Know everything about corporate sustainability and expand your knowledge base through this interactive blog.
Indeed, business organizations exist for a profit motive. It is the surplus that keeps the corporate running and expanding. But in recent times there has been a major shift in this mindset. Not only governments and societies but also stakeholders now want the corporates to do business using the best business practices. They must be conscious of the people as well as the environment in which they operate.
Let us study deeply what corporate sustainability means and whether it is the best corporate strategy.
What Is the Need?
As per the Global Risks Report issued by the World Economic Forum, several critical risks are manifesting in the economy. From environmental risks, such as global warming, and climate action failure to societal risks, such as deepening water crisis, pandemics, and infectious diseases – All these risks are among the top threats that are jeopardizing human lives.
“Corporates nowadays do not live only to return dividends to their stakeholders. They have a greater responsibility towards society and of course the environment.
They need to be sustainable in their operations and give due respect to the climate and people.”, said Jennifer Alston, a renowned business coach currently residing in the Greater Toronto Area.
This led to the development of the concept of corporate sustainability, which prompts the corporates to create an impact for good and shift from their objective of earning profit solely.
What Is Corporate Sustainability?
To understand the meaning of this term precisely, let us first discuss what “sustainability” means. It refers to the societal good, wherein natural resources are used judiciously so that enough of them are available to even for future generations.
Sustainability in a broader sense is limited not only to natural resources but also includes social and economic resources. The corporates that are influenced by the concept of sustainability are often able to make business decisions that are in line with their environmental and societal goals.
Now coming back to corporate sustainability, it represents the ideology wherein the business organizations are not only running after the economic profits, instead, they wish to create an impact on society through their effective and sustainable business policies.
It is based on three pillars. These are:
|a) Since the industrialization boom, the environment has always remained depleted.
b) Thus, several strategies have been adopted by the corporates to reduce the negative impact.
c) These strategies include:
– Usage of green energy
– Reducing carbon footprint and emission of greenhouse gases
– Dumping toxic materials and waste strategically
– Focusing on reusing/ recycling the materials
– Making the entire value chain more sustainable and feasible
|a) The organizations have recognized that the people existing in their operating environment are the assets and their needs must be catered to.
b) This prompts them to develop strategies for the protection of the interests of the customers, employees, and even the communities at large.
c) It includes the following:Focusing on employee wellbeing and securing their future
d) Developing a safety culture within the organization
e) Ensuring that the customers of the company have adequate information at their disposal so that they can use the products and services safely
|a) Not only short-term, but the corporates must also adopt measures that create a long-term impact
b) This helps in truly achieving the real objective of corporate sustainability. It includes:
– Making less usage of plastic, especially in packaging, as it is hard to decompose and is detrimental to the entire biodiversity.
– Installing solar panels and using solar energy for business needs.
In other words, relying less on traditional sources of energy and creating several green jobs, which can help in offsetting the negative impact on the environment
How Is It Different from Corporate Social Responsibility (CSR)?
Both terms – Corporate Sustainability and Corporate Social Responsibility seem similar and some Canadians might feel to use them interchangeably. However, they differ and have distinct meanings.
Till now, we discussed the definition, the need, and the three pillars of corporate sustainability. So, we assume that you have got a fair idea of what it is.
Now when we come to corporate social responsibility (CSR), it is a term broader in scope and makes the corporates socially accountable.
It is often perceived that CSR lacks vision and is more focused on what the organization has achieved in the past. That is to say, it looks backward. On the other hand, Corporate Sustainability is forward-looking and focuses on the future. It aims to create a sustainable strategy for the future.
Furthermore, CSR does not focus on the entire value chain and is limited only to the media, politicians, and other pressure groups. Whereas corporate sustainability considers everyone from employees to consumers to stakeholders.
Is Corporate Sustainability the Best Strategy?
Reputation and public image are of prime importance when it comes to selling products and services in a competitive market. If you own a business that is focused on improving the environment and is determined to create a positive impact on society, you will always be in the good books of the people and will be perceived as a “good company” that cares for the environment and the community.
Undoubtedly, this helps organizations in returning robust sales figures besides creating a positive impact.
Such companies are often able to create enough public goodwill that helps them in expanding their customer network with minimal marketing costs. Further, they even tend to enjoy a lower attrition rate from the employees. It also becomes easier to find and employ the best talents at competitive pay packages.
Thus, corporate sustainability is the best strategy due to its several benefits.
If you are an investor, you can always go for such companies and invest in them. On the other hand, if you are a business owner and are reluctant to implement corporate sustainability, think twice, as the world has moved beyond the sole profit-making approach.