Sustainable success for Australian business
Why Australian businesses need a sustainability strategy and a sustainable strategy for future security and survival
The midst of multiple disruptions – from conflict in the Middle East to Artificial Intelligence – may seem like the time for a company to pull back its efforts to become more sustainable.
But right now, the benefits of a more strategic approach to sustainability are greater than ever and we’ve reached a point where sustainability strategy can be separated from sustainable strategy.
Sustainability and sustainable strategies – not the same thing
A sustainability strategy involves how businesses and organisations decide issues such as emissions reduction targets and when they aim to reach net zero. How do you set and resource those targets, and measure and govern them?
A sustainable strategy is a company or organisational strategy that incorporates all the changes driven by things we think of as sustainability – climate change, biodiversity loss and people’s changing expectations.
While these two strategy elements overlap and inform each other, they are not the same thing.
Building future proofed business models
The most prominent issue in the news is climate change.
Companies are under pressure to reduce their contribution to climate change by reducing greenhouse gas emissions and to demonstrate that their business models are robust enough to cope with effects of climate change.
One industry leading the way is the property sector, which has gone from a ‘wouldn’t it be nice to have a green 5-star building’ to companies thinking about which locations are at increased risk of future flooding?
They are researching higher-quality systems that can handle increased heat and humidity and provide better ventilation in buildings. The property sector is thinking about these things today so companies can continue to be successful in a future hotter climate.
Asia Green Real Estate is focusing on sustainable residential and office investment opportunities in Asia’s fastest growing metropolises.
In Australia, Prologis, one of the world’s largest industrial real estate managers realised that their warehouse rooftops are great places for solar panels. Energy is now one of the company’s three big growth pillars.
In 2021, BHP divested its gas and oil production to free capital to put into commodities such as copper, nickel and potash. In February 2026, BHP announced a 22% growth in profit, driven largely by copper that is essential in the electrification process.
However, businesses face a broader set of sustainability-related challenges.
Threats to endangered species, like Australia’s koala population, have raised the profile of biodiversity.
Air and water pollution directly impact public health, and business performance. The increasing difficulty of exporting materials for recycling has made waste reduction urgent.
Why does sustainability matter to Australian business?
The onus on Australian businesses in terms of required reporting around sustainability is increasing.
Many companies and organisations are wrangling with the mechanics of pulling data together and reporting that data accurately.
This reporting process introduces greater transparency. It becomes easier for outsiders to compare sustainability performance and, internally, it becomes easier for companies to benchmark themselves.
Sustainability also matters to business because it matters to stakeholders.
Many employees, particularly those entering the job market, want to work for a company with a positive approach to sustainability.
Companies are finding customers want more sustainable products, while industries perceived as unsustainable are finding it harder to attract financing.
Shareholders are raising their expectations through organisations like the Climate Action 100+ – an international initiative of 700+ institutional investors that manage over US$68 trillion – or the Investor Group on Climate Change in Australia and New Zealand.
Sustainability affects revenue, cost, risk and impact.
Companies that respond well can improve their outcomes. Those that don’t risk falling behind.
What is Australian business doing?
Most global and Australian companies, have started with the functions where the chance to reduce risk or cost is most obvious.
This has generated environmental and financial payoffs.
But, a review of over 50 research articles in top academic journals, makes it clear that the biggest financial payoff comes when sustainability grows beyond discrete efforts in functional areas – like procurement – and becomes embedded in the firm’s strategy.
Fewer companies have made that leap.
Why is the sustainability of business so important?
A sustainable society requires business engagement and leadership.
Only business has the collective technological, organisational and financial capital needed. But the actions of individual businesses matter, too.
Every time a company commits to reducing landfill waste or greenhouse gas emissions, it reverberates throughout their supply chain.
What are the barriers to becoming more sustainable?
My research suggests that the main barriers are around value.
The leaders I work with want to contribute positively to communities and live in a sustainable world. However, they equally value their careers, their ability to create jobs and their commitment to shareholders.
To move forward, they need to understand the value that being more sustainable can generate for their firm.
They also need to be confident in their ability to successfully generate that value.
Managers need access to credible, global best practices and locally relevant insights.
Finding the right skills base
The greatest challenge, however, is the range of skills required.
It requires integrating sustainability knowledge – often highly technical – with hard and soft business skills including finance, change management, leadership, strategy and innovation.
Because these fields have developed in isolation from each other, few individuals or organisations can bring together all necessary expertise.
Melbourne Professional Education (MPE) works with the University of Melbourne’s experts to equip professionals, industry leaders and government bodies with knowledge and skills to build sustainability knowledge and to address strategic challenges in industry and government.
What opportunities do disruptions and crises give us to change?
Firms have also faced another barrier – the same inertia that makes any large-scale organisational change difficult.
The disruption of COVID-19 opened a window for firms to jump-start their sustainability efforts.
Organisational change literature highlights the importance of ‘unfreezing’ current practices before trying to transition to new practices. Most sustainability efforts effectively start at the second stage, trying to transition to new practices while the old practices are still frozen in place.
But since the pandemic, old ways of working and planning have been thoroughly disrupted, creating an opening for companies to adopt more sustainable practices.
Business and government leaders ranging from Atlassian co-founder, Mike Cannon-Brookes, to Matt Kean, former New South Wales Minister for Energy and Environment and current Chair of the Climate Change Authority, called for a ‘Green Recovery’ post-COVID-19.
If we combine these large-scale initiatives with elevating the practice of sustainability across industries, we could improve the financial and social performance of Australian business for everyone’s benefit.
MPE has the expert knowledge to help organisations build the skills and strategies they need as they transition to more sustainable practices.
This is not the time to stop pushing ahead. The difference between companies that have a good strategy and succeed – and those that don’t – will be whether they are truly integrating sustainability into strategic thinking, and not regarding it as something separate.
Professor Glenn Hoetker: MBS Foundation Chair of Sustainability and Business and Professor of Strategy, Melbourne Business School, University of Melbourne.