What is sustainability and what are its implications for companies

Sustainability has become a vital part of any organisation, as it has a bearing on customer choices, employee support, and investment decisions. Business leaders integrating sustainability and ESG considerations across value chains and business model are setting up their companies for long-term success and resilience.

Sustainability can help businesses innovate and grow while also addressing environmental and societal challenges that pose significant risks to the future existence of businesses.

Principles and concepts

What does sustainability mean?

We can eventually define 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 the concept of sustainability here.

Founding principles: the triple bottom line

Sustainability is a generic concept that can be applied by: governments, companies, and individuals to inform their strategic decisions, actions and behaviour.

Sustainability is more than just nature. There are three pillars to consider: the environment, society, and economy. These are informally associated with the planet, people and profits.

Each pillar encompasses several issues that guide organisations to envision and formulate their sustainability strategy as well as the goals and targets they want to achieve.

Social pillar of sustainability (or People)

This pillar or dimension of sustainability focuses on creating and nurturing a responsible community, fair treatment of employees while protecting and promoting their well being, inclusion and prosperity.

Universal human rights and necessities are attainable by everyone with adequate resources to keep their families and communities healthy and secure.

Key considerations for the social pillar include:

• Human rights and social justice
• Health and safety
• Standard of living
• Education and equal opportunity
• Supporting communities

Environment pillar of sustainability (or Planet)

The environmental dimensions of sustainability emphasise on promoting and preserving natural ecosystems, responsible production and consumption of resources and waste management systems. It focuses on ecological integrity.

Key considerations for the environmental pillar include:

• Climate change
• Natural resources (water, land…)
• Biodiversity
• Pollution and Waste management

Economic pillar of sustainability (or Profit)

Invest in the long term to create a resilient economy

Human communities across the globe can maintain their independence and have access to the resources that they require, financial and other, to meet their needs. Economic systems are intact and activities are available to everyone.

Key considerations for the economic pillar include:

• Jobs and economic growth
• Investments and Research & Development
• Wealth creation
• Governance
• Risks management

Coming together, those 3 pillars create a viable sustainable economy, respecting the people involved in the process and including social equity while preserving the environment.

Sustainability seats perfectly in the center of the combination of the 3 pillars’ spheres.

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‍Surrounding the core of sustainability, each pillar intersects with another pillar to emphasise specific topics:

Social + Environmental: 

• Environmental justice
• Natural resources stewardship
• Locally and globally

Economic + Social:

• Business ethics
• Fair Trade
• Workers rights

Environmental + Economic:

• Energy efficiency
• Sustainable use of natural resources
• Restore and regenerate

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Underlying principles: systemic and long-term thinking

Embarking on a sustainable journey requires reconsideration of a business or organisation's vision, goals and objectives for the future. It calls for transforming short-term profit-oriented strategies to an economically-environmentally and socially sustainable strategy that aligns with the financial and non-financial goals.

Short-termism is defined as the excessive focus of decision-makers on short-term goals at the expense of longer-term objectives. It can deteriorate firms’ competitiveness, increase systemic risk, and reduce the long-term potential of the entire economy.

In a sustainability approach, organisations must adopt a “long-term” and a systemic perspective. It requires them to be mindful and considerate of not only the traditional business concerns, such as revenues, costs, and profits but also the impact of their actions on the physical environment and the well-being of future generations.

It also requires companies to address the root causes of an issue and not just its consequences. For instance, an ambitious and robust sustainability approach will address the deforestation issue by identifying its root causes (such as overconsumption of meat, overuse of palm oil in manufactured goods) and not just by investing in reforestation projects.

This forces companies to have a vision over several decades and multiple stakeholders.

A concrete application of this long-term vision is the UN Sustainable Development Goals and the Agenda 2030.

The Paris Agreement and its ultimate goal of limiting global warming to well below 2°C is also an example of the necessary systemic and long-term thinking.

Implications for companies

How does it translate for companies?

Many approaches exist to describe companies’ social and environmental initiatives, like Corporate Social Responsibility (CSR), Environmental, Social, and Governance (ESG), or Creating Shared Value (CSV).

Sustainability applies to businesses as corporate sustainability. "Corporate sustainability" emerged as a component of corporate ethics in response to public discontent over the long-term damage caused by unsustainable and non-ethnic economic systems and business strategies.

One company alone cannot create sustainable development, because sustainability issues are vast, multidimensional, and cut across geographies, demographies, sectors of the economy, and governance systems. Everyone needs to be involved, it must be a collective effort.

