By: Elizabeth Urbic
The belief that corporations can and should take an active role in achieving socially and environmentally sustainable solutions is growing, so much so that organizations that neglect to embed sustainable practices within their structure will suffer the consequences, sooner rather than later. Whether or not the concern for environmental impact is present in the corporate leadership of an organization, the interest in profit and business prosperity certainly is, and it is becoming increasingly true that consumers and talented employees place great value in sustainability. Sustainable practices are simply becoming good business.
Sustainability is a broad and continually developing construct that evades a universal definition. Most definitions draw upon the principles of the Brundtland Commission’s report, Our Common Future (Oxford: Oxford University Press, 1987):
Sustainability is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
As far as corporations are concerned, there is an emergence in defining sustainability based upon three pillars:
1. Economic sustainability is fundamental to financial success in that basic survival requires that expenditure not exceed income.
2. Social sustainability embodies the humanitarian context of business, relating to issues of poverty and income inequality; disease; access to health care, clean water, and sanitation; education; and broader issues associated with the business’ impact of globalization on economic development.
3. Environmental sustainability considers the impact of business on the quality and quantity of natural resources, the environment, global warming, ecological concerns, waste management, reductions in energy and resource use, alternative energy production, and improved pollution and emissions management.
This triple bottom line (TBL) structure is at the heart of corporate sustainability. Companies are reaching beyond the traditional measure of success–fiscal profit–and incorporating a focus on people and the planet into their definition as well. It is no longer acceptable to be purely money-driven; the modern business world pushes for social and environmental responsibility too. Only a company that produces according to a TBL is taking account of the full cost involved in doing business, and is able to be measured on a more meaningful level of performance. In that sense, the TBL is a manifestation of a balanced scorecard; behind it lies the fundamental principle that what you measure is what you get, because what you measure is what you are likely to pay attention to. And so, only when companies measure their social and environmental impact will we have socially and environmentally responsible organizations. The relationship between business and ethics is growing at a fascinating pace.
Whole Foods Market, Inc. founded a nonprofit called Whole Planet Foundation, through which they proactively participate in global sustainability initiatives.
As we’ve done business around the world, increasingly we feel we have the responsibility to help those communities in which we trade. –John Mackey, CEO
Aside from the ultimate global benefits, investing in sustainability has proven immediate results for the organization and has been linked to positive corporate performance, competitive advantage, customer loyalty, enhanced company image and goodwill, and improvements in employee recruitment and retention.
Once it is understood that sustainability is an important part of the modern corporate structure, the issue becomes how to embed it within the organization. A formidable challenge, the path to success is through acquiring new knowledge. As successful organizations are comprised of successful individuals, changing employee attitudes to appreciate that sustainability is a key driver of the company–not an optional add-on–is essential and requires investment in the employee learning process. The managerial mindset on the role, purpose, and impact of the corporation on society must shift. Some ways in which corporations can enable employees to learn about sustainability are through the implementation and/or restructuring of codes of conduct, impact measures, company policies, purchasing and supply chain initiatives, communications and dialogue, training and workshops, company visits, and volunteering opportunities.
Sustainability is changing the competitive landscape and reshaping the opportunities and threats that companies face. Business strategies are shifting more and more each day as sustainability takes its position as a global priority. Smart and responsible organizations must get on board–fast.
- Haugh, H. & Talwar, A. (2010). How Do Corporations Embed Sustainability Across the Organization, Academy of Management Learning & Education.
- The Economist (2009), Triple Bottom Line, http://www.economist.com/node/14301663