Sustainability is a word that we hear a lot these days, but what does it really mean? And how does it relate to the business world? The ‘concept of sustainability’ is not new. It is an ‘old concept’ that can be traced back to ancient times when some cultures and civilizations recognized the importance of living in harmony with nature and preserving resources for future generations. In the 1960s and 1970s, the environmental movement that emerged gave a new impetus to this concept and raised awareness about the ecological crises and challenges facing humanity.
However, the ‘term’ sustainability as it is commonly used today, especially in the context of sustainable development can be traced back to the 1987 report of the World Commission on Environment and Development, also known as the Brundtland Report, which defined sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. This definition implies a balance between economic growth, social equity, and environmental protection. In other words, sustainability is a broad term that refers to the ability to maintain or improve the quality of life for present and future generations without depleting natural resources or harming the environment.
Over time, sustainability has evolved and expanded to include more aspects and dimensions of human well-being and planetary health under the Environment, Socia, and Governance (ESG) pillars. Today, sustainability is not only a goal but also a principle that guides our actions and decisions in all spheres of life, from personal to global.
One of the spheres where sustainability has gained more prominence and relevance is the corporate world. Businesses are increasingly recognizing that they have a responsibility and an opportunity to contribute to sustainability, not only for ethical reasons but also for strategic ones which is a testament to growing consciousness and a clear shift in corporate dynamics. By adopting sustainable practices, businesses can enhance their reputation, attract and retain customers, manage risks, foster innovation, engage employees, and improve their financial performance.
But how do businesses measure and report their sustainability performance and goals? This is where ESG comes in. ESG is a set of criteria that evaluates the impact and performance of a company on three key pillars:
Environmental: This includes factors such as carbon emissions, waste management, energy efficiency, water use, biodiversity, and climate change.
Social: This includes factors such as labor rights, diversity, human rights, health and safety, community engagement, and customer satisfaction.
Governance: This includes factors such as board structure, ethics, transparency, accountability, and stakeholder involvement.
ESG also helps investors and other stakeholders to evaluate and compare companies based on their sustainability performance and risks. Corporate sustainability on the other hand is the practice of integrating environmental, social, and governance (ESG) factors into business strategies, operations, and decision-making. By understanding the link between sustainability and ESG, businesses can align their actions with their values and vision, and create positive outcomes for themselves and society as sustainability is not only good for the planet but also good for business.