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Making Sustainability Profitable Essay

1149 words - 5 pages

The subject of the Harvard Business Review (Haanaes, K., D. Michael, J. Jurgens,
S. Rangan. 2013. Making sustainability profitable. Harvard Business Review. Vol. 91, Issue 3, Page 110—114.) is the sustainability in emerging market businesses.
The main aim of the article is to show how companies in emerging markets can gain advantages against big western companies in changing their methods to sustainable methods and how they can make sustainability profitable.

The authors are analysing a research from the Boston Consulting Group, which identified “companies with the most effective sustainability practise in the developing world” (p.111). The research includes 1000 companies with ...view middle of the document...

Sekem started already 1977 to produce as an organic farm, which had to that time a really little market. But this sustainable production already started to pay off when 1990 organic cotton started to be mainstream in the Western stores. Through the organic approach the soil improved, which was in danger because of the spreading Sahara, and the cotton crops needed 20% to 40% less water. This increased the yields by almost 30% and from 2006 to 2011 the business increased 14% annual, which made Sekem to Egypt’s largest organic manufacturer (p.110)

Secondly, the authors say that companies can reach profit with sustainability if they concentrate on their most important resource and improve this one with small adjustments (p.111). When this small adjustment with the time returns larger and larger savings, the company can purchase more-expensive innovations, which for example Western companies start with. Those adjustments are not capital investment, but are mostly “engineering work and a willingness to challenge conventional thinking” (p.112) Shree Cement is an excellent example for this case. Shree Cement is an Indian cement producer, which had no plan of sustainability when they started their business 1985 and therefore began with a diesel-generating plant. But Shree’s engineers had the idea to reduce the electricity usage and came up with a unique solution. They replaced clinker, which is one of the products necessary to produce cement, with the “waste coal slag and fly ash” from the kilns. With this mixture they could produce suitable cement for some applications and it saved a lot of energy in the kilns, where the clinker was normally produced. With this savings Shree invested in a new technology, which could produce electricity out of hot exhaust from the kilns. They enlarged this method and in the end they could provide the open market with electricity to the lowest price (p.112).

Last, the approach to concentrate on the operations of your costumers and suppliers to make sustainability profitable. The authors say that the method is “boosting customers’ buying power” (p.112) to create interdependencies, which both have benefit from (p.112). The authors give the example Jain Irrigation Systems from India. Jain helps their customer to get a credit at the banks so they can purchase the Jain irrigation systems. Furthermore they make a contract with the customer that they are going to buy a part of the crops to a fixed price. From this method are both customer and company getting benefit. From 2006 to 2010...

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