Corporate sustainability explained

Corporate sustainability is an approach aiming to create long-term stakeholder value through the implementation of a business strategy that focuses on the ethical, social, environmental, cultural, and economic dimensions of doing business.[1] The strategies created are intended to foster longevity, transparency, and proper employee development within business organizations.[2] Firms will often express their commitment to corporate sustainability through a statement of Corporate Sustainability Standards (CSS), which are usually policies and measures that aim to meet, or exceed, minimum regulatory requirements.[3]

Corporate sustainability is often confused with corporate social responsibility (CSR), though the two are not the same.[4] [5] Bansal and DesJardine (2014) state that the notion of 'time' discriminates sustainability from CSR and other similar concepts. Whereas ethics, morality, and norms permeate CSR, sustainability only obliges businesses to make intertemporal trade-offs to safeguard intergenerational equity. Short-termism is the bane of sustainability.[6]

Origin

The phrase is derived from the concept of "sustainable development" and Elkington's (1997) "triple bottom line." The Brundtland Commission's Report, Our Common Future, defined sustainable development as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concpets:

  1. "the concept of 'needs', in particular the essential needs of the world's poor, to which overriding priority should be given; and
  2. "the idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs."[7]

The idea of meeting present economic needs without reducing the ability of future generations to meet their own economic needs became a popular approach in the business world's implementation of sustainable development, referred to as "corporate sustainable development."[8]

"Triple bottom line" proposes that business goals were inseparable from the societies and environments within which they operate. While short-term economic gains could be pursued, failure to account the social and environmental impacts of these pursuits is believed to make those business practices unsustainable.

Whether corporate sustainability can be measured remains contested. There are composite measures that include measures of environmental, social, corporate governance, and economic performance, such as the Complex Performance Indicator (CPI).[9] And there are many different definitions of sustainability applied to and used by companies.[10] It remains difficult to say whether a company or other actor is operating sustainably or not because "there is no generally accepted set of indicators that could clearly delineate a status of sustainability from one of unsustainability. Therefore, the global status of sustainability, as well as the exact status of different actors, such as countries, companies, or individuals, is almost impossible to measure."[11]

Scope

The most broadly accepted criterion for corporate sustainability constitutes a firm's efficient use of natural capital. This eco-efficiency is usually calculated as the economic value added by a firm in relation to its aggregated ecological impact.[12]

Similar to the eco-efficiency concept but so far less explored is the second criterion for corporate sustainability. Socio-efficiency[13] describes the relation between a firm's value added and its social impact. Whereas, it can be assumed that most corporate impacts on the environment are negative (apart from rare exceptions such as the planting of trees) this is not true for social impacts. These can be either positive (e.g. corporate giving, creation of employment) or negative (e.g. work accidents, human rights abuses).

Both eco-efficiency and socio-efficiency are concerned primarily with increasing economic sustainability. In this process they instrumentalise both natural and social capital aiming to benefit from win-win situations. Some point towards eco-effectiveness, socio-effectiveness, sufficiency, and eco-equity as four criteria that need to be met if sustainable development is to be reached.[14]

Theorists agree that respect for issues other than economics is an important matter. The Business Case for Sustainability (BCS) has had many different approaches for ways to approve or disapprove the economic rationale for corporate sustainability management.[15]

Principles for corporate sustainability

Transparency
  • proposes that by having an engaging environment within a company and within the community it operates will improve performance and increase profits. This can be attained through open communications with stakeholders characterized by high levels of information disclosure, clarity, and accuracy.[16]
    Stakeholder engagement
  • is attained when a company educates its employees and outside stakeholders (customers, suppliers, and the entire community) and move them to act on matters such as waste reduction or energy efficiency.
    Thinking ahead
  • Envisioning the future enables companies to generate fresh ideas for implementation. These ideas can either reduce productions costs, increase profits, or provide a better image for the organization.
    Diversity, Equity and Inclusion : A a 2012 study by the University of California Berkeley's Haas School of Business found that companies with a high number of female board members were more likely to reduce their environmental impact and improve energy efficiency.[17] [18]

