Sustainability is often referred to as “meeting the needs of the present without compromising the ability of future generations to meet their own needs” (Bruntland Commission Report, United Nations, 1987).
Such needs fall under the umbrella of the ESG (environmental social governance) pillars, that businesses are increasingly implementing as part of their corporate social responsibility strategies. The scope of this article is to analyse each pillar and its impact on businesses.
Environment
The environmental pillar encompasses safeguarding the environment, as well as researching and developing technologies aimed at preserving the ecosystem while ultimately ending harmful practices and processes. This aspect is probably the one businesses tend to focus on when kickstarting their sustainability policies.
Reducing carbon footprint has an immediate return in terms of corporate image and bears a positive impact on raising finance, as both investors and the public are increasingly considering the environmental impact of businesses they decide to support.
Society
This aspect doesn’t just encompass focusing on practices having a positive impact on society at large but primarily deals with the mental and physical well-being of employees. Successful businesses are supported by their employees and such support can only be achieved by adopting internal policies guaranteeing safety, fairness of treatment, appropriate remuneration and an adequate work-life balance.
From a society perspective, companies must build a reputation as reliable partners and allies to the communities they operate in, hence the necessity of developing community outreach programmes and policies aimed at creating positive engagement with the public. On a global scale, businesses must be aware of their entire production and supply chain, ensuring that environment-friendly practices and labour laws are scrupulously followed.
Governance
Both private and public entities find themselves compelled to reassess their practices to fall in line with good governance principles. The governance pillar, therefore, addresses the importance of transparency in accounting practices, regulatory compliance and keeping the company’s values aligned with the expectations of government bodies, the community, value chains and end-user customers.
Accountability and good governance are becoming increasingly important, as well as regular corporate sustainability reporting, which lays out the sustainability objectives of a business and its progress in attaining them.
Sustainability reports may include a plethora of information about the company’s sustainability strategy, the use of resources and the effects of its operations on the community and the environment.
The achievement of good governance ultimately fosters sustainability, allowing businesses to reduce risks, mitigate crises and attract new investors.
Why is corporate sustainability good for your business?
Incorporating environmental, social and corporate sustainability into corporate practices is becoming a must for businesses worldwide. In addition to having a positive environmental and social impact, a corporate strategy calibrated on sustainability can boost brand equity, meet consumer demands, increase operational efficiency, attract talent and open the door to new markets and business opportunities.
The transition to a sustainable model may be a complex and time-intense process, requiring the execution of feasibility studies and the evaluation of the risks and impacts of change on your operations.
To that end, Grant Thornton’s multidisciplinary team gauges the environmental, operational, social and financial impacts to better inform the decision-making process of its clients. For guidance on how to transition to a sustainable model, contact Grant Thornton’s sustainability team by e-mailing wayne.pisani@mt.gt.com or by visiting www.grantthornton.com.mt/sustainability/.