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With the inevitable effects of climate change on ecosystems and communities, the business world is quickly realizing they can do well by doing good. Sustainability is increasingly becoming a crucial concept in all aspects of a business.
A growing number of organisations are considering ways to incorporate a balance among environmental, economic and social value creation in their operations and business models. But what exactly does it mean to be sustainable in a business?
In Business, sustainability refers to the practice of operating without negatively impacting the environment and the community as a whole. It is the management and coordination of environmental, social and economical demands and concerns to ensure responsible, ethical and continuous success.
An environmentally aware business recognizes its responsibility to the environment and community by contributing to the structure within which it operates through sustainable business practices. Businesses must ensure a long-term vision that recognizes that we cannot conduct business operations outside of taking care of the environment in which our businesses exist.
Apart from making a positive impact on the community and the environment, implementing sustainable business strategies improves a business’ brand image and can help drive its success. Almost every investor today considers environmental, social, and governance (ESG) metrics to analyze an organization’s ethical impact and sustainability practices. Factors such as a company’s carbon footprint, water usage, and community development efforts are examined by investors to determine if the business would be a worthy investment.
According to research by Deutsche Bank, which evaluated 56 academic studies, “companies with high ratings for environmental, social, and governance (ESG) factors have a lower cost of debt and equity; 89 percent of the studies they reviewed show that companies with high ESG ratings outperform the market in the medium (three to five years) and long (five to ten years) term.” When a business fails to assume the responsibility of sustainability, this is not only detrimental to its operations, but it will lead to issues such as environmental degradation, inequality, and social injustices.
What is a sustainable business?
A sustainable business observes “the triple bottom line”, a concept that was first coined in the year 1994 by John Elkington, founder of a British consultancy called SustainAbility. Through this concept, Elkington argues that businesses should set three unique and separate bottom lines, the measure of profit and loss, the measure of social responsibility and the measure of environmental responsibility.
The triple bottom line, therefore, comprises the three Ps which are Profit, People and Planet. It aims to measure the financial, social and environmental performance of the corporation over a period of time. Thus, a sustainable business earns its true profit by being socially responsible and ensuring a sustainable use of environmental resources.
Why is sustainability important in business?
Sustainability has become an operational and strategical imperative, it helps solve and mitigate ecological, social and economic problems through the strategic management of resources. The growing number of countries announcing pledges to achieve net zero emissions and carbon neutrality is illustrative of why it is critical for businesses to prioritize sustainability.
According to The World Counts, Strip mining is one example that portrays the destruction and harm caused to people and the environment. Also known as surface mining, strip mining involves the stripping away of earth and rocks to reach the coal underneath. If a mountain happens to be standing in the way of a coal seam within, it will be blasted or levelled – effectively leaving a scarred landscape and disturbing ecosystems and wildlife habitat. Due to this invasive and destructive activity, wildlife species face severe impacts resulting from their habitats being destroyed.
These effects would not exist if business were more responsible in their operations. Simply put, if businesses don’t act responsibly as members of the global community, the majority of many species will not survive past the 21st century. Environmental Sustainability notes that “the human-caused rate of extinction of species of both plants and animals at present is hundreds of times higher than the natural rate in the past.” It is time to act now. This calls for an urgent need for businesses to become part of the solution, cut down emissions and waste, and contribute towards a healthier and livable planet.