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Consider first this definition from Stefan Schaltegger’s Encyclopedia of Corporate Social Responsibility: ‘The company has to realise a voluntary, or mainly voluntary, activity to contribute to the solution of societal or environmental problems. These activities are intended for society or the natural environment, not just a reaction to legal enforcement or regulations.’
Some of the global issues sustainable business strategies may focus on or address include the following:
Businesses can operate sustainably in many ways, minimising their impact on the environment while still being profitable. Some sustainable business practices include using renewable energy sources, recycling and upcycling materials, and using natural resources efficiently.
A sustainable business can bring many benefits, including a better brand image, improved employee recruiting and retention, compliance with regulations and increased profits.
By implementing sustainable business practices, businesses can help the environment and improve their bottom line. Sustainable businesses often save money by reducing waste, using less energy, and having a smaller environmental footprint. Over the past five years in the UK, there has been a shift in consumer behaviour towards buying more sustainable products. More consumers are looking to support sustainable companies doing their part to protect the environment.
Businesses must understand that the priorities of their customers and employees are changing. Millennials and Gen Z have grown up with more access to information than ever, thus understanding the impact businesses can have on the environment. As such, customers and employees from these generations are more likely to trust companies that have proven their sustainability commitment.
Corporate sustainability relates to a corporation's ability to maintain the environment around them. Some corporations take this one step further by improving the surrounding environment, but most businesses don’t run before they can walk. With corporate sustainability, it’s important to note that environmental sustainability is just one factor. Sustainability reporting is crucial here, as it ensures transparency and accountability in tracking and communicating sustainability efforts.
According to a study done by YouGov, Gen Z’s in the UK are 1.4 times more likely to pay a premium for eco-friendly products. And by 2030, it is expected that Gen Z and Millennials will share 39% of the total retail spending in the UK, so these generations' priorities must be taken seriously.
The three pillars of sustainability are environmental care, social well-being, and economic growth.
The most referenced pillar is the environmental one, which includes climate change, pollution, and natural resource management. Businesses can be environmentally sustainable by, for example, sourcing sustainable materials and implementing water-efficiency rules at work. The downside of the environmental pillar is that it can take time to quantify the impact. This could be because very few companies have transparent supply chains, so whilst one company may be keeping their carbon footprint down, other companies in its chain may not be as focused on this goal.
The social pillar includes poverty, inequality, and social injustice. This pillar is closely linked with the Social License to Operate (SLO), which is the perception of the business through the eyes of the people who come into contact with it. The SLO will also evolve with the business as it develops. This second pillar relies on support from employees, stakeholders and community members. To improve within this pillar, companies can ensure their employees are paid a fair living wage, communicate with shareholders, and give back to the local community.
The economic pillar concerns profit, job creation, economic growth, and financial stability. Leaders can become strong forces for economic good in their companies in many ways. They can appoint finance directors that focus on transparent, straightforward accounting methods, and they can reject donations and investments from parties that have harmful or criminal interests.
Sustainable business practices can help organisations save money in the long run, and they may be expensive to set up or implement. And, of course, the bigger the company, the more costly it can be. Corporate leaders may encounter barriers from stakeholders because it is challenging to balance the needs of multiple people at once.
Another consideration is the risks associated with greenwashing, which is “conveying a false impression or misleading information about how a company’s products are environmentally sound.” There may be a tendency to want to fast-track sustainability or overshadow harmful practices with a list of positive achievements. Due to the nature of greenwashing, comparisons aren’t necessarily accurate. It’s essential to be vigilant when it comes to quantifying the corporate sustainability of other organisations. Here, sustainability reporting plays a critical role in ensuring accurate and honest communication of sustainability efforts.
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