The emergence of the smartphone
technology changed the business of photography forever. Everyone now takes
pictures anywhere with ease. A time was, when it was never that easy. The likes
of Kodak dominated the industry then.
Today, Kodak is gone because it
did not pay close attention to the threat posed by the smartphone technology to
its business. It did not adapt to the changing nature of its business
environment. The rest now is history. Sustainability is the potential new
threat, if ignored or taken for granted.
Sustainability has become a new
mantra, a philosophy of sorts. It however means different things to different
people. If one takes the literary meaning of the word, it simply suggests
longevity or the ability to continue to be in existence irrespective of counteracting
pressures. Another word often used in this regard is resilience. While
longevity and resilience are integral to sustainability, they tend to,
somewhat, present a narrow and limited view of sustainability.
The broad view of
sustainability goes beyond resilience and longevity and emphasises the need to
balance environmental, social, and economic considerations in decisions. It is
directly linked to the quest for sustainable development – a development that
does not inhibit future generations in their quest for development. It
recognises the nested interdependency amongst the economy, society, and
In other words, the success of
the economy is dependent on the viability of society, and the success of
society is linked to the viability of the natural environment. As such, without
the environment, there will be no society, and without society, there will be
no economy. The three are interwoven. Sustainability thus strives to ensure the
integrity of this nested interdependency. This is very much at the heart of the
Sustainable Development Goals (SDGs).
In July 2015, the UNEP Finance
Initiative and Nigeria’s Financial Services Regulation Coordinating Committee
(FSRCC) co-hosted an event on sustainability for senior officials and Board
Members of the Nigerian financial regulatory community. The event was to raise
awareness and build capacity around the concept of Sustainable Finance – i.e.
the application of the SDGs to, and the financing of the SDGs by, the financial
Members of the FSRCC include
the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation
(NDIC), Securities and Exchange Commission (SEC), National Insurance Commission
(NAICOM), Corporate Affairs Commission (CAC), Federal Ministry of Finance
(FMF), Nigerian Stock Exchange (NSE), Nigeria Commodity Exchange (NCX), the
Federal Inland Revenue Service (FIRS), and the National Pension Commission
Following the event, the
Nigerian financial regulatory community agreed to develop and implement a
national sustainable finance roadmap. This sustainable finance roadmap requires
each member of FSRCC to develop and implement operational and industry
strategies founded on the principles of sustainable development. In other
words, members of FSRCC are required to ensure that they embed the principles
of sustainability in their everyday organisational practices as well as in the
industries they regulate.
Some of the issues to be
covered include the integration of environmental and social risks in investment
and lending decisions, proactive pursuit of financial inclusion, recognition
and respect for human rights, health and safety in the workplace, women
economic empowerment, minimisation of direct and indirect carbon emissions,
waste management, impact investing, good governance and reporting practices, et
cetera. It is expected that each regulator will complete the process before
With the full spectrum of the
Nigerian financial regulatory community covered, it is obvious that all sources
of finance in Nigeria – debt and equity – are now required to respect and
reflect sustainability principles. Finance is the life-blood of any business.
Therefore, for any firm to have a future in Nigeria, it must conform to the
tenets of sustainability; and herein lies a danger.
For a long time now, Nigerian
businesses have treated sustainability as a luxurious option. Due to the
perceived challenges of doing business in Nigeria, the focus of most businesses
has always been on survival first. As such, the pursuit of sustainability is
seen as going the extra mile, which isn’t necessarily good for business. This
is a myth. It is also poor thinking.
There is significant empirical
evidence that sustainability is good for business. Imagine you run a bank with
600 branches in Nigeria. Imagine each branch spends an average of N1.5m on
diesel every month. Your annual spend on diesel is a whooping N10.8bn. This is
enormous and not good for your balance-sheet and the natural environment. How
much of this N10.8bn could be saved, for instance, through alternative sources
of energy and other efficiency measures? The same applies to paper usage,
business travels, waste management, water consumption, health and safety in the
workplace, et cetera.
In sum, the sustainability turn
is a quest for effectiveness and efficiency. It is first and foremost an
organizational orientation committed to reducing its negative impacts and
increasing its positive impacts on its different stakeholder groups (e.g.
customers, shareholders, employees, regulators, the government, unions, local
communities, et cetera). It is about Creating Shared Value – i.e. win-win
outcomes for business and society. It is a business orientation and culture
that recognises the firm as an entity embedded in a network of relationships
with different stakeholder groups. It is a form of self-regulation driven by
the values and philosophy of a business.
For Nigerian businesses to
benefit from it, they need to start seeing it as a better way of managing
risks, exploring opportunities, and adapting to changing business contexts and
expectations for long term success. They will need to go beyond the piecemeal
approach of Corporate Social Responsibility (CSR), which often attracts strong
cynicism in boardrooms, as corporate philanthropy – an extra cost, which most
businesses will like to avoid. They need to embed sustainability thinking in
their strategic decisions and everyday practices.
However, based on many years of
working with businesses in this area, one key way to make a success out of
commitment to sustainability is to see it as a ‘business paradigm’, a culture
that should permeate all facets of business decisions. It is a way of life –
the ‘how’ of “how we do business”. It is not primarily a strategy, but a lens
through which strategy is crafted and implemented. In other words, commitment
to sustainability should first be a mindset before being a strategy. The
sustainability mindset offers businesses committed to it a richer and more
advanced paradigm to continuously challenge their purpose and align to their
core values, aspirations and mission. Without this mindset, a sustainability
strategy is, at best, hollow and unsustainable.
Since October 2016, I have been
working with the National Pension Commission (PenCom), as a Scholar in
Residence, to embed sustainability thinking and practice in the organisation
and mainstream it in the industry. The initiative started with a strategic
capacity building partnership between PenCom and the University of Edinburgh
Business School, United Kingdom, back in March 2015. Since then, PenCom and the
pension industry operators already see the benefits of sustainability thinking
and are keen to translate it into practice. The idea is for both to eventually
co-create a set of Sustainable Pension Principles for the industry. This will
be a legacy project in line with the Nigerian Sustainable Banking Principles of
the Central Bank of Nigeria (CBN). I have no doubts that other financial
regulators will follow the same route soon.
It is obvious that
sustainability is no longer an option. It is fast becoming a necessity. The
changing finance landscape orchestrated by the sustainability turn in Nigeria
can either mar or save your business. As Hölderlin – a German poet – put it:
“…where danger lies, also lies the saving power”. Now is the time to make the
necessary adjustments before it is too late. Luck meets the prepared, as it is
said. The choice is yours.
Amaeshi is a scholar in residence at
the National Pension Commission (PenCom), Nigeria, and professor of business
and sustainable development at the University of Edinburgh Business School,
United Kingdom. He tweets @kenamaeshi