As businesses and organizations continue to transition towards business sustainability practices, there is likely to be a number of challenges ahead.
The drive for sustainability in business demands restructuring business operations, collaboration across companies and industries, and technology-driven innovation.
However, in making this transition companies will increase revenue, support government regulation, and improve their reputation amongst customers and investors.
BusinessBecause spoke to experts from Zhejiang University School of Management to find out what challenges businesses are facing in the transition towards sustainable development and how business leaders can prepare.
A reduction in carbon footprint is necessary to achieve business sustainability goals
Across the world, the push for climate change mitigation means businesses must abide by governmental policies and regulations that target a reduction in carbon footprint.
Jun Jin is professor of corporate innovation and strategy for carbon neutrality for the Global MBA program at Zhejiang University School of Management, which is based in Hangzhou, China.
“While there are business benefits to becoming more sustainable, and moving towards low carbon initiatives, it’s currently being driven by crisis and necessity,” she says.
To meet the UN Sustainable Development Goals (SDGs) and achieve carbon neutrality by 2060, China launched the world’s largest carbon market in July 2021. This works by limiting the amount of CO2 companies can release, creating competition among companies to adopt clean energy.
Companies that reduce their carbon output can sell unused ‘pollution allowance’ or those that exceed will have to buy more or pay fines.
This incentive means the spotlight is on businesses to implement low carbon strategies.
On the Global MBA program at Zhejiang, students study courses such as Doing Business in International Markets and International Law, which focuses on global business practices and regulations including sustainable development goals.
“Moving towards carbon neutrality requires cooperation from leaders to stakeholders to the supply chain, as well as industry wide collaboration,” says Jun.
Zhejiang MBA students learn how to implement a low carbon business strategy everywhere from management to manufacturing so they know all aspects of the process, she adds.
To enhance sustainability in business, there needs to be a sustainable global supply chain
As the world becomes increasingly globalized, more and more goods are produced, distributed, and consumed across different countries. The environmental impact of transporting these goods can be huge so the global supply chain needs to be assessed at each stage to ensure the system is sustainable.
The Global Manufacturing and Supply Chain Management (GMSCM) program at Zhejiang University is designed for managers in manufacturing, services, and logistics industries as well as entrepreneurs.
Many students on the GMSCM program at Zhejiang University come from an engineering background.
“These students have extensive technical knowledge about how to develop a product and design a supply chain but do not know how to understand the needs of a global customers, about international finance, or the implications of climate change,” says Yongyi Shou, professor of operations and supply chain management at Zhejiang University.
Courses on the GMSCM program include Corporate Social Responsibility, Managing Organizational Changes, Managerial Communication and Elements of Modern Finance.
Students will gain a broad understanding of the implications of implementing a sustainable supply chain as well as the soft skills to manage this organizational change effectively.
Yongyi points to the crucial role the logistics industry plays in the global supply chain.
“When transporting goods, efficiency is key for this industry and very closely linked to sustainability as vehicles produce lots of CO2 emissions, so the industry needs to adopt greener methods such as electric trucks and fuel technologies,” he says.
When transporting goods on a global scale, leaders need to be innovative to think of ways to reduce emissions while remaining cost-effective.
On the GMSCM program, students learn from professors across Canada, Europe, India, and China, gaining a global perspective of how business operates.
Courses such as Cross-Cultural Management and Strategic Management of Operations teach students how to analyze the business environment to gain advantages over competition and understand the best solutions for different markets.
Balancing cost and sustainable transition in the drive for business sustainability
The global economy is still recovering from the aftereffects of the Covid pandemic, which for businesses means some uncertainty and a focus on pursuing key performance indicators (KPIs) such as revenue, profit, and sales growth.
“It’s not easy for managers to become sustainable and shift their mindset from primarily caring about monetary business gains but in the long run these leaders need to make a balance between sales growth and corporate social responsibility,” says Yongyi.
For many companies, reducing carbon emissions and implementing a sustainable supply chain requires investing in new technologies and restructuring operations, which is both a timely and costly process.
Yet, implementing such practices may result in a long-term pay off.
“Digital technologies can be used to visualize the global supply chain and understand what the most valuable component in the global structure can be,” says Yongyi.
For smaller scale companies, new technologies and solutions can help manage cash flow, he adds.
While making a sustainable transition can be a challenge for businesses, more and more consumers are willing to invest and pay a higher price for a sustainable brand and product.
To see this in action, students on both the GMSCM program and Global MBA program at Zhejiang University get the chance to visit firms and companies that are leading the way in driving sustainable in business.
For business leaders at all levels, it’s more important than ever to make a sustainable transition. Business school programs that tackle such challenges can help leaders navigate the transition to a greener future and help businesses make a purposeful change in the modern world.