Increasingly, businesses are making strategic decisions around the type and extent of their corporate sustainability policies. In addition to environmental and social benefits, companies that incorporate sustainability into decision-making processes can reap significant financial advantages and attract more interest from investors, which is a key to long-term profitability.
Yet sustainability can have a variety of meanings, depending on the business context. On this article, you will understand how the concept is applied in terms of the environment, employment practices and business practices.
Environmental sustainability can be applied in many ways, such as creating alternative routes in a production process to reduce waste generation and increase water and energy efficiencies. Investment in renewable energy is also growing momentum among big organisations, with many building their own solar or wind farms, in order to phase out the consumption of fossil fuels and reduce their carbon emissions.
Climate change, one of the biggest challenges of our time, continues to influence the way companies are doing businesses. Research undertaken by CDP shows that last year, 215 of the world’s largest companies reported that they saw nearly $1 trillion at risk from climate impacts, but also $2 trillion in opportunities. Thus, climate leadership is a key to ensure the profitability of organisations over the next decades.
Attaining the carbon neutral certification under the Climate Active Program – a program from the Australian Government that certifies companies, products, events or buildings that are able to neutralise their GHG emissions – is a great incentive for organisations to show climate leadership. The certification contributes to improve the image of companies, as consumers have been asking for urgent climate action.
Sustainability and employment
Businesses with strategies that are sustainable in the long run pay their workers’ salaries and benefits that allow them to live a sustainable life within their community. This builds loyalty within the organisation, benefiting the company through increased productivity and creativity, as well as lower levels of fraud and mismanagement.
Besides, when organisations look to improve the health and well being of communities, they are able to motivate employees who are genuinely interested in contributing to the success of the business.
Sustainability in business practices
Pushed by growing demands from consumers for products and services that cause minimal effects to the ecosystems, corporations have shown interest in bringing sustainability aspects to the core of the business. Another driving force behind this is the pressure from investors, who are already considering the level of corporate social responsibility, in other words, the role of businesses to address the needs of society, as a decisive factor on their choice of organisations to allocate capital.
Sustainable investing – the process of incorporating environmental, social and governance (ESG) factors into investment decisions – is becoming a common practice. Corporations are going beyond the desire of profitability, which is shown by their growing efforts to build internal environmental policies and also take part in global tendencies, like the alignment with the Sustainable Development Goals (SDGs) – topics suggested by the United Nations to guide organisations on the development of policies towards sustainability.
Therefore, the incorporation of sustainability principles into business practices is becoming mainstream. Companies who don’t follow this tendency are likely to lose credibility from investors, as well as opportunities to generate revenues and the chance of being an example to society.
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