In other words, sustainability is about protecting our planet while also ensuring that future generations have access to the same resources we do. This can be done through sustainable practices like recycling and using renewable energy sources. However, sustainability is not just about environmental protection. It also encompasses social and economic factors. For businesses, this means finding ways to reduce their environmental impact while also considering social responsibility and economic development. To be truly sustainable, businesses need to consider all three of these pillars.
This approach looks at three different factors: environmental, social, and economic. To be sustainable, businesses need to balance these three areas. For example, a company might reduce its environmental impact by switching to renewable energy sources. But if that transition comes at the expense of job losses or higher prices for consumers, then it's not truly sustainable for the long-term.
There has been increasing demand for transparency regarding a company’s environmental impact and the risk that climate change poses to its business model. In 2022, the US Securities and Exchange Commission (SEC) started requiring registered companies to disclose climate change risk to investors. Because sustainability reports are a somewhat new phenomenon, the landscape continues to evolve. It’s likely that stakeholders, particularly investors, will want companies to establish the validity of sustainability reports because they have the potential to influence a company’s market capitalization. Unverified claims could create a downside risk for investors and damage public trust, so it is in a company’s best interest to verify the report.
In the near future, increased scrutiny could cause companies to flow down sustainability requirements to their partners and vendors. Some organizations have already instituted some of these requirements, and it is expected that more organizations will press their supply chain to assist with their sustainability directives. Supplier manuals and codes of conduct could potentially entail requirements for environmental, social, and economic factors. One example is BMW, which mandates that suppliers must consider occupational health and safety in its operations. By the end of 2023, the German automaker will require its Tier 1 suppliers to be certified to ISO 45001, the international standard for Occupational Health & Safety management systems. Also, Amazon recently mandated that its exclusive vendors complete third-party audits that evaluate social and ethical compliance.
Because sustainability has become increasingly important in today's society, many organizations have made it a focus of their operations. Through the adoption of sustainability principles, organizations can ensure that they are taking proactive steps to reduce their environmental impact and improve social equity. Organizations can demonstrate this commitment through the adoption of sustainable development.
The United Nations has determined that there are 17 different focus areas of sustainability called the “Sustainable Development Goals.” These goals are:
Image: United Nations
As you can see, sustainability encompasses many humanitarian efforts beyond just environmental concerns. English speakers in North America rated four SDGs in an online poll conducted by TÜV SÜD.
The results are as follows:
Reconciliation of multiple, sometimes competing goals, will be a challenge. Implementing frameworks that address concerns surrounding these issues supports sustainability claims because it demonstrates commitment. Enterprises trying to get a handle on their own sustainability (and possibly involve their supply chains) could benefit from implementing standards.
The most common international standards that concern sustainability include:
* Is a certifiable standard
Performing audits to these standards demonstrate a commitment to sustainability. Still, companies must determine which factors best support their needs and those of the communities that support them.
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