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Sustainability Programs Don't Always Lead to Sustainable Business

Can I do this forever? That's the key question to answer if you want to figure out if something is sustainable.

Plastic, for example, has been part of our daily lives for the past fifty years or so. Used in everything from food containers and toys to bottles and bags, one of its main qualities – its durability and the fact it takes millions of years to decompose – has become its biggest drawback. And simply, it’s unsustainable for us to continue consuming such vast quantities.

The key idea of sustainability is that we must act responsibly so that resources on this planet will be able to support the many generations to come. Companies, of all shapes and sizes, have announced ambitious goals from sustainable sourcing and reducing waste to so-called “decoupling” in which the production grows without corresponding increases in environmental pressure.

But how are we getting things wrong? From my experience, it’s far easier to measure both the financial and social benefits if companies have direct control over how solutions are implemented, such as reducing water or inputs in production processes. Sustainability programs, which invariably have complex systems and multiple actors, tend to flounder when there’s a lack of direct control or direct relationships in the supply chain.

Take the garment industry in Asia, for example – a major employer with a vital role to play in alleviating poverty. Typically, brands in developing countries outsource the manufacturing to suppliers many thousands of miles from their headquarters. The brand is several steps from the process and may be unaware that child labour is being used, or that workers are inadequately trained on barely livable wages in unsafe factories.

One response has been to hire certifiers to inspect for child labour or unsafe conditions and provide grants to NGOs. But is there a sustainable “livelihood” solution for these children and workers or just risk mitigation for the brand? What happens when the grant to the NGO dries up? Is there a viable platform for continuing to deliver a service such as a skills or education program?

Bangladesh, for instance, ranks below nearly every neigboring country on literacy, education and skills. More than eight out of ten laborers is either illiterate or has no formal schooling. An incredible 60% of pupils fail to complete primary school and just 5% have received some sort of training. It’s holding Bangladeshis back from securing quality jobs.

To do better, governments and businesses need to take a longer term view. Investing in developing the technical skills of workers is a sustainable approach.

One such program is Sudokkho, which focuses on private sector training for the poor, particularly women. Trainees contribute hard-earned money to the cost, which alongside the garment industry’s financial support, makes the training sector less reliant on subsidies.

Within two years of the program beginning, more than 10,000 people were placed into semi-skilled or skilled jobs. Almost half (4,825) – mostly women – were sewing machine operators. The increased skills resulted in an additional £4.26 million of net income for those who had undergone training. Ultimately, the five year program aims to help improve the skills of 100,000 people by 2020.

The benefits are not only increased productivity but an improvement in the quality of products. Companies stand to benefit financially from a more efficient and competitive process – the time it takes to get a t-shirt, for example, from the factory to the shop floor is less. Better skills also means higher pay and improved conditions for workers.

The key to success is that all of the actors in this system, including major global retailers, move from a short term transactional relationship based on price, to a longer term relationship where they all have an incentive to invest in the transformation of the supply chain. Over time, skills development pays for itself, like any good investment.

Now that’s sustainable. And yes, we can do it forever.

This article was written by Palladium's Director of Thought Leadership, Eduardo Tugendhat, for Real Leaders.