What is sustainability, and what are the implications for businesses?
Sustainability has become an essential component of any organisation, as it influences customer choices, employee support, and investment decisions. Business leaders that integrate sustainability and ESG issues throughout value chains and business models are preparing their organisations for long-term success and resilience.
Sustainability may help firms develop and thrive while also tackling environmental and societal concerns that threaten their long-term viability.
Principles and Concepts
What does "sustainability" mean?
We may finally refer to sustainability as "the process of living within the limits of available physical, natural and social resources in ways that allow the living systems in which humans are embedded to thrive in perpetuity."
Learn more about sustainability here.
Founding Principles: the Triple Bottom Line
Sustainability is a broad term that can be used by governments, businesses, and individuals to guide strategic decisions, actions, and behaviour.
Sustainability encompasses more than simply nature. The three pillars to consider are the environment, society, and the economy. These are informal associations with the environment, people, and profits.
Each pillar addresses a number of challenges that help businesses envisage and develop their sustainability strategy, as well as the goals and targets they wish to attain.
The social pillar of sustainability (or People)
This pillar or component of sustainability focusses on fostering a responsible community and treating employees fairly while safeguarding and promoting their well-being, inclusion, and prosperity.
Everyone with enough resources can achieve universal human rights and necessities in order to maintain their families and communities healthy and secure.
Key factors for the social pillar are:
Human Rights and Social Justice
Health and Safety
Standard of Living
Education and Equal Opportunity
Supporting Communities
Environmental pillar of sustainability (or planet)
Environmental sustainability emphasises the promotion and preservation of natural ecosystems, responsible resource production and use, and waste management systems. It focusses on environmental integrity.
The key factors for the environmental component are:
Climate change.
Natural resources, including water and land.
Biodiversity
Pollution and Waste Management
Economic component of sustainability (profit)
Invest for the long term to build a robust economy.
Human communities around the world can keep their independence while also having access to the financial and other resources they require to meet their requirements. Economic systems remain intact, and activities are available to all.
Key factors for the economic pillar are:
Employment and economic growth
Investments and R&D
Wealth Creation
Governance
Risk management
When these three pillars work together, they produce a thriving sustainable economy that respects the people involved and incorporates social equality while protecting the environment.
Sustainability sits precisely in the middle of the three pillars' circles.
Surrounding the core of sustainability, each pillar crosses with another to stress specific concerns.
Social + Environment:
Environmental justice.
Natural resource stewardship
Locally and globally.
Economic and Social:
Business Ethics
Fair trade.
Worker rights
Environmental + Economic:
Energy Efficiency
Sustainable utilisation of natural resources
Repair and rejuvenate.
Underlying themes include systemic and long-term thinking.
Beginning a sustainable journey necessitates a rethinking of a company's or organization's vision, goals, and future ambitions. It advocates for the transition from short-term profit-oriented strategies to an economically, ecologically, and socially sustainable plan that aligns with both financial and non-financial objectives.
Short-termism is described as decision-makers' disproportionate emphasis on short-term aims at the expense of long-term ambitions. It can impair business competitiveness, increase systemic risk, and reduce the overall economy's long-term potential.
Organisations must use a "long-term" and systemic strategy when pursuing sustainability. It asks companies to be attentive and considerate of not only typical commercial issues like revenues, costs, and profits, but also the influence of their actions on the physical environment and future generations' well-being.
It also requires businesses to address the underlying causes of a problem rather than just the consequences. For example, an ambitious and robust sustainability approach will address deforestation by identifying core causes (such as meat overconsumption and the abuse of palm oil in manufactured goods), rather than simply investing in reforestation programs.
This requires businesses to have a vision for several decades and multiple stakeholders.
The United Nations Sustainable Development Goals and Agenda 2030 serve as specific examples of this long-term ambition.
The Paris Agreement, with its ultimate objective of keeping global warming well below 2°C, exemplifies the need for systemic and long-term thinking.
What implications does this have for businesses?
There are numerous techniques to describing firms' social and environmental objectives, including Corporate Social Responsibility (CSR), Environmental, Social, and Governance (ESG), and Creating Shared Value (CSV).
Corporate sustainability is the term used to describe sustainability in business. "Corporate sustainability" evolved as a component of corporate ethics in response to public concern about the long-term harm caused by unsustainable and non-ethnic economic systems and company methods.
