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In 1987, the United Nations defined sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.”
In business, sustainability means balancing the short and long-term profit goals with the short and long-term environmental impacts. Businesses often use what are referred to as ESG (environment, society, and government) matrices to implement strategic decision-making with a sustainable mindset.
For companies, sustainability could look like:
Traditionally, companies have viewed profits as their primary goal, rarely seeing themselves as catalysts for social change. However, in modern times social progress and profitability have become increasingly interdependent. Google has pledged to reach net-zero emissions across all of its operations and value chain by 2030. Already, they have maintained an average of 64% carbon-free energy across all of their global electricity consumption.
The corporate landscape is evolving and the overlap between societal impact and business success is growing. Many of the world’s most significant challenges, like climate change and social justice, are so extensive that the cooperation of businesses will be integral to achieving solutions. Conversely, the private sector is often viewed as profiting at the expense of social welfare, which hurts its reputation and deters stakeholders. Shared value opportunity – the idea that by doing good your business will receive financial benefits – is imperative for firms to evaluate and incorporate.
The world is undergoing an unprecedented global shift towards sustainability and businesses can choose to be either leaders or laggards. Investors increasingly consider ESG markers when deciding where to devote their money. Bloomberg finds that in 2022, Global ESG assets exceeded $30 trillion and are projected to surpass $40 trillion in 2030. Investors acknowledge that a strong ESG portfolio is critical for the long-term health of a company.
Sustainability is economical. Growth and sustainability have always been inextricably intertwined. Sustainable practices can reduce energy consumption, decrease resource use, and increase efficiency, optimizing operating costs. A 2020 McKinsey report found that India can quadruple its renewable-energy output, which could produce $90 billion in GDP and create about two million jobs in 2030. The passage of the Clean Air Act did not only combat ozone depletion but also increased wages and labor-force participation for those affected. Sustainability and growth are not competing subjects, rather they reinforce and propel each other.
Additionally, customers care about their environmental footprint and are shifting their consumption patterns towards companies with sustainable claims. A 2020 McKinsey study found that 60% of people would pay more for a product made with sustainable packaging. ESG is important for companies to reach wider consumer segments, build brand loyalty, and increase revenue.
Employees also care about sustainability. IBM’s “Sustainability at a Turning Point” Research Brief found that, “69% of the full potential workforce—which includes people who are employed full- or part-time, unemployed and seeking employment, or full-time students or apprentices—say they’re more likely to accept a job with an organization they consider to be environmentally sustainable”
Sustainability business is not a fad or a phase. It is the future for a healthy economy and planet. It no longer solely pertains to the environment but is now a synonym for business strategy and resilience. Incorporating sustainability into business practices reconciles the needs of the planet with profitability, and it is essential for aligning company missions, values, and goals, improving legitimacy, and fulfilling growth opportunities.