There is a growing need to adopt a new set of Sustainable Development Goals that aim to “Transform the World”. Change comes with collective effort, mutual understanding and knowledge toward specific goals.
Despite the UN and other international organisations making crucial decisions, the result is far from expected. It made me wonder what it is that we are falling short on? Is it the lack of interest or lack of awareness?
That’s when I had a eureka moment, and it suddenly started to make all sense. Many people don’t know the complicated terms and references that are used when we talk about sustainability. The idea inspired me to create a new series called “The ABCs of Sustainability Development”. I hope that this series of blogs is well received and serves its purpose.
Justice for Sustainability
There is a growing need to adopt a new set of Sustainable Development Goals that aim to “Transform the World”. Change comes with collective effort, mutual understanding and knowledge toward specific goals.
Despite the UN and other international organisations making crucial decisions, the result is far from expected. It made me wonder what it is that we are falling short on? Is it the lack of interest or lack of awareness?
That’s when I had a eureka moment, and it suddenly started to make all sense. Many people don’t know the complicated terms and references that are used when we talk about sustainability. The idea inspired me to create a new series called “The ABCs of Sustainability Development”. I hope that this series of blogs is well received and serves its purpose. This week I want to talk about ecological and social justice in business to business sustainability. The conversation about sustainability has been increasingly becoming part of the mainstream, leading to many changes in consumer attitudes and business practices, along with changes in mandated sustainability compliance practices. With the push for sustainable business practices coming even from the UN (which has outlined global partnership as the road to sustainable development in trade), let us take a closer look into what sustainability in business looks like and what purpose it serves.
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A business is considered to be sustainable if it takes into consideration what is known as the triple bottom line: people, planet and profits. The focus of a sustainable business has to lie on each aspect—ensuring environmentally safe practices, equitable pay and social justice to the employees, and ensuring the actual financial growth of the business. It is increasingly being seen that businesses which focus on all of these goals end up on a trajectory of growth that allows them to see not just success but longevity. According to a survey by McKinsey in 2020, leaders in business and investment professionals expect that programs that focus on environmental, social and governance (ESG) issues will contribute to significantly higher shareholder value in five years as compared to the present. The idea that marketing, communication and good intentions will suffice is now seen as outdated, corporations are now seen to hold and be worthy of a greater sense of responsibility and transparency towards the communities that enable and even fund their functioning.
Sustainability in business is essentially a way to ensure longevity in business through long term value creation via environmental, social and governance oriented strategies. In order to achieve this longevity, there are two key aspects that need to be addressed in overall business strategy:
- A survey by MIT shows that while 60% of companies incorporate sustainability in their strategy, only 25% include it in their business model. This is the gap between knowing and doing
- Companies still see sustainability as a set of ideas and rules that they need to be in compliance with. They do not see how it could give them a competitive edge over others. This leads to a lack of creativity and enthusiasm in sustainability strategization.
It is estimated that about a fifth of the waste generated in the UK is generated by businesses. Consumer research by Kantar finds that 77% of British people have switched or avoided brands upon finding out about their environmental policies.
The B-Corp certification designates that a business is meeting certain specified high standards of verified performance, accountability, and transparency on factors from employee benefits and charitable giving to supply chain practices and input materials. In the UK, there are now over 200 companies that have acquired this certification. Clearly, there is a significant impact of sustainability strategization on the success and longevity of the business.
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The challenge of achieving environmental equality and pursuing ecologically sustainable and equitable policies is one that requires redressal from several sources and multiple approaches. To that end, there are several teams dedicated to working towards sustainable development that take decisions and formulate rules which affect the functioning of businesses, while also forming guidelines for businesses to base their strategies on.
The Ministry of Sustainable Development is responsible for both the development and the supervision of sustainability practices in the functioning and operation of the Government of the UK, and following and formulating supportive rules, policy and guidance. It is crucial to the government’s attempt to meet the Greening Government Commitments. These goals are achieved through comprehensive research and adaptation of policy, and these efforts are applied into several different fields, including adapting to climate change, conserving biodiversity and ecology, sustainable construction, sustainable resource procurement, and more.
The Joint Nature Conservation Committee is a statutory committee that functions as an advisory body to the government. It works to enrich biodiversity and protect ecological systems. It also forms several guidelines and mandates for the functioning of businesses in several respects. For instance, it delineates marine conservation zones across the UK. It also publishes significant data and research that proves to be extremely relevant and reliable to businesses from the point of view of risk management, resource procurement and operations. The JNCC has formulated and also collects data on the use and application of Environmental Management System by companies across the country.
The formulation of policy essential for sustainability compliance and collection of data regarding its applications provides crucial information to investors, shareholders and also non-business outside stakeholders in the same field.
It is also established that business sustainability and social justice practice leads to legitimate improvements in business performance. Companies can generate higher shared value for their stakeholders by addressing social problems which affect their field of work and business. This also allows a company to be better equipped to handle time sensitive crises that can arise due to social, economic and environmental circumstances. This also allows for significantly improved risk management strategies. Engaging more closely and in a more holistic manner with stakeholders and shareholders allows for smoother and heightened functioning of the business and overall improvement in performance.
Studies from Arabesque and University of Oxford have also found that ESG standards lower the cost of capital, and stock price performance is also positively correlated to sustainability practices. Investors are therefore also beginning to value companies that engage with proper sustainability practices to a higher extent.
Corporate sustainability initiatives also results in greater employee loyalty and stability and higher performance, with a significant reduction in average turnover time and annual quit rate, along with a 16% increase in functional productivity. Social justice is no longer a responsibility that companies have to fulfil in order to be compliant with guidelines, it is a responsibility they have to their own employees, shareholders, and any and all stakeholders in their area of business. It is being significantly established that companies that formulate strategies in these respects not just for the purpose of marketing themselves are socially aware green companies, but actually incorporate these into their larger vision and bring structural change, are going to see significant returns and larger long term viability of their businesses.