The 3 Interconnected Pillars of Sustainability are;
- Planet;
- Profit;
- and People.
In the last blog post, we looked at the Planet Pillar. Now let’s look at the Profit Pillar of Sustainability.
Profit Has Been Crucial Throughout History
Our companies and families all revolve around a healthy economy. Whether we conduct our trade in direct exchanges of goods and services, trading beads, IOU notes, or any of the world currencies, humans have engaged in the practice of commerce for at least as long as written history (including cave art) has existed. We buy the things we need, and we sell the items we have.
Adding environmental concerns has not removed the need for a business to be profitable. Therefore, profit remains an essential component of an analysis of sustainability. If a product we use requires a mineral or material that is scarce, the laws of supply and demand increase the price to buy it until it is no longer available and can’t be purchased at any cost.
Why Bankers and Investors Are So Concerned about Sustainability
Banks and investors care about risks in their portfolios of investments. They are looking at the complete
- upstream supply chain for the product in which they are investing including complementary products that are used side-by-side with the product in question; and
- downstream consumer chain including the complementary products that are used side-by-side.
The trend from years ago, where banks and investors were only looking at the direct supply chain and the direct consumer, are changing.
Crucial questions now include:
- Are any raw materials from nature in short supply, meaning that the price for that raw material will rise sharply, affecting the price point for the product?
- Are there pending regulations on water utilization or air emissions that will change the operational costs of the company?
Sustainability issues represent risks to investors. Therefore, more and more annual company reports are now reporting on sustainability.
In conclusion, the Profit Pillar of Sustainability considers the viability for
- consumers to continue to purchase the product at a price they can afford; and
- suppliers to continue to make the product at a cost that provides a healthy profit.