Gone are the days in the corporate world when sustainability belonged to the sidelines. Instead of being a non-priority only paying attention to when the brand reputation needs a small bump, sustainability has become a critical business strategy.
In between the Intergovernmental Panel on Climate Change’s (IPCC) 2030 climate catastrophe deadline, the rise of ESG standards, and environmentally aware consumers – businesses no longer have a good reason to keep ignoring sustainability.
Enter corporate sustainability – a business approach wherein an organization fulfills the interests of its customers and stakeholders while also having a net positive impact on the environment, economy, and society. A corporate sustainability strategy is underlined by the responsible use of resources and making sure everyone involved in the business process is treated fairly.
A corporate sustainability strategy is what your business needs if it’s to survive and grow in today’s market.
Why corporate sustainability is critical for businesses
Around 85% of consumers today prefer brands that offer sustainable products and services. They’re also more likely to follow brands whose values align with theirs. Any business that wants to grow and survive would have to adapt to the environmentally aware consumer.
The ESG (Environmental, Social, and Governance) standard has also risen to the forefront of investor strategy. ESG ratings, which depend on a company’s sustainable practices, are used by investors to determine whether a company is socially responsible. And by extension, whether they should invest in them or not.
The three pillars of corporate sustainability
Sustainability has grown not only in importance but also in scope. Today, most discussions of sustainability are done with regard to three major aspects. Considering its three pillars, these aspects directly affect a company’s alignment with ESG standards.
Pillar 1 – Environmental
Despite expanding, sustainability is still mostly about the environment. The bulk of corporate sustainability strategies focuses on reducing a company’s carbon footprint. Moreover, the practices concerned with this pillar are often tied with increasing operational efficiency. Initiatives such as waste reduction and better resource management contribute to achieving lower operational costs and other positive financial impacts.
Fundamentally, an organization should ensure compliance with the environmental regulations put in place by the government. Much like how medical institutions need to follow HIPAA, businesses need to follow laws such as the Clean Water Act and Clean Air Act, at least in the US.
Pillar 2 – Social
Perhaps the most overlooked aspect of sustainability, the social pillar is all about people. Companies need to build and maintain a social license, despite it being somewhat ambiguous and difficult to measure. In a nutshell, having a social license means a company has the support of the people – employees, stakeholders, and the community it’s operating in. To be socially sustainable, a business needs to both avoid causing harm or any undesirable effect to the people and produce benefits to uplift the quality of life.
Internally, a business should always seek the best for its employees. A company should provide its employees things like proper pay, a safe workspace, a flexible working schedule, learning and development, and career opportunities.
Externally, a business should avoid getting involved in scandals and controversies, especially ones that directly affect communities. Defective products causing injury to consumers or any environmentally destructive practices can easily damage a company’s social license. Furthermore, a company should also ensure it’s contributing to building a better community either through the products and services it provides or by using its influence and financial power.
Pillar 3 – Economical
At face value, one might think a business will have no problems with the economical aspect. Businesses are built to generate revenue, after all. But in the context of sustainability, profit becomes a lot more complicated. An economically sustainable business needs to earn money without jeopardizing the two other pillars. This results in a challenging balancing act that never ends.
The economic pillar is the one most closely tied with corporate governance. Every business process involves money and properly managing these processes requires a working system of rules. A company with good governance should have goals that are aligned with the interests of stakeholders, customers, and the community.
Corporate sustainability practices to follow
1. Reduce energy consumption
The energy sector (including transport) is the largest contributor to greenhouse gas emissions at 73.2%. Needless to say, energy is a big deal in sustainability. By transforming business operations in a way that improves energy efficiency, a company will not only save money but also contribute significantly to worldwide efforts to reduce emissions. Activities tied with reducing energy consumption include offering remote work, using energy-efficient office equipment, and getting an energy audit.
2. Digitize business processes
Migrating as much of your business to a digital platform translates into a large boost in operational efficiency down the road. Communication via digital channels and fully electronic databases will significantly reduce the consumption of paper products while also optimizing the accessibility and exchange of information across the organization.
3. Work with non-profit organizations
Implementing corporate sustainability strategies can be a bit challenging, especially for the inexperienced. Fortunately, there are many non-profit organizations that are more than willing to help businesses get their initiatives off the ground. You can find a non-profit that belongs to your sphere of business or one that you’re interested in.
4. Educate and train your employees
One way to go above and beyond in your sustainability efforts is by nurturing a workforce that is willing and capable of making a change. Many people understand the importance of sustainability but are severely held back by their lack of knowledge. By educating your employees, you decrease the likelihood of your organization reverting to old, bad habits. This is also a great way of boosting employee morale and encouraging everyone to do their part. Educational activities may include in-house training, webinars, team-building events, and others.
5. Reevaluate your supply chain
A lot of things can feel out of your control with regard to sustainability, especially if you’re a large business. You can ensure the process of making your products is totally sustainable, but can you say the same for the materials you used to make them? How did the materials reach you? Was it through sustainable means? To answer these questions, you need to take a closer look at your entire supply chain. Doing so can reveal opportunities for sustainability that you otherwise wouldn’t be aware of.
Improving your supply chain should be guided by three things:
- material source,
- resource consumption,
- carbon emissions.
You should invest time in ensuring raw materials are sourced sustainably and the supplier complies with labor laws. You can optimize shipping routes and replace your packaging materials with more sustainable ones.
6. Use renewable energy
Using renewable energy is still considered an ambitious task, despite the price of wind and solar energy dropping significantly in the past decades. In addition, shifting from a traditional energy source to a renewable one can present a tough challenge depending on the size and nature of your business. That being said, if renewable energy proves to be feasible for your business, it will be well worth it in terms of emissions reduction and cost-effectiveness.
7. Buy RECs or carbon offsets
The purchase of Renewable Energy Certificates (RECs) and carbon offsets are heavily criticized but when done right, they present an opportunity to make a positive impact on the environment and communities. RECs are proof that your business is run using clean energy while carbon offsets are a way to cancel out your emissions by investing in a green project elsewhere. The practice of buying RECs and offsets isn’t ideal in the bigger picture, but they allow companies to make immediate contributions while working towards long-term sustainability goals.
If you do commit to buying RECs and offsets, make sure you’re doing it right and cover all your bases. Otherwise, you would be wasting your money and potentially cause harm instead.
Businesses don’t have a shortage of ideas for corporate sustainability. In between the three pillars, you won’t find it hard to find practices that best suit your company. The real challenge in corporate sustainability is consistently balancing the three pillars. It feels daunting, but sustainability isn’t supposed to be a walk in the park. It requires consistency and an eagerness to truly contribute.