For any single company to become sustainable, it needs suppliers to innovate, opt for cleaner and socially responsible products and processes. It also needs incentives and customer base willing to support their efforts.

Sustainability requires coordination, collaboration, innovation, invention, and re-imagination.

How should companies take sustainability into account?

Companies need to figure out how to embed sustainability into their corporate DNA and strike the right balance between being profitable and having a positive social impact and the minimum environmental impact.

They must always consider the three pillars of sustainability in their strategic decisions and their daily operations.

In a very practical way, companies must:

• Include sustainability in all their decisions and make it part of their company DNA and culture
• Work with their supplier and educate their customers, to make sure they use and dispose of their products responsibly
• Reach out to other key stakeholders to ensure that they take responsibility for any negative impacts on the community and the environment. Therefore, they must implement changes to reduce them to the minimum and provide compensation if necessary.

What are the benefits for companies?

Embedding sustainability in a firm's business model and across the value chain seems tough and expensive to achieve. That is, until we acknowledge the multidimensional and long-term value created and returns accrued from sustainable investments.

Minimise costs. Maximise returns.

Reducing environmental footprint often means looking at efficiency measures in every aspect and at every stage of the business operations (energy, raw materials, factories…). Many companies are also exploring and opting for circular economy solutions that help conserve, reduce, reuse and recycle resources.

Changing habits, reducing waste, energy consumption, implementing more cost-effective systems, and embedding sustainability across supply chains show that transitioning toward sustainability goes hand in hand with cost savings and operational efficiency.

Attract customers

Today’s consumers are more environmentally-conscious than ever before.

They consider a company’s social and environmental impact when deciding whether to purchase their goods or services, and they are more likely to purchase from companies that practice sustainable habits.

According to Deloitte UK’s latest survey on sustainability and consumer behavior, 28% of consumers have stopped buying certain products due to ethical or environmental concerns. It even goes up to 45% among the generation Z (people born after 1997).

This trend will keep on increasing years after years and companies need to meet consumers’ new expectations.

Improve employee retention and recruitment rate

People’s needs for meaning and accountability toward the future increase constantly, especially among younger generations. They do not want to be linked to companies implicated in ecological disasters and social welfare scandals.

Companies that are not showing any interest in acting on the social and environmental impact of their activity will be set aside.

Improved brand image 

The proliferation of media outlets and the power of social media means that companies are increasingly subjected to public scrutiny. It is more and more difficult to hide unethical practices and irresponsible operations. Corporate entities are now under constant pressure to demonstrate a positive image of their environmental, social, and ethical responsibility.

Ensure long-term survival

For organisations throughout the world, integrating sustainable innovation, inclusive growth, as well as social and environmental impact into their corporate strategy, now makes real business sense in the long-term company resilience and survival.

A study by professors at Harvard Business School and London Business School tracked companies that voluntarily adopted sustainability policies by 1993.

Compared to businesses that did not adopt many sustainability policies, the more sustainable ones significantly outperformed over the following 18 years from both a stock market and accounting perspective.

Help comply with regulations

With all the discussion regarding climate change, resources availability and allocation, and environmental impact, it’s no surprise that states and international organisations are enacting regulations to protect the environment and human rights.

Integrating sustainability will ease companies’ business strategies to meet changing regulations promptly.

Attract investors and funds

Investors are increasingly scrutinising corporate sustainability efforts, both in terms of overall practices and shareholder disclosure.

According to the US SIF Foundation’s 2020 Report on US Sustainable and Impact Investing Trends, as of year-end 2019, one out of every three dollars under professional management in the U.S. was invested based on what’s known as sustainable, responsible and impact (SRI) strategies. A 42% increase from the amount identified two years prior.

Create value and lead by example

Companies leading the ecological and social transition and showing that a new type of sustainable business development is feasible and attractive will create inestimable value to the society, the people, and the environment.

They will lead by example and will be recognised for their commitment.

Drive innovation

Companies need to think creatively if they want to meet their customers' needs. Such out-of-the-box thinking can lead to more sustainable and less costly practices.

To conclude...

The more a company cares about society, the environment, and its employees, the more successful it will be in the long run. Start implementing a sustainability policy with little steps, and scale up.

And for that, Apiday can help!

With the support of our experts, you can benefit from a custom strategy that fits your company's unique goals and needs.

We’ll get you through a materiality assessment and identify where your energy should be dedicated, with a step-by-step sustainability roadmap and tailored suggestions.

Start making a positive impact with Apiday - give it a try now! 🌿