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Sustainability involves the act of considering the social, economic, and environmental impact of corporate actions. It requires companies to be socially, economically, and environmentally responsible for its actions and decisions. It also requires organization to consider the consequential effect of its business activities on the society and environment by acting in a responsible manner.
Businesses exist not only to make superior profit to maximize owners’ wealth but also to consider the divergent interest of other claimants on the company’s resources including the investors, government, competitors, employees, and particularly, the community where the company operates.
The importance of sustainability cannot be overemphasized because it has the benefits of attracting and retaining customers and promoting brand recognition. Companies that embrace sustainability practices usually have good working and cordial relationship with relevant stakeholders.
Generally, employees have the propensity and are more attracted and committed to working for socially responsible companies. Businesses perceived as being ethically sound are rewarded with extra customers. This positive contribution to the society may be of a long-term investment that will create a safer, better, and more equitable society.
Ideally, corporate sustainability practices and strategy should include the following considerations:
This refers to the impact of the business’ actions on the environment. The goal for an environmentally responsible company is to engage in business practices that are mutually beneficial to the environment. Sustainability dictates that company should consider the impact of its carbon emissions and pollution. Instead, consideration should be given to the use of renewable and clean energy such as solar. Any corporate action that will degrade the environment as a direct consequence of negative externalities should be avoided.
To be environmentally responsible, businesses should consider the consequential effect of their carbon footprint, water usage, or waste packaging on the environment. In this case, optimal use of resources, including materials is required by comparing the actual material usage against the set standard to avoid wastage.
This involves the relationship between the company and the society. A socially responsible business practices involved producing goods or rendering services that are of the highest quality, attractive to the customer segment, and beneficial to the society. This could involve sourcing for raw materials or inputs from local community, paying employees a livable wages or salaries. All of these, have the potential to create wealth, reduce unemployment and poverty.
Social sustainability practices encourage companies to create enabling environment that provide equal opportunity to thrive in the workplace. The kind of working atmosphere that uphold fair dealings and show care towards employees. It will promote good neighborliness, if businesses can consider establishing recreational facilities for the youths in the immediate local community. This has the benefit of reducing problems of youths’ restiveness and enhance their physical being.
Being socially and environmentally responsible has its own underlying costs. The economic consideration of sustainability represents the cost implication of the sustainable practices on the company’s profitability. Since these actions will result in outflow of economic resources to the company. Under this consideration, the cost-benefit analysis may be carried out to ascertain whether the benefit outweighs the cost. It is generally believed that the underlying benefits of sustainability practices are greater than its costs. Hence, company would have no reason to limit it.
However, it is important for businesses to recognize the financial impact of sustainability activities on the company’s profitability, while being a good corporate citizen. This is necessary to ensure that the shareholders’ equity value and other stakeholders’ interest are not materially impaired.
The United Nations General Assembly (UNGA) adopted the 2030 Agenda for Sustainable Development in September 2015. The new Agenda is focused on building an all-inclusive approach to achieving sustainable development for all. The implementation of the SDGs commenced in the year 2016 for the next 15 years, up to the year 2030.
Companies should develop the ability and willingness to relate its operations in a manner that are mutually beneficial to the environment and the society. To this end, businesses should create a working sustainability strategy consistent with the United Nations Sustainable Development Goals.
Every individual and corporate entities are encouraged to scan through the 17 goals for possible implementation. For examples, companies can embrace and practice inclusion and diversity among its employees, customers and others, provide scholarships to indigent students of their immediate community etc.
At Adda, our business advisory team support businesses in developing sound sustainability strategy
At Adda, we pride ourselves with highly experienced and committed professionals willing and ready to collaborate with businesses to create value
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