Corporate sustainability - a challenge for companies that want to improve their overall performance
Sustainability is a concept that means satisfying one's own needs, without compromising the ability of future generations to use the resources available to society today.
Publishing date: 11 November 2022
Sustainability does not only refer to natural resources, but also to social and economic ones, which are equally important for sustainable development. Although the term is relatively new, the concept has its roots in older movements and ideas of the past. Sustainable development is also a concern for companies that want to carry out activities without having a negative impact on the environment, the community and society as a whole. The sustainability of a business depends a lot on the economic and financial side, but also on other important aspects. Find out in this article more information about the concept of corporate sustainability.
Contents:
1. What does sustainable mean and what are the pillars of sustainable development?
1.1. What does sustainable mean?
1.2. What are the pillars of sustainable development?
2. Corporate sustainability - everything you need to know
2.4. What does the sustainability of a project mean?
2.5. Sustainable development goals
What does sustainable mean and what are the pillars of sustainable development?
Sustainability is a highly debated concept not only at the organizational level, but also at the individual level by ordinary consumers. In a broad sense, being sustainable refers to the ability to sustain a process continuously over time. In the context of business, this aims to prevent the depletion of resources so that they are available in the long term.
1.1. What does sustainable mean?
The most common definition of sustainability is that from the UN World Commission on Environment and Development, which says that sustainable development is achieved only if the needs of the present are met without compromising the ability of future generations to meet their own needs.
Another definition states that sustainability is a balance between ensuring environmental health, social equity and an efficient economy so as to create healthy and sustainable communities for the present and future.
Whatever the exact definition of sustainability, surely sustainable practices are important in a context where resources are limited. Therefore, they must be used conservatively and wisely, keeping in mind the long-term consequences of the ways of use.
In doing so, many businesses have committed to achieving sustainable goals: reducing their ecological footprint and conserving resources. Also, companies in the European Union must align themselves with environmental legislation, the entire transformation and implementation of the imposed measures can be a real challenge. Integrating sustainability into all activities is a complex process whose ultimate goal is to improve overall business performance.
1.2. What does sustainable mean?
Sustainability addresses both ecological and social and economic aspects, arguing that each contributes to sustainable prosperity. So, the concept can be divided into three pillars:
Environmental sustainability - refers to the maintenance of ecological integrity so that all environmental elements are in balance and natural resources are consumed at a rate that allows them to replenish themselves. It focuses on the conservation of biodiversity, without renouncing economic and social progress. Sustainable development of the environment involves protecting water, saving energy, limiting or eliminating the use of plastic materials, reducing waste and recycling, protecting flora and fauna.
Economic sustainability - refers to the ability to maintain the independence of human communities around the globe and access to the resources necessary to meet needs. Economic sustainability in business envisages a balanced approach so that organizations manage their resources effectively and responsibly generate long-term profits.
Social sustainability - is a concept that refers to universal human rights and access to sufficient resources, with the aim of strengthening the cohesion and stability of social communities.
2. Corporate sustainability - everything you need to know
It is no wonder that sustainability has now become a core principle, given the concerns facing the world, including pollution, global warming, social inequality or resource depletion. Therefore, the concept of corporate sustainability has become part of the economic, social and environmental agenda of a company, which requires finding innovative solutions and a responsible approach in the entire development strategy.
Financial sustainability is important in any business, having a positive impact on development. It involves certain approaches and strategies, with the aim of bringing value to companies, protecting and increasing financial resources, thus contributing to a better future and the well-being of the business.
Financial sustainability supports innovative solutions that responsibly manage the company's resources, ensuring an efficient cash-flow. A very good strategy in this sense is to attract funds or access sources of financing. Also, other important measures are the adoption of sustainable management policies, the development of transparent relationships with collaborators, investments in human resources and other strategies for increasing the profitability of a business.
All this is approached from a sustainable perspective, which implies a rational management of resources, the optimization of financial processes and the reduction of operational risks that will lead to performance. Financial sustainability is, therefore, an important aspect in any business, being implemented by all entrepreneurs who want a good operation and development of the company.
In the business context, sustainability does not only refer to the ecological side, being closely related to the economic side as well. Business sustainability is a vision that encourages businesses to find a balance between long-term benefits and immediate profits through ecological practices. This involves developing strategies to achieve this perfect balance between sustainability and the company's economic performance. Among the most important practices in this sense are:
- Reducing emissions;
- Reducing energy consumption;
- A smaller carbon footprint;
- Increasing packaging recycling;
- Promoting the use of recycled materials;
- Supplying products from organizations that practice fair trade;
- Responsible consumption awareness campaigns.
