You might have heard the term “corporate sustainability” used in different contexts in the past decade. But if you are slightly confused by recent uses of the term, don’t fret.
Like any business approach, framework, or process, the meaning has evolved.
Today, corporate sustainability denotes a business approach that generates long-term consumer, employee, and societal value while exercising stewardship of the environment.
It incorporates the concepts of the “Triple Bottom Line” (TBL) as an accounting framework. The TBL usually refers to the three Ps of planet, people, and profit.
Generally speaking, corporate sustainability traces its roots from the 1987 Bruntland Commission, which offered the modern definition of sustainability with the consideration of humanity inhabiting our planet and necessitating its various ecosystems to flourish:
Sustainable development (SD): Defined as “meeting the needs of the present generation without compromising the ability of future generations to meet their own needs.”
In a business context, corporate sustainability is an umbrella term that includes:
- Corporate social responsibility (CSR): Probably the most widely used term, sometimes abbreviated to corporate responsibility (CR). Many companies have CSR professionals on staff.
In the past, CSR meant the degree to which a company was involved in social and environmental activities. Now it generally reflects a company’s adoption of the principles of TBL.
- Environmental, social, and governance (ESG): Business journals use the term ESG when discussing sustainability issues in large public and privately owned corporations. It is often used contextually with other terms, such as responsible investing (RI), or socially responsible investing, ethical investment, and green investing.
The governance aspect includes business ethics, management structure, transparency and disclosure, employee relations, executive compensation, and investment strategies. ESG offers a different lens for evaluating a firm’s asset value while shedding light on issues that are of increasing importance to many investors and shareholders.
What about green teams? Green teams are a reflection of a company’s grassroots efforts to be more environmentally responsible. These teams generally focus their activities on energy, waste (including paper use, procurement policies, cafeteria waste, and so on) and water use.
For the more established green teams, carbon footprint is also tabulated and basic sustainability reports are often generated and posted online.
In this blog, we will use corporate sustainability in its widest sense and will refer to the ESG framework when addressing the specific aspects of corporate sustainability.