonetheless, says Luzzini: “Sustainability is a more general and comprehensive strategy that should also embed the concept of resilience.” Naturally, organisations may have to address some trade-offs between sustainability and resilience. “There might be win-win situations, when you can improve both dimensions at the same time,” he continues, “but very often you need to prioritise one over the other. As anticipated, sustainability also embeds the economic dimension, which is ultimately linked to resilience. Therefore it seems more appropriate to prioritise sustainability – making the most to ensure the right level of resilience.”
Finding a good fit for both strategies appears to be the way forward. As part of building in resilience, businesses should adopt a risk-based approach that can identify and manage risks to mitigate the potential impact of disruptions. Indeed, some sources of disruption may result from issues directly relating to a lack of sustainability and CSR in supply chains or the extended enterprise – for example, environmental or operational accidents, social or safety issues, non-compliance, and even disasters – that can have a major impact on an organisation’s bottom line, as well as its brand reputation. “But, if a company takes sustainability as a risk issue, they may be able to integrate everything together in a general risk management strategy,” Miemczyk concludes.Back to all
- 532 views