Companies have also set certain sustainability goals: waste collection, efficient packaging recycling solutions or a commitment to reduce global emissions by a certain percentage.
In addition to the social benefits that sustainability has for a company, there are also financial benefits for companies that successfully implement such strategies. Responsible use of resources improves long-term sustainability, and reducing waste and pollution, using more efficient lighting and plumbing helps businesses save money on utility bills.
Economic sustainability refers to a company's ability to continue its efficient operations over the long term. Thus, it must be able and have sufficient resources, workers and suitable consumers for its products, now and in the distant future.
Regardless of the size of the business or the sector in which it operates, adopting sustainable business practices will improve the bottom line. The initial costs of a sustainable business plan will be offset by reduced risks, positive brand image, environmental and health improvements, and the ability to meet a demand for green products and services.
Business plan sustainability involves developing a strategy to achieve financial, social and environmental stability goals. This plan is beneficial considering the impact a business has on the community and resources.
To improve sustainability performance, a well-crafted plan provides the first steps in this direction:
- Defining the company's vision, mission and values;
- Creation of a sustainability department within the company;
- Analyzing and evaluating current sustainability performance;
- Involvement of all staff;
- Planning, setting objectives and priorities;
- Implementing the plan, establishing and communicating new policies and practices;
- Track progress and measure results.
However, this plan is a general guideline as every industry and every business uses energy and resources differently. The minimization of waste and the reduction of carbon emissions can be mentioned as common objectives. A business's sustainability practices are also influenced by other factors such as customers, investors, consumer preferences, resource scarcity or project profitability.
2.4. What does the sustainability of a project mean?
An organization can also maintain its sustainability through feasible projects that can be successfully completed. An effective method is to implement small changes at first, then measure the results and move on to the next goals. Projects can target various areas such as energy efficiency and renewable energy, waste reduction through reuse and recycling, pollution prevention, sustainable practices in product manufacturing and packaging processes.
Some examples of sustainable projects are:
- Projects for the modernization of heating systems or for renewable energy installations such as solar panels;
- Projects to improve production processes in order to reduce waste and hazardous emissions;
- Projects for the purchase of ecological equipment.
Therefore, the existence of a sustainability plan is necessary for the success of a company and involves several steps in this regard:
- Identification of sustainability factors for the company;
- Understanding possible environmental initiatives within the company;
- Prioritizing sustainability initiatives that are aligned with the company's vision;
- Establishing specific and measurable objectives and deadlines;
- Track progress and results.
Sustainability is a relevant aspect in all fields of work. Procurement teams in various companies are always looking for opportunities to buy from sustainable sources and make the supply chain more efficient. Moreover, in most projects, sustainability remains just as significant and important, and is a fundamental component for improving sustainable practices and working methods. The concept of sustainable development can be incorporated into projects, taking into account finding a balance between the most important elements: the environment, society and the economy.
2.5. Sustainable development goals
Many companies are trying to integrate sustainability practices into their business models. To do this, they must first identify the weak points. For example, a firm might conclude that it generates too much waste. Therefore, the company could set an ambitious goal such as reducing the amount of waste it produces. Other sustainable development goals are reducing the carbon footprint on the environment and energy efficiency or sustainable procurement strategies. A final step would be to implement the strategy and measure its results.
By taking this step-by-step approach, business sustainability is more likely to be profitable. It does not make sense for a company to try to tackle all the objectives at the same time, because this will involve difficult tasks and a lot of difficulties. Instead, businesses can identify relevant goals that will make a valuable contribution to sustainability, which will mean much more.
An assessment carried out by a competent firm with business expertise, which provides the necessary support in developing a coherent sustainability strategy, can also be useful. Thus, companies can very well set clear and relevant goals without the risk of not meeting them and leading to financial and reputational damage.
Sustainability must be gradually integrated into a company's activities so as to improve the overall performance of the entire business. Only in this way can a business be considered sustainable, able to protect natural resources, support the community and provide a healthy workforce, while generating enough revenue to be efficient in the long term.
In conclusion, a business can be sustainable from the beginning, through a relevant business plan, or it can get involved along the way, by adopting measures and strategies to guide it throughout this process. Exploiting natural resources responsibly, developing a recycling plan or selective waste collection are just a few examples. The specialized help that companies can call on is a really beneficial solution to be able to more easily face the challenges that come with sustainable development.
*This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
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