In the wake of the recent economic downturn, many industries have taken a much harder look at their core business functions. Initiated by compliance and/or business sustainability necessity, today’s executives can no longer accept ‘business as usual’. Beginning with reform in financial monitoring and reporting, there are many lessons that can now be applied to other core sustainability-driven functions.
Covered in the Chicago Tribune article, Geithner warns other countries about light regulation, U.S. Treasury Secretary Timothy Geithner warned against “regulatory arbitrage”. Foreshadowing “another race to the bottom around the world”, Gartner painted a picture of companies seeking out the jurisdictions with the slackest regulation in order to push the envelope on allowable activities.
Applying the same dynamic to environmental and social regulation and reform, there could be a race to the depths of the ‘Triple Bottom Line’. Companies feeling the pressures to compete would be faced with threats of unregulated competition. However, avoiding sustainability performance standards is not the answer.
Most organizations and their executive management will knowingly avoid a business direction that has the most obvious and significant downside. Often based on an equal balance of risk and reward, the critical component of that decision is ‘knowing’ where that pivot point lies.
Our sustainability consulting finds leading businesses no longer find the greatest value in evading the threats to their current competitive positions. These businesses are distancing themselves from their competition by proactively meeting and continuously exceeding what will be the future business sustainability regulatory measures. These progressive business sustainability minded organizations are asking:
- How will this new economy be different than those of the past?
- Have the measures of performance changed?
- How can a company rebuild for a sustainable future with these new marks of performance?
- Will meeting these targets now better position our business for the future?
Each business responds differently to the dynamics and shifting sustainable expectations in the marketplace. By anticipating and taking steps to address change, organizations can not only avoid risky business paths but make decisions to capture immediate value.