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Businesses have a significant impact on the people and communities they serve. They also affect the environment, as they use resources and generate waste.
Corporate sustainability is about making this impact as positive as it can be—not just for the good of the planet but also for strategic business results. If you are new to this concept, this guide is for you. Here’s how to get started with corporate sustainability.
The world is at a crossroads. If we continue “business as usual,” we may damage the environment to a point of no return. It’s our responsibility to protect and preserve natural resources for future generations.
That’s one side of the coin. The other is more strategic.
Corporate sustainability is quickly becoming a business imperative. Companies that hesitate to adopt sustainable practices risk falling out of favor with investors and consumers.
For example, almost three in four Gen-Z consumers are ready to pay more for sustainable products. In addition, 85% of investors consider environmental, social, and governance (ESG) factors in their decision-making, and 91% of banks track the ESG performance of investments.
Let’s dig a little deeper into the three core principles or pillars of corporate sustainability —the ESG factors mentioned above. These elements come together to give us a framework for pursuing, measuring, and benchmarking corporate sustainability.
The environmental aspect of corporate sustainability aims to reduce or eliminate the negative effect a company has on the natural environment. Goals might include:
- Cutting carbon emissions and pollution
- Transitioning to green and renewable energy sources like solar power
- Reducing material waste and recycling
- Conserving water
The social pillar is about people—how they are paid, treated, and valued. It encompasses things like:
- Labor practices and compensation
- Diversity and inclusion initiatives
- Human rights
Finally, the governance principle looks at a business's operational workflows and policies, as well as the leadership team. Outcomes might include:
- Transparent business practices that protect against malicious or deceptive behavior
- Executive compensation that is fair and proportionate
- Strong shareholder rights
Investing in corporate sustainability can pay dividends for companies and the people they serve. Here are just some of the advantages:
Sustainability can improve operating profits by 60% or more. It also lifts employee productivity, which further contributes to cost savings. As an example, one study found that companies with inclusive workplace cultures were 27% more profitable and 22% more productive
Today's customers and investors look for sustainability. Committing to an ESG strategy can bolster your reputation and help you stand out as a pioneer in your industry. It's about aligning your corporate values with your actions. Your company might say it values its people, but stakeholders and consumers want cold, hard proof of it. If you can give them that, they may be more likely to do business with you.
Regulations are evolving, with milestones like the Paris Climate Agreement pushing governments to do more to hold companies accountable. Already, countries like Sweden have introduced legally binding netzero targets. What's more, the EU's taxonomy regulates the environmental sustainability of all organizations within the EU—as well as any firms across the globe that do business with them. Becoming more sustainable helps you adhere to emerging rules and avoid fines or legal issues.
Initial Steps to Take
Small steps have big impacts. If you are interested in reaping the rewards but aren't sure where to start, consider these simple actions. They're perfect for sustainability for beginners.
You cannot improve if you don't know where you currently stand. The first step is to look at how your business performs across the three principles of corporate sustainability. It can be helpful to get a third party to audit your company—their objectivity can shed light on areas that need improvement
Sustainability is multifaceted and complex, which is why it's imperative to break down your big-picture vision into more manageable goals. Your goals should be measurable and time-bound. For example, you might set a goal to decrease your energy use by 10% in the next 12 months. Roadmap the specific actions your company would need to take to achieve these goals. It can be helpful to create a timeline of milestones.
Track Your Progress
As you move closer toward your goals, continuously track your performance. Select and measure meaningful metrics that give you a concrete idea of how well you are progressing. Use this data to adjust and tweak your approach.
Transparency is critical, so give stakeholders access to your efforts and results. This includes customers, investors, and the community.
Corporate sustainability is a powerful way to build a better business and a better world, but it doesn't have to be overwhelming. The small steps you take today can have a significant and far-reaching impact in the future. The best thing you can do is start. If you'd like guidance on your journey, please reach out to us today.