    See also

    Sources

    External links

    Notes and References

    1. Ashrafi . Mehrnaz . Acciaro . Michele . Walker . Tony R. . Magnan . Gregory M. . Adams . Michelle . Corporate sustainability in Canadian and US maritime ports . Journal of Cleaner Production . 20 May 2019 . 220 . 386–397 . 10.1016/j.jclepro.2019.02.098 . 2019JCPro.220..386A . 159125203 .
    2. Book: Purkayastha, Debapratim. In Search of the Triple Bottom line – Case Studies in Corporate Sustainability. 2019-02-01. IBS Case Research Center. 978-81-314-2847-4.
    3. Grimm . Jörg H. . Hofstetter . Joerg S. . Sarkis . Joseph . Exploring sub-suppliers' compliance with corporate sustainability standards . Journal of Cleaner Production . 20 January 2016 . 112 . 1971–1984 . 10.1016/j.jclepro.2014.11.036 . 2016JCPro.112.1971G .
    4. Ashrafi . M. . Adams . M. . Walker . T. R. . Magnan . G. . How corporate social responsibility can be integrated into corporate sustainability: a theoretical review of their relationships . International Journal of Sustainable Development & World Ecology . 17 November 2018 . 25 . 8 . 672–682 . 10.1080/13504509.2018.1471628 . 2018IJSDW..25..672A . 158792026 .
    5. Hirst . Scott . Social Responsibility Resolutions . The Harvard Law School Program on Corporate Governance Discussion Paper . 2016 . 2016-06 . 8 .
    6. Bansal . Pratima . DesJardine . Mark R. . Business sustainability: It is about time . Strategic Organization . February 2014 . 12 . 1 . 70–78 . 10.1177/1476127013520265 . 154779480 . free .
    7. Book: Our common future . World Commission on Environment and Development . Oxford University Press . 1991 . 1987. 0-19-282080-X . 15489268.
    8. Bansal . Pratima . 2005 . Evolving Sustainably: A Longitudinal Study of Corporate Sustainable Development . Strategic Management Journal . 26 . 3 . 197–218 . 10.1002/smj.441 . 20142218 . 0143-2095.
    9. Dočekalová . M. P. . Kocmanová . A. . 2016 . Composite indicator for measuring corporate sustainability . Ecological Indicators . 61 . 612–623 . 10.1016/j.ecolind.2015.10.012. 2016EcInd..61..612D .
    10. Montiel . Ivan . Delgado-Ceballos . Javier . June 2014 . Defining and Measuring Corporate Sustainability: Are We There Yet? . Organization & Environment . en . 27 . 2 . 113–139 . 10.1177/1086026614526413 . 145688373 . 1086-0266.
    11. Book: Hahn, Rüdiger . Sustainability management: global perspectives on concepts, instruments, and stakeholders . 2022 . 978-3-9823211-0-3 . Fellbach . Hahn Rüdiger . 1302310975.
    12. Book: Schaltegger . Stefan . Sturm . Andreas . Eco-Efficiency by Eco-Controlling: On the Implementation of Emas and ISO 14001 . 1998 . vdf, Hochschulverlag AG an der ETH Zürich . 978-3-7281-2415-9 .
    13. Dyllick . T. . Hockerts . K. . 2002 . Beyond the business case for corporate sustainability . Business Strategy and the Environment . 11 . 2 . 130–141 . 10.1002/bse.323.
    14. Young . William . Tilley . Fiona . Can businesses move beyond efficiency? The shift toward effectiveness and equity in the corporate sustainability debate . Business Strategy and the Environment . November 2006 . 15 . 6 . 402–415 . 10.1002/bse.510 .
    15. Salzmann . Oliver . Ionescu-somers . Aileen . Steger . Ulrich . The Business Case for Corporate Sustainability:: Literature Review and Research Options . European Management Journal . 1 February 2005 . 23 . 1 . 27–36 . 10.1016/j.emj.2004.12.007 .
    16. Schnackenberg . A. . Tomlinson . E. . 2014 . Organizational Transparency: A New Perspective on Managing Trust in Organization-Stakeholder Relationships . Journal of Management . 42. 7. 1784–1810 . 10.1177/0149206314525202 . 144442748 .
    17. Web site: Development Solutions: How to fight climate change with gender equality. 2020-09-17. European Investment Bank. en.
    18. News: Tom . Pamela . More Female Board Directors Add Up to Improved Sustainability Performance . Haas News . Berkeley Haas . 15 November 2012 .

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