Developing Value 5

Executive summary

For small and medium sized enterprises Developing Value — Investors and lenders, both local and
the emphasis is very much on cost savings, a practical guide for change international, could strengthen the business
although they also benefit from higher case by including companies’ sustainability
revenues and improved market access, Developing Value takes this discussion a performance in funding assessments.
especially through environmental products step further, suggesting practical steps
and services. National companies and companies can follow in the implementation Business customers in developed countries
multinational corporations based in of sustainability activities and strategies, could work with emerging market suppliers
emerging markets gain benefits in all from understanding the business priorities in meeting higher technological and
areas, led by cost savings from to implementation and monitoring. management standards. Consumers should
environmental process improvement. act on their values — question companies’
Foreign multinationals (headquartered in The business case is constantly evolving, sustainability performance and follow
developed countries with operations in reflecting changing expectations and through in their purchasing decisions. NGOs
emerging markets) also experience more relevance. Companies will need to be can help by applying appropriate pressure on
intangible benefits such as risk reduction flexible in their approach to sustainability companies, and exploring collaboration and
and human capital development. and monitor change. Sustainability is itself new partnerships involving business,
a continuous process — from small activities governments and other players.
Export-oriented companies which that bring quick returns to incorporation in
demonstrate adherence to sustainability strategies that bring long-term competitive Developing Value is just the start of a
standards and management systems benefit advantage. Companies need to choose discussion. It answers some questions but
from better access to markets and can their focus. also raises many more. The full report can be
sometimes apply price premiums to their used in several ways. Readers may select an
products. Companies focused on the entry point appropriate to their own interests
domestic market are more likely to gain Enhancing the business case and concerns, whether that be sustainability,
from local economic and community the emerging market context or the specific
development, which strengthens their license While the evidence demonstrates that business case. We hope that this work will be
to operate and can deliver revenue growth. businesses can benefit while helping to picked up and used by others in the field to
achieve sustainable development objectives, find the business cases for specific regions
In most geographic regions, eco-efficiency other players also have responsibilities and and industry sectors — and by business
— cost savings from better environmental can help to strengthen the business case. managers seeking to customize the business
management — is the most significant Governments in emerging markets need to case for their own operations.
relationship. South Asia appears to be provide good governance, regulatory
the exception: the strongest evidence of certainty, and an appropriate mix of policy www.sustainability.com/developing-value
a business case is for higher revenue from tools, including clear and enforceable provides information on all the case studies
local economic growth, and community regulatory standards and appropriate examined in this report through a searchable
development leading to improved reputation. economic instruments. database. It also links to sustainability tools
These geographic differences are also a and resources.
function of the different business contexts
in these areas.

The business Sustainability

The business case matrix case matrix Factors

A significant output of this study is Governance & Environmental Socio-economic

the business case matrix which relates engagement focus development

key aspects of sustainability to a set of

recognized business success factors — Governance Stakeholder Environmen- Environmen- Local Community Human
demonstrating graphically where a viable & manage-
ment
engagement tal process tal products economic
Improvement & services growth
development resource
management
business case exists. This matrix has
been adapted from previous work by Business Revenue
success growth &
SustainAbility, Buried Treasure, 2 which factors market
examined the business case for sustainability access

in developed countries. Cost

savings &
productivity
A comparison of the two studies shows that
emerging market companies focus more on Access to
capital
short-term cost savings and revenue gains,
while intangibles like brand value and
reputational issues are more significant in Risk
management
developed countries. Community investment & license
to operate
and development are seen primarily as an
Human
overhead in developed countries, but in capital
emerging markets they are shown to be
important in retaining the ‘license to
Brand value
operate’ and in reducing risk. & reputation

Figure 1 The business case matrix