One corporation cannot produce sustainable development on its own since sustainability concerns are huge and diverse, spanning geographies, demographics, economic sectors, and governance systems. Everyone must participate in this joint effort.
For any single company to become sustainable, its suppliers must innovate and choose cleaner, more socially responsible products and processes. It also need incentives and a consumer base eager to support their efforts.
Sustainability necessitates coordination, collaboration, innovation, invention, and reimagination.
What steps should businesses take to ensure sustainability?
Companies must figure out how to incorporate sustainability into their corporate DNA and achieve the correct balance between profitability and a positive social impact while minimising environmental harm.
They must always keep the three pillars of sustainability in mind when making strategic choices and conducting day-to-day operations.
In a very practical sense, businesses must:
Include sustainability in all of their decisions and incorporate it into their company's DNA and culture.
Work with their suppliers and educate their customers to ensure that their products are used and disposed of ethically.
Contact other important stakeholders to ensure that they accept responsibility for any negative effects on the community and environment. where a result, they must make improvements to decrease them to a minimum and offer compensation where needed.
What are the advantages for companies?
Embedding sustainability in a company's business model and throughout the value chain appears difficult and costly. That is, until we recognise the multidimensional and long-term value and returns generated by sustainable investments.
Reduce expenses. Maximise returns.
To reduce environmental impact, businesses should consider efficiency methods at all stages of operations, including energy, raw materials, and manufacturing. Many businesses are also researching and implementing circular economy solutions to assist preserve, reduce, reuse, and recycle materials.
Changing habits, lowering waste and energy consumption, introducing more cost-effective systems, and embedding sustainability throughout supply chains demonstrate that the transition to sustainability is accompanied by cost savings and operational efficiency.
Attract Customers
Today's customers are more ecologically sensitive than ever before.
They consider a company's social and environmental impact when determining whether to buy its products or services, and they are more inclined to do so from companies that use sustainable practices.
According to Deloitte UK's most recent poll on sustainability and consumer behaviour, 28% of consumers have stopped purchasing specific products owing to ethical or environmental concerns. It even rises to 45% among Generation Z (those born after 1997).
This trend will continue to grow in the coming years, and businesses must adapt to match new consumer expectations.
Improve staff retention and recruiting rates.
People's needs for purpose and accountability in the future are always increasing, particularly among younger generations. They don't want to be associated with corporations involved in environmental disasters and social welfare problems.
Companies who do not demonstrate an interest in addressing the social and environmental effect of their operations will be excluded.
Improved brand image.
Companies are increasingly susceptible to public scrutiny as media sources proliferate and social media grows in influence. Unethical activities and irresponsible operations are becoming increasingly difficult to disguise. Corporate companies are under constant pressure to project a positive image of their environmental, social, and ethical responsibilities.
Ensure long-term survival.
Integrating sustainable innovation, inclusive development, and social and environmental impact into corporate strategy today makes genuine commercial sense for companies worldwide in terms of long-term resilience and survival.
Professors from Harvard Business School and London Business School conducted a survey of organisations that had voluntarily adopted sustainability strategies by 1993.
Businesses that adopted stronger sustainability strategies beat those that did not during the next 18 years, both in terms of stock market and accounting performance.
Assist in meeting regulatory requirements.
With all of the talk about climate change, resource availability and allocation, and environmental effect, it's no surprise that nations and international organisations are passing legislation to protect the environment and human rights.
Integrating sustainability into business plans will make it easier for enterprises to respond quickly to changing requirements.
attract investors and funding.
Investors are increasingly scrutinising business sustainability efforts, both in terms of general practices and shareholder disclosure.
According to the US SIF Foundation's 2020 Report on US Sustainable and Impact Investing Trends, as of the end of 2019, one in every three dollars under professional management in the United States was invested using sustainable, responsible, and impact (SRI) techniques. A 42% increase over the amount identified two years ago.
Create value and lead by example.
Companies that pioneer the ecological and social transition and demonstrate that a new style of sustainable corporate development is achievable and appealing will add immeasurable value to society, individuals, and the environment.
They will set an example and be recognised for their dedication.
Drive innovation.
Companies must think imaginatively if they want to meet their customers' demands. Innovative thinking can lead to more sustainable and cost-effective methods.