By Shikha Nepal
Globalization together with technological advancement has brought immense economic opportunities for businesses and organizations worldwide. The world has become one. As a result, problems and issues are shared. They impact everyone around the globe. This is the reason why recent dramatic changes within the global economic, political and social forefront have not only affected the economic goals of many large companies but have also shifted their role as “profit generators” to “sustainable companies” or “socially responsible companies”. This major shift has compelled companies not only to get involved in major activities related to sustainability and social development, but also to integrate sustainability and corporate social responsibility as part of their core strategies.
The concept of sustainability combines the environmental, social, financial, ethical, legal and political issues that can be both internal and external to the company. It pushes companies to set goals and milestones to address specific issues.
As defined by Brundtland Report (1987)1, “sustainable development satisfies the needs of the present generation without compromising the chance for future generations to satisfy theirs.” In addition, various environmental, social, cultural and economic factors come into play while designing and developing any sustainability related strategy or product. McKinsey2 developed a Triple Bottom Line Model for addressing and tackling various pertinent issues that ultimately leads the way to sustainable development.
Most Fortune 500 companies are implementing initiatives that target a broad range of sustainability issues. A well-known example is General Electric’s Ecomagination3 campaign, which aims to “imagine and build innovative solutions to today’s environmental challenges while driving economic growth”. The GE campaign utilizes technical, human, infrastructure and manufacturing capabilities to identify various environmental issues as well as to develop and implement environmentally friendly products, technology and services. Another example is Coca Cola. The company’s sustainability initiatives target the areas of water, climate protection, packaging and recycling, and community.
According to a survey by McKinsey Global Survey4 about the mindset and attitude of top level executives towards the concept of sustainability , 33 percent of the respondents said their companies’ top reasons for addressing sustainability include improving operational efficiency and lowering costs. Survey results show that “this concern for costs replaces corporate reputation as the most frequently chosen reason”. Reputation is the second most cited reason, followed by alignment with the company’s business goals, mission, or values and new growth opportunities.
Companies around the world are striving to achieve the highest level of sustainable practice and responsibility on every aspect of its operation. To better analyze and compare the sustainability related performance of companies, Corporate Knights, a Toronto-based media, research and financial products company, compiles an annual list of the 100 most sustainable companies. The companies are weighed against various performance indicators from energy productivity, innovation capacity to pay ranges. Their sustainability metrics encompass a wide array of social, economical, environmental and ethical activities undertaken by the company. The pressure to stand out on these grounds is more than ever. Corporate Knights releases this Global 100 List5 every year at the Annual Meeting of the World Economic Forum in Davos.
The concept of sustainability is a powerful force that has elicited companies’ involvement in various social, economical, environmental, legal and political issues. Integration of sustainability within a company’s core strategy has become imperative for a company’s reputation and economic success.
1 Brundtland Report, Our Common Future, 1987, October 2011, http://conspect.nl/pdf/Our_Common_Future-Brundtland_Report_1987.pdf
2 McKinsey Quarterly, Valuing Social Responsibility Programs, Sheila Bonini, Timothy M. Koller, and Philip H. Mirvis, 2009, https://www.mckinseyquarterly.com/Valuing_social_responsibility_programs_2393
3 GE Website, http://www.ecomagination.com/about
4 McKinsey Quarterly, The Business Of Sustainability: McKinsey Global Survey results, 2011, https://www.mckinseyquarterly.com/Energy_Resources_Materials/Environment/The_business_of_sustainability_McKinsey_Global_Survey_results_2867
5 Corporate Knights Global 100, 2012 Global Annual List, http://www.global100.org/annual-lists/2012-global-100-list.html