What is Corporate Sustainability and Why is it Important?
The importance of sustainability is constantly increasing. These days, having a sustainability strategy in place is no longer just “nice to have” - it is essential to the survival of businesses. Corporate sustainability plays a big role in the business world - but what does corporate sustainability actually mean? Let’s have a look!
What is Corporate Sustainability?
With a shift in the mindset of the business world, companies these days are expected to engage in practices that are good for the environment and people.
Corporate sustainability is defined as the incorporation of long-term and sustainable values into a company’s business strategy and value creation. The sustainability of corporate action is based on the three pillars: Environmental, Social, and Governance (short: ESG). This implies that businesses that implement a corporate sustainability strategy should not only commit to a responsible use of natural resources, but also ensure that everyone involved in your business process is treated fairly and with respect.
Overall, corporate sustainability focuses on the long-term growth of the business by means of sustainable methods, instead of short-term financial gains.
What are the Benefits of Corporate Sustainability?
Making sustainability a core part of your business strategy holds numerous benefits not only for the environment but also for your company. Here are a couple of examples, but if you’d like to know more feel free to head over to our article Why Purpose and Profit Can (and Should) Go Hand in Hand where we discuss this topic in more detail.
- Improve employee engagement and your attractiveness as an employer
The sustainability agenda of a company increasingly becomes a key selection criteria for people when choosing an employer. This is especially true for millennials and GenZ, who will make up a large part of the workforce in the near future, of which 76% state sustainability to be an important factor. Moreover, corporate sustainability can increase the engagement of your employees, make them work towards a clear purpose, and create a sense of community.
- Achieve cost savings
Reducing the resource consumption of your business operations does not only benefit you in terms of economic efficiency, it also cuts down on the overall excessive use of resource.
- Increase your attractiveness for investors
Investors and other stakeholders are increasingly more interested in companies that incorporate sustainability in their business and that work for a clear purpose.
- Anticipate stricter regulations in the future
With the new proposal for an EU sustainability reporting standard, the Corporate Sustainability Reporting Directive (CSRD) (introduced by the EU Commission in April 2021), up to 50,000 large public-interest European companies with more than 250 employees will be required to report on ESG-related factors in the near future. Anticipating new regulations allows you to adapt ahead of time and to possibly become a pioneer in your industry.
- Increase your brand reputation, trust and credibility
Many brands, like Patagonia, Ben&Jerrys or Levi’s, implemented sustainability at the core of their business model, and now live on an exemplary reputation through which many customers give them trust and loyalty.
- Meet the needs of consumers
Now more than ever, consumers expect products and services to be sustainable and not harmful to the environment or society - and they expect companies to do their share to contribute to a better future. Companies that do not follow along and practice corporate sustainability are likely to lose to the competition in the future.
How do you practice corporate sustainability?
According to the Guide to Corporate Sustainability by the UN Global Compact, companies must do 5 things in order to be sustainable: (1) Principled Business, (2) Strengthening Society, (3) Leadership Commitment, (4) Reporting Progress, and (5) Local Action.
First of all, companies should not only conduct their business responsibly in line with the 10 global principles, including Human Rights, Labour, Environment, and Anti-Corruption, but they should also take actions and collaborate with others in order to support society and advance global challenges. Furthermore, change happens on the highest level, it is therefore essential that leadership is on board with implementing long-term changes towards sustainability. Then, to increase transparency, annual reports recording their sustainability efforts should be created. And lastly, companies should engage locally and make local connections in places where they have a presence.
There are already many companies out there setting a good example of what corporate sustainability can look like. Chr. Hansen Holding, which was named to be among the most sustainable companies in the world, Neste Corporation, Lego, and eBay are just a couple of good examples from which your business can get inspiration.
What is the Difference Between Corporate Sustainability and Corporate Social Responsibility?
Even though Corporate Sustainability and Corporate Social Responsibility (CSR) are closely related, they are two different business practices.
Corporate sustainability is a business strategy to help organisations achieve their corporate objectives in an environmentally friendly way, implying that a company does not only focus on the economic and ecological aspects of its business but also on the social part. CSR on the other hand can be understood as a broader term, describing business practices or actions that a company has taken to advance environmental and social imperatives.
In a nutshell, while corporate sustainability is about how a company plans to achieve their environmental, economic, and social goals in the future, corporate social responsibility is about what a company has already achieved.
Has your company already implemented a corporate sustainability strategy into its business model? If you are curious how to get started or how to communicate about corporate sustainability - feel free to reach out to us.