Sustainability is turning into a success factor for business
Around the globe, activities to protect the climate are on the rise; crises, hunger, violence, and war – also in Europe again -, massive loss of credibility of institutions in society and the never-ending Corona pandemic: The environment for companies and institutions is changing rapidly and dramatically. The acceptance of entire industries in society, such as banks, the automotive industry, but also the chemical and plastics industries, are one focus of public debate. Stakeholders are scrutinizing economic and institutional behavior, and they are asking for transparent social benefits; sustainability is consequently becoming a business case. Furthermore, economic operations should not just be less harmful, not just destroy and pollute less, but create useful and safe products for the biosphere and technosphere right from the beginning.
The disaster is getting closer
Furthermore, estimates and forecasts by leading research institutes indicate that mankind and nature are heading for an ecological catastrophe, and an ecological catastrophe affects both the economy and society. The future of the planet is the same as the future of humanity: its conservation is consequently the greatest challenge for global society. Multiple summers of intense heat have transformed climate change from a theoretical discourse into a real threat. These issues must be faced by businesses, society, and politics.
The course is set towards sustainability
The good news is that a drive toward sustainability has long been underway in business and society, not just characterized by idealistic and agenda-driven beliefs, but also by increasingly clear guidelines from the financial sector. Green’ is no longer a lifestyle; green has become an economic imperative deciding on lending and ratings. Peter Gassmann of the consulting company PwC comments on the trend toward reