Sustainability for Your Business: Can You Be Both Ethical and Profitable?

I know what you're thinking: “Come on, Brian. Sustainability doesn’t work for business. Business profits and ethics go in opposite directions. Whenever my business worries about the ethical issue du jure, I’m not maximizing my profits. This is a huge mistake”.

But what if I tell you that you’re wrong? What if I said to you that being a sustainable and ethical business is going to improve your long-term success? Including your long-term profitability? You may not believe me. But I’m going to try and convince you that it’s true. Because it is.

Practicing sustainability and good business ethics is one of the most important elements in running a successful long-term business. Sure, anyone can open a fly-by-night shop, make quick profits by scamming people, and then skip town (or the country). But that’s not a sustainable long-term business. And probably gets exhausting once you’ve switched towns (etaphorically speaking) many times.

Before we go any further, let’s get clear on exactly what we mean by sustainability and an ethical business.

What Is a Sustainable Business, Anyway?

An ethical and sustainable business is one that fundamentally adheres to business practices, strategies, tactics, and communications that incorporate ethical values, principles, and norms toward all stakeholders, including the community and the environment. It means going beyond what is legally required of you as a business. And not trying to do whatever you think you can “get away with”. It means to be a great business in all senses of the word, not just financially. It means running a business you and your stakeholders can be proud of.

“Ethics” can be a murky term. One way to think about ethics is by appealing to the golden rule. The golden rule is generally stated as, “Do unto others as you would have them do unto you.” Treat others the way you want to be treated. This applies to individuals, but it also applies to groups. Including businesses. For example, if you want someone to give you a fair deal, and be honest and transparent with you, then that is how you - and your business - should treat others.

And because we are talking about all your stakeholders - not just your shareholders or investors - this means treating all of your stakeholders the way you would want to be treated. It doesn’t mean you or your business are always ethically perfect. What it does mean is that you will strive to incorporate best ethical practices into the very DNA of your businesses wherever possible. While still providing the goods or services that your customers need and the healthy profits that you and your shareholders rightly earned.

Eek.

How Can Being a Sustainable Business Help Profitability?

I’m not talking about sacrificing your profits to be a better citizen of the world. I’m talking about being a better citizen of the world and thereby maximizing your long-term profits. The relationship between these two factors is mutually reinforcing. People want to do business with businesses that do good.

If you constantly try to take advantage of, lie to, or scam your customers, you can make a lot of short-term money. But word tends to get around in the long run. It is difficult to maintain a great reputation when you are constantly cheating your customers. It’s also a terrible way to build fiercely loyal customers, who are often necessary to the long-term growth, health, and success of your business.

But your customers are not your only stakeholders either. You should also treat your employees ethically. For example, one business model could be to pay your employees as little as you can possibly get away with. But this is a bad business practice. It creates unhappy employees, leading to both high employee turnover and bad employee-customer interactions. A much better path to profitability is to pay your employees a fair wage, contributing to their employee satisfaction and leading to more productive, engaged, and effective employees.

Community engagement is another important aspect of being a sustainable ethical business. Whether you are a small business whose community is a local town, or a global corporation whose community is literally everyone, you want to impact your community in a positive way. You want to leave your community, at a minimum as good as, but preferably even better than you found it.

Finally, there is the issue of sustainability and climate change. Not every business can be equally good for the environment. People still want oil, and as long as people still want oil, oil companies will be needed to give them the product.

But that doesn’t mean even oil companies have no responsibility to minimize the environmental damage they cause as much as they can. But they can do so while still pursuing healthy profits. Customers will feel much better supporting an oil company that looks to lessen negative environmental impacts and helps build environmental sustainability in other ways than those they perceive do not care about the environment or a sustainable future at all.

Don’t do this.

How a Business Can Balance Ethics and Profits

The best way to build an ethical business is to build it from the ground up, rather than trying to retrofit a less-than-ethical business with sustainable practices later. This means infusing values, ethics, and stakeholder interests into the very DNA of the company as you construct it. If you create a business incorporating ethics and long-term profitability right into the very foundation of the business, it will be much easier to align the business with ethics moving forward.

On the other hand, most businesses already exist. This means if you want to improve the ethics of your company’s pursuit of profits, you need to find ways of incorporating positive practices after the fact. One great way to do this is to engage with all of your stakeholders on a regular basis. This way you will learn about their needs, values, goals, and concerns for your business. The more you know about all of your stakeholders, the more you can figure out ways to maximize both ethics and the bottom line at the same time.

Another thing you can do is what I call an “Ethical SWOT Analysis”. “SWOT” stands for

• Strengths

• Weaknesses

• Opportunities

• Threats

While a SWOT analysis is traditionally employed to understand a business’s strategic environment, we can re-apply it specifically to the ethical strengths and weaknesses of your business. By doing so, we can identify your ethical opportunities and threats. 

For example, perhaps you know that your business is great at creating employee satisfaction, but is not so great at employee diversity. Further, you notice that there is a lot of underserved employee talent in your industry or region that could be swept up by your competitor.

This could be a great opportunity for your business to improve its Diversity and inclusion strategy. You can offer the same great employee satisfaction levels to underserved populations. And because diversity & inclusion is good for business and profitability, it will help you be both a better organization ethically as well as financially in the long run.

Balancing is a snap.

Making Your Business Both Ethical and Profitable

Business profitability and ethics are not mutually exclusive. Rather they are, in fact, interconnected aspects of running a healthy, growing, and sustainable business. By embracing transparency, fair treatment of employees, sustainable sourcing, and other ethical business practices, companies can not only forge a path of positive ethics but also attain sustained financial prosperity.

As shown by companies like Patagonia, Ben & Jerry's, and Eileen Fisher, ethical considerations can play a crucial role in brand differentiation and long-term success. These firms clearly demonstrate the positive relationship between ethics and profitability in today’s business world.

By prioritizing both ethical considerations and profitability, your business can potentially unlock new avenues of growth and innovation. You can contribute to a more sustainable and equitable global business landscape. And you can earn healthy profits for your business and yourself.  

The seamless blend of ethical business practices and profitability is not just some silly dream of idealist utopians. It is a tangible and practical way of doing business that will help you achieve your business goals at the same time make you make your world a better place in which to live.

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