Corporate Sustainability

Many corporations have mentioned sustainability as the key to moving forward while reducing environmental footprints and accomplishing other objectives to benefit the society. The concept of corporate sustainability serves as a platform to maintain honest and transparent accounting practices and regulatory compliance via its three pillars when it comes to sustainable investing- environmental, social responsibilities and governance.

The environmental pillar is the one that often gets the most attention i.e most companies toady are oriented towards reducing their packaging waste, water usage and other ways that the environment could be getting damaged. The best part about such practices is that it also has an added financial benefit to it more often than not. For example, reducing the usage of packaging materials implies at lower spending, and improved fuel efficiency also helps with the organisation’s budget. This pillar includes strategies that are implemented with the intention of eliminating and offsetting greenhouse gas emissions, using green energy, recycling or reusing in order to better manage waste, eliminate toxic hazards as well as reducing carbon footprint throughout the value chain.

When it comes to the environmental pillar, benchmarking is essential. Benchmarking comes in to quantify externalities (factors that are not reflected in consumer prices meaning the business’s impact isn’t fully costed). By benchmarking the progress in reducing externalities can be tracked and reported in an efficient way.

However one must keep in mind that corporate sustainability is more than just about safeguarding the environment (despite it being one of the core concerns in this approach).

The Social Pillar

The social pillar ties back into the concept of social license. A sustainable business should include practices that promote health, well-being and safety of employees thereby helping to have the support and approval of its stakeholders, employees and the community it operates in by treating employees fairly and being a good neighbour and community member, both locally and globally.

The Economic Pillar

To be sustainable, a business must be profitable without trumping the other two pillars. Activities that fit under the economic pillar include compliance, proper governance, and risk management to ensure a long-term positive impact and higher chances of survival.

Sometimes, this pillar is referred to as the governance pillar, referring to good corporate governance i.e the boards of directors and management align with shareholders' interests as well as that of the company's community, value chains, and end-user customers.

Investors may want to know that a company uses accurate and transparent accounting methods, and that stockholders are given an opportunity to vote on important issues when it comes to governance and may also want assurances that companies avoid conflicts of interest in their choice of board members. In such cases, organisations must not use political contributions to obtain unduly favourable treatment and steer away from engaging in illegal practices.

The economic pillar provides a counterweight to extreme measures that corporations are sometimes pushed to adopt, such as reducing costs by using less plastic in product packaging or abandoning fossil fuels or chemical fertilizers instantly rather than phasing in changes.

The main question for investors and executives is whether or not sustainability is an advantage for a company. Given the challenges our world faces, a focus on social and environmental impacts ensures businesses can create long-term value and corporate sustainability helps mitigate risks, build brand reputation, increase revenue, reduce costs and attract investment; thereby making it an extremely helpful practice to be implemented. Also, a key factor to keep in mind is that a business that engages in sustainability practices is securing itself a place in the future economy. Sustainability provides a larger purpose and some new deliverables for companies to strive for and helps them renew their commitments to basic goals like efficiency, sustainable growth, and shareholder value.

The trend seems to be making sustainability and a public commitment to its basic business practices, much like compliance is for publicly traded companies. A few additional benefits apart from serving the environment and the community is that these practices help organisations in the long term by adding policies that may potentially increase the disposable income of potential customers and result in more people buying the products or services.

All in all, corporate sustainability requires accountability at all levels while trying to have the most sustainable approach that keeps the goodwill of not just the monetary profits incurred by the organisation but the overall benefits reaped by even the people in and around it.In case of any query, do leave a comment below!