Sustainability covers a wide spectrum such as defining the limits for living, interconnections between society, economy, and environment, and equitable distribution of resources and opportunities. In 1987, the World Commission on Environment and Development offered a new definition “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.
As management guru, Peter Drucker, states “you can’t manage what you can’t measure”, the subject of Sustainability is based on sciences and uses measures for planning, monitoring and managing its three aspects viz. Environment, Social, and Economic, also referred in the context of corporate sustainability as the triple bottom line impact.
Below are some perspectives on the subject encompassing strategy, business and technology, greenhouse gas and carbon footprint measurement and management, environmental and social Life Cycle Assessment.
There is an acknowledgment of the science behind climate change, but there are also many conflicting views on the subject. While the urgency for reducing greenhouse gases is being acknowledged, there is limited understanding on the practical ways to measure, calculate, report, and strategize reduction in greenhouse gas (GHG) emissions. In the context of the current business and political environment, it is imperative to understand what the scientists are saying, the business implications, the evolving pattern of scientific data on climate that is emerging, and the implications for society in terms of adaptation and mitigation options as the climate will continue to change in the coming years. This implies understanding the impacts of change management with leadership engagement, need for empowerment that will result in effective action at an organizational level, and contributing to a cumulative net large impact taking the society to a sustainable future. This will require applying the scientific principles of environmental issues and environmental management practices, related to health of humans and ecosystems, understanding operational impacts to pollution of water and air, impacts of energy and climate change, water use and management, biodiversity, toxic substances, and solid waste management.
For a Corporate Social Responsibility (CSR) program to succeed, Corporate Responsibility must be aligned to the strategic imperatives of an organization. This will drive internal initiatives towards improving products, resulting in improved profits, and building of a stronger brand equity. The view that corporations are meant for just producing wealth without obligations towards its impact on society, and environment, is being challenged. This has been facilitated by the globalization of business and transparency in corporate operations. Different corporations have adopted different approaches to balancing the pursuit of profits and good corporate citizenship. It therefore becomes necessary for corporations to be able to measure progress of its sustainability programs, the impact of doing business on natural resources, pollution, and supply chains. However more pertinent to many internal stakeholders is how can sustainable initiatives be monetized. This requires establishing methodologies and metrics that track sustainability progress within organizations, that would reveal opportunities for growth. It requires applying management tools to drive corporate sustainability from the perspective of large, multinational corporations, balancing environmental stewardship, social well-being, and economic objectives; prioritizing actions for stakeholder engagement, analyzing sustainability reports, and examining perspectives of various stakeholders such as the investment community with related governance issues. Corporate financial decisions are increasingly being driven by availability of resources, and impacts of climate change. At the market level, organizations are being monitored by standards and indexes such as ISO, Dow Jones sustainability index, Carbon Disclosure reporting, Global Reporting Initiative, resulting in corporations seeking ways to staying and increasing profitability through efficiency and adopting policies aligned to the CSR principles of the organization. Thus financial and investment principles, financial analysis, financing and valuation can be integrated with sustainable investing and sustainability risk assessment.
There is a growing acknowledgement of the impact that business and economic activity are having on the planet. Thus is resulting in an increase in entrepreneurial activity based on sustainability principles of social responsibility, environmental friendliness, and energy efficiency. To determine activities that are based on enduring principles leading to implementation of the principles of sustainable business, and an opportunity to look at new businesses, business models, and technologies that are relevant in future with constrained resources requires the use of tools and technologies. One such example is Life Cycle Assessment (LCA) that provides the methods and tools for the systematic evaluation of environmental, social and economic aspects of a product or a service through all stages of its lifecycle. It involves systems analysis of the full range of environmental impacts, product life cycles, and supply chains. LCA provides the frameworks, principles, tools, and applications of life cycle assessment, use of software tools and databases that address social and environmental impacts in global supply chains. Another example is use of Digital Transformation. In this new age of technology revolution, Digital Transformation is influencing businesses through adoption of technologies such as cloud computing, big data, mobile computing, social computing, and analytics resulting in significant improvements in operational efficiencies and customer experiences. Digital Transformation is thus a means to driving sustainability objectives. Various industry frameworks on Digital Transformation and Sustainability have emerged. The confluence of the two is resulting in increased employee and worker productivity and safety, faster decision making with leaner infrastructure, reduction in carbon footprint, improvements in supply chain tracking and quality management resulting in reduction of losses, returns and waste, and meeting of regulatory requirements. Digital Transformation, and technology are becoming key drivers for corporate strategy of organizations in adopting a sustainability driven business model.
Defining and adopting policies that result in synergies between an organization’s corporate social responsibility (CSR) and its global value chain is a not a simple matter. While organizations may have a serious intent towards social responsibility, yet are only partially successful. Certain measures adopted by buyers do result in a positive social impact such as reviewing purchase practices, better production planning, having long term relations with suppliers, and investing in supplier capacity development in the form of training of supplier managers and workers. Locke (2013) provides an example of a Latin America headquartered company that supplies clothing products and sources from an Asian supplier. The company adopted the above precepts that resulted in growth and positive social impacts for the supplier company even in times of radical changes in the market place. Typical approaches include audits on the ground such as periodic onsite visits, providing CSR contacts to supplier workers, cooperation with local NGO’s, trade union support, etc.. The challenge of course is adopting it for every supplier especially in large corporations that have thousands of suppliers. Social Life Cycle Assessment (S-LCA) modeling helps address this through use of defined methods and frameworks. S-LCA can help identify hot-spots in the supply chain, define KPI’s to prioritize issues, provide information to help policy development, optimize on resource utilization and provide a basis to monitor responses at an operational, individual, and supplier level. This is achieved by crunching a large amount of data into useful information. The goals of S-LCA are to improve social conditions within supply chains by providing an understanding of the social impacts on the following parameters viz. labor rights and decent work, local community, human rights, governance, and health and safety along with certain defined sub-categories. This analysis is done for multiple stakeholder’s viz. workers, local community, value chain actors, society and consumers. CSR policies benefit from the information that S-LCA provides in bridging the gap between environmental LCA (LCA) and social compliance programs. S-LCA provides methods to assess risks and performances through the value chain. The methods and procedures follow guidelines published by UNEP and ISO frameworks. As a reference point, till date, over 300 S-LCA studies have been conducted. Below are some sources of information on the subject:
ISO 26000: Guidance on Social Responsibility: http://www.iso.org/iso/home/standards/iso26000.htm
Locke, R. M. (2013). The Promise and limits of private power: Promoting labor standards in a global economy. Cambridge: Cambridge University Press.