3 Pillars of Corporate Sustainability
Sustainability is often defined as meeting the requirement of the present without compromising the needs of the future. In the Corporate world, there is the constant use of the word 'Sustainability'. Corporate sustainability has become a concern for investors who seek economic profits and the distribution of social goods. While Corporate sustainability refers to company growth and profitability, it also requires corporations to match the societal goals, relating to sustainable development: environmental protection, economic growth, and lesser negative spillovers. After many mainstream corporates have taken corporate sustainability as a key priority, other corporations are under pressure to implement and deliver goods and services in a sustainable process. This begs us to know more.
The three main pillars of corporate sustainability are: environmental, economic, and social. Informally referred to as planet, profit, and people.
Companies nowadays are focusing on reducing carbon emissions, waste packaging, and wastage of water. Companies have realized the social impact on the planet can also have a financial effect on the company. Reducing the material used for packaging can reduce the overall costs of the firm and reduce the cost of production. For example, IKEA has been following sustainability throughout its operations. IKEA has more than 700,000 solar panels powering their stores, and plan on selling them to customers in the UK. Solar panels help in reducing carbon footprints, reducing water usage, and helping slow down climate change.
Businesses that have obvious impacts on the environment, such as mining and coal or food production. The main challenge faced by the environment pillar is that the impact of the businesses is not fully costed, which means there are always some negative externalities that don't meet the eye. Waste is not easy to calculate in general, this is where benchmarking comes in place to quantify those externalities, so the reduction of the wastage and the increase in the wastage can be monitored or tracked.
This pillar of sustainability is where most businesses claim to be on firm grounds. A business needs to be profitable to be sustainable. But getting profits at any cost is not the purpose of the economic pillar. Two things come under this: proper governance and risk management. This pillar may also be referred to as the governance pillar as it refers to good governance. This means that the boards to directors and management lean toward the shareholders' interests and the company's community, value chains, and end-user customers.
Keeping in mind governance, investors may want to know that the company uses accurate and transparent accounting methods, and the stakeholders are given equal opportunities to vote on important issues. They also require that the companies avoid conflict of interest in their board members, and the course doesn't engage in any illegal activities.
The economic pillar provides a counterbalance to extreme measures that corporations are forced to take, such as complete abandonment of fossil fuels or chemicals that harm the environment instantly rather than phasing in change.
This pillar requires the approval and support of its employees in the business. The goal is to secure and maintain this support. But eventually, it comes down to treating the employees fairly and providing them a good atmosphere to work in, both locally and globally.
On the employees' side, companies focus on retention and engagement strategies, including benefits like better maternity and paternity leaves, flexible hours, and a lot of learning opportunities. Companies also do fundraisers, sponsorship, and investing in small local projects to show community engagement.
On a global scale, businesses need to know - is child labor going into the product production? Is the working condition safe? Is the labor paid fairly? There have been many tragedies related to the questions mentioned above, like the Bangladesh factory collapse.
The main question is whether sustainability is an advantage for a company. Practically, most businesses have taken sustainability into account and have included more community engagement. Sustainability provides a larger purpose for the new upcoming businesses that strive to reach goals like efficiency, sustainable growth, stakeholder value.
A sustainability strategy that is publicly shared can have a lot of benefits that can be hard to quantify, and it gives a good reputation. Some companies cannot touch the points of every pillar, however, there isn't a market consequence faced yet.
Sustainability is here to stay. For some companies, sustainability represents an opportunity to show diverse efforts and gain public credit. For other companies, sustainability means answering a hard question related to their business and how does it impact society.
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