Sustainability is now a widely recognised term that is often thrown about in the context of eco-consciousness and environmental inclinations. What it inherently means is a holistic approach to everything- work and life in general, that factors in the environmental health of our planet and the moral and ethical decision making that encompass it.
For individuals as well as companies, sustainability pervades all aspects pertaining to reducing carbon footprint, decreasing waste generation, and minimising consumption of natural resources including water.
For companies, Sustainability and ESG (Environmental, Social, and Governance) are the cornerstones of their efforts toward the integration of sustainable business practices into their operations by considering the impact of the company’s actions on the environment, society, and governance. The implementation of sustainability measures can range from reducing paper usage in offices to investing in renewable energy or creating more environmentally friendly products.
ESG takes a broader perspective on sustainability by integrating social and governance factors. Social factors include labor rights, human rights, community involvement, and diversity and inclusion practices. Companies can take measures to promote fair labor practices, promote community engagement, and ensure multiple perspectives are represented at all levels of the company. Governance concerns refer to transparency, accountability, and ethical management practices. Companies are expected to operate transparently, with high ethical standards, and implement policies that promote diversity, fairness, and equality.
An ESG approach can benefit a company in several ways, however three of the most prominent ones are:
- Optimised response to external risks– by integrating ESG factors, a company is better positioned to identify and respond to external risks, such as climate change or social unrest.
- Elevated social standing- ESG practices can improve a company’s reputation, increasing brand loyalty and attracting socially conscious customers.
- Greater stakeholder trust- with ESG practices driving corporate operations, stakeholders adherence and trust is bolstered as it is established that the company is committed to managing risks while creating positive social and environmental outcomes.
Agreed that the integration of sustainability practices not only reduces the negative environmental impact of the company and also serves as a competitive advantage by appealing to eco-conscious customers.
But, sustainability has its pitfalls, and it is critical to recognise and understand them to maximise the efforts in creating a sustainable future. Here, there are four main issues to tackle:
- Use of outdated methods and resources– with the advances in technology and scientific knowledge, several means and methods are available for becoming more efficient and sustainable. Businesses and governments that continue to rely largely on fossil fuels, as well as those that haven’t yet implemented energy-efficient practices, are limiting their long-term viability and greatly missing out on the perks associated with reducing their carbon footprint such as cost reduction and improved time-to-market.
- Lack of implementation of education and awareness initiatives– Companies and organisations often have great ideas and methods of going green, but unless they are proactively promoting and propagating them, they are stifling the cause. Without an organisation-wide education and awareness of the benefits of sustainable practices, all the parties involved may not be willing to invest the resources necessary to make a difference.
- Failure to take into account all stakeholders- Strategies restricted to management or shareholders can be severely detrimental to the cause of sustainability. When attempting to develop a plan for sustainability, it is necessary to consider all stakeholders, from surrounding communities to industry professionals and beyond, and understand their lifestyles, attitudes, and needs before an action plan can be developed. Only when all stakeholders are taken into account, real workable solutions are possible.
- Absence of an overarching, long-term strategy or vision for sustainability- many a times, sustainability can be seen as an ‘end’, when in truth, it is a process, a means to an end. Companies and organisations must understand that sustainability is an ongoing process, requiring review and adaptation to changing environmental conditions. Without a clear yet flexible strategy in place, it will be impossible to measure and improve upon sustainability goals.
Sustainability is indeed a complex process and ESG is a comprehensive and continuous improvement effort. Recognising and understanding the potential pitfalls is key to successfully addressing and correcting the issues that can arise in implementing sustainability and ESG goals.
By Hendrik Van Der Ham, Founder and CEO of Bridges 2000 and Sustainability Advocate