Your bottom line isn’t all that matters. If people think you don’t care about the environment, social good, and the economy’s health, your business may struggle in the long term. And so, corporate sustainability is a top priority now.
KPMG reports that sustainability reporting from companies has grown from 75% in 2017 to 80% in 2020. The report also posited that the trend would continue to grow for the foreseeable future because it’s something that younger audiences want when they look for brands.
73% of millennials will pay more for sustainable goods, and this influence from the dominant consumer demographic is something no business can ignore.
So, what is corporate sustainability, and how can you get started? Read on as we break down the three core pillars of sustainability, explore successful examples, and take a look at what we can expect in the years ahead.
What Is Corporate Sustainability?
Corporate sustainability is a business strategy that enables long-term growth by helping the organization take responsibility for its impact on the economy, the environment, and society.
This approach to business aims to find a balance between business operations, humans, and the environment. A sustainable business is one that works in step with societal and environmental goals, rather than at odds with them. However, corporate sustainability is about more than just protecting the environment.
Although concerns for the planet often take the limelight, we can explore the corporate sustainability definition to identify the three pillars of a functional sustainability strategy:
We’ll discuss each of these points in more detail later. But first, let’s find out why corporate sustainability has been in the headlines.
Why Is Corporate Sustainability Important?
Corporate sustainability is the antithesis to the traditional business approach of simply making money for stakeholders. Today, businesses that adopt sustainable practices tend to reap positive rewards across the board.
For example, corporate sustainability can improve your brand image, increase productivity, slash costs, and ultimately leave your shareholders and customers happier and more supportive of your business’s campaigns. Over time, this approach will help you attract more customers, bigger investors, and the best talent.
A round-up from Solstice found that:
- 92% of customers are more likely to trust a brand that is environmentally or socially conscious.
- 64% of millennials would turn down a job opportunity if the company doesn’t have a strong focus on corporate responsibility.
- Employees working for eco-friendly companies are 16% more productive than the average employee.
Buyers are gravitating toward brands that put the planet alongside profits—if not above. The Conversation reported that nearly 80% of people are concerned about climate change. The report mentions Unilever’s survey of 20,000 customers, where 33% said they would pay more for products they feel are good for the environment.
Companies can benefit from becoming climate-positive, with many significant organizations announcing their aims of achieving net-zero carbon emissions in the future. But behind the lofty claims, a company must have pioneering leadership that takes action.
Otherwise, consumers will see through the claims. As the famous environmental activist Greta Thunberg argues: “Net-zero targets are being used as excuses to postpone real action (…) they’re about communication tactics and making it seem like we’re acting without having to change.”
Employees are also putting corporate sustainability on the front burner of their careers. For example, Reuters reported that 72% of employees in the UK expressed concern over environmental ethics. In that study, 83% of respondents said their companies are not making sufficient effort to address climate change.
However, this multigenerational workforce didn’t just express their concerns. They also made their intentions clear. Specifically, 65% of respondents said they would choose to work for a company with strong environmental policies over those that don’t.
Top investors are altering their investment strategies to extend beyond just profits. Recent studies show that institutional investors accentuate the environmental and social governance (ESG) of businesses in their investment considerations.
In the Edelman Trust Barometer Special Report, about 90% of institutional investors said they are paying more attention to ESG risks. The result is that investors are putting forward $8.7 trillion of professionally managed money using socially responsible strategies.
What Are the Three Pillars of Corporate Sustainability?
As mentioned already, corporate sustainability has three key pillars—the planet, people, and profits. In this section, we’ll explore the role each pillar plays in your corporate sustainability strategy.
The Environmental Pillar
The environmental pillar includes action plans to reduce and remove harmful emissions, do away with toxic substances, and improve green energy adoption.
It also includes recycling and reusing paper, plastics, metals, and other renewable materials. In addition, the environmental pillar supports waste management and cross-value-chain carbon footprint removal.
In 2019, Walmart diverted 80% of its waste materials, packaging, and unsold products from landfills and incineration. The retail corporation has set an ambitious deadline of 2025 to achieve zero waste in all its key markets—Japan, the US, the UK, and Canada.
Businesses are aggressively investing in environmental sustainability projects, setting long-term goals to take the organization in a more eco-friendly direction. This trend suggests that the environmental pillar is very relevant today and will likely remain a top priority in the future.
The Social Pillar
The people or social pillar involves strategies to advance the safety, wellbeing, and health of communities, employees, and customers. The focus here is to foster a safe corporate culture and provide employees, suppliers, partners, and customers with any critical information they need to do their work. Another benefit of the social pillar is that it also supports the provision of access to basic needs.
While Amazon should be commended for its $100 million reforestation fund and four other environmentally conscious projects, the ecommerce giant has come under pressure in recent years about pay equality for different genders and minority groups.
A genuinely successful social pillar is built on transparency, honesty, and cohesion throughout the workplace, which nurtures a stronger culture internally, and a more trustworthy brand image externally.
The Economic Pillar
The economic pillar ensures that businesses can turn a profit, and establish a solid financial status. Profit strategies may include sustainable cost reduction through improved material engineering and packaging. Other key activities that fall under the economic pillar include regulatory compliance, proper data governance, and risk management.
On one hand, the economic pillar presents a company with the most potential to generate profits by combining innovative technology with sustainable practices. However, it’s important to realize that profit does not negate the need for the other two pillars.
Arguably the best example of getting the economic pillar almost perfect is the clean energy and electric vehicle company, Tesla. In July 2021, TechCrunch reported that Tesla’s quarterly profit soared past $1 billion, proving there is money to be made in sustainability.
How Are Businesses Improving Sustainability?
Fortune 500 companies are not the only businesses improving their corporate sustainability. Little-known companies are leading the race for more sustainable business practices.
In 2019, Chr. Hansen took the top spot for the most sustainable company in the world. The Danish bioscience company attributes its recognition to its work on good bacteria for food sustainability.
Interestingly, Chr. Hansen has been committed to sustainability long before it became a trend. The company published its sustainability commitment back in 1949 when it wasn’t even a global topic yet—considering Chr. Hansen’s strides in sustainability, we can agree that early corporate sustainability adopters will lead their industries in the future.
As more investors evaluate businesses based on their ESG risks, corporate sustainability will shift from optional to compulsory for companies.
You may be wondering how businesses are adopting and integrating corporate sustainability into their operations and management. Let’s explore some examples to gain inspiration for your approach.
Examples of Corporate Sustainability Initiatives
The World Economic Forum ranking considers over 8,000 businesses and ranks 100 of the most sustainable. We will consider five corporate sustainability examples to inspire your strategy. Let’s get started.
Neste Corporation: From petroleum to biofuels
Corporate Knights gave Neste a sustainability score of 83.64% in its 2020 rankings, placing the company in third place overall.
Petroleum refining may appear unsustainable in itself, but that’s precisely why its corporate sustainability initiative is unique. The petroleum refining company from Finland, Neste, invests in biofuels and has committed to developing that revenue channel to nearly 50% of its total revenue by 2050.
GlaxoSmithKline: Environmental cleanliness and gender diversity
The pharmaceutical giant, GlaxoSmithKline, has committed to both the social and environmental pillars of corporate sustainability. As for their social pillar, the company plans to have at least 45% female representation in senior roles and at least 30% ethnically diverse leaders in VP or higher roles by the end of 2025.
Secondly, the company is committing to reducing its waste, emissions, and environmental footprint to achieve the coveted net-zero impact by 2030.
Google: Going from carbon neutral to carbon-free
Google has been carbon-neutral since 2007 and has now committed to becoming carbon-free by 2030. However, the company has been working on sustainability-related projects for years. In 2009 they even got goats to eat their grass instead of using lawnmowers.
The company has different sustainability projects under the Google Sustainability umbrella. For example, they now do more of their computing in places that have clean energy. Google’s sustainability projects span from clean energy to workplaces, supply chain to data centers, and more.
Bosch: Committing 50% of R&D to Sustainability Projects
Bosch has committed 50% of its research and development money to support sustainability projects. This commitment includes supporting university research programs that focus on sustainability.
And the German multinational practices what it preaches, too. The lead plant in Homburg cut its emissions by about 10% within just two years. Since then, Bosch rolled this solution out to over 100 global locations, marketed it to other companies.
Cisco Systems: Focusing on people and technology
Cisco Systems ranks as the fourth most sustainable company in 2020. It also won the best place to work in 2019 and 2020. Considering the tough times that 2020 presented to companies, that award is commendable.
However, like many other companies, Cisco runs other corporate sustainability projects. Its ESG report shows efforts across all three sustainability pillars.
What’s The Outlook for Corporate Sustainability?
Looking at the corporate sustainability initiatives of the companies we’ve considered so far, you can see patterns emerging. First, these initiates are long-term projects that span across many years—or even decades.
However, these projects are just starting. Most companies will continue raising their sustainability threshold until they reach a 99% or higher sustainability score.
One of the critical corporate sustainability shifts you’d expect is more collaboration and open innovation across initiatives and businesses. And it’s already happening.
In September 2020, Carrefour, IKEA Food, Kroger, Walmart, and Tesco partnered to launch the 10x20x30 initiative. The program brings together more than 200 suppliers from over 80 countries that work with these brands to commit to cutting food waste and loss across their supply chain.
Who Will Invest in Sustainability Initiatives?
The real question is: who won’t?
We’re living in a new age where social good and environmentally-friendly practices are no longer nice to have—they’re crucial to your brand image. With a focus on the three pillars, you can gain the trust of global audiences. Without this focus, your business may falter and lose ground to more conscious competitors.
In 2021, 400 companies applied to the MassChallenge Sustainable Food Systems Challenge. Renowned brands like Nestlé, Bühler, DSM, and Givaudan are already partnering with MassChallenge to become sustainability leaders in their respective markets. If you’re interested in innovative new approaches to business or finding solutions from fresh talent, now is a great time to invest in corporate sustainability projects.