#26 SUSTAINABILITY, SCALABILITY AND SOCIAL RESPONSIBILITY


There are a wide range of investment opportunities in the market. As a Project Management Consultancy (PMC) firm, MCM constantly receives a various amount of interesting business proposals from our partners and associates across the globe every month. The businesses vary from all sorts of industries and countries. Before we delve into any of these proposals, it is crucial to draw a line to make clear of what the objectives of our business investments are. We call it “business investment philosophy”.


Only when you combine sound intellect with emotional discipline do you get rational behavior.”

~ Warren Buffet


Why is business investment philosophy so essential to an investor? Consistency is the key. Commonly, amateur investors are so easily swayed away from their investment goals at the first sign of market vulnerability. Be that as it may, uncertainty is the companion of the purchaser of long-term esteem.

To begin with, there are 3 'S's that are the main considerations emphasized by MCM, to consider before we start to invest, namely Sustainability, Scalability, and Social Responsibility. With the 3S of business investment philosophy, we can basically dispense with the unnecessary dilemmas that could possibly be posed to our investment.


Sustainability

A growing number of organizations are integrating sustainability into their business strategy —realizing they can do well by doing good. But what exactly does it mean to be “sustainable” in business?


WHAT DOES “SUSTAINABILITY” MEAN IN BUSINESS?

Sustainability in business generally addresses two main categories:

  • The effect business has on the environment

  • The effect business has on society

The goal of a sustainable business strategy is to make a positive impact on either one of those areas. When companies fail to assume responsibility, the opposite can happen, leading to issues like environmental degradation, inequality, and social injustice.

A sustainable business, or a green business, is an enterprise that has minimal negative impact, or potentially a positive effect, on the global or local environment, community, society, or economy—a business that strives to meet the triple bottom line.


WHY IS SUSTAINABILITY IMPORTANT?

Beyond helping curb those global challenges, sustainability can drive business success. Several investors today use Environmental, Social, and Governance (ESG) metrics to analyze an organization’s ethical impact and sustainability practices. Investors look at factors such as a company’s carbon footprint, water usage, community development efforts, and board diversity.


Research shows that companies with high ESG ratings have a lower cost of debt and equity, and that sustainability initiatives can help improve financial performance while fostering public support. According to McKinsey, nearly 3,000 employees said the strongest motivating factors to adopting a sustainable mindset are to: align with a company’s goals, missions, or values; build, maintain, or improve reputation; meet customer’s expectations; and develop new growth opportunities.


Rather, “doing good” can have a direct impact on your company’s ability to also do well.


Scalability

Scalability, whether it be in a financial context or within a context of business strategy, describes a company's ability to grow without being hampered by its structure or available resources when faced with increased production.


Scalability is essential in that it contributes to competitiveness, efficiency, reputation and quality. Small businesses must be particularly mindful of scalability because they have the biggest growth potential and need to maximize the return with resources. Although many areas in a company are scalable, some are not.


Internal scalability describes how capable the operations of the business model are to expand the customer base and sales in a short time and at low cost. External scalability describes how beneficial the business environment is to expand the customer base and increase sales.


Some of the best practices, are as follows:

  1. Create a list of very specific functional requirements.

  2. Automate.

  3. Don't over-optimize.


Social Responsibility

The concept of social responsibility as used in management science is, that businesses should maximize their profits subject to their working in a socially responsible manner to promote the interests of the society. Their business activities should not harm other groups such as consumers, workers, and the public at large.


Being a socially responsible company can bolster a company's image and build its brand. Social responsibility empowers employees to leverage the corporate resources at their disposal to do good. Formal corporate social responsibility programs can boost employee morale and lead to greater productivity in the workforce.


Another tenet of social responsibility is the triple bottom line, also known as "people, planet, and profit." MCM does try to abide by these principles, and the belief that achieving profit does not require harm to the planet or the exploitation of people. Organizations can profit while also taking care of the planet and people.


Staying well informed with MCM, and being continually equipped with the necessary knowledge and understanding of how and what to invest in, will inadvertently lead to better asset accumulation, and thus, wealth. Never tire of learning, financial education ultimately leads to your freedom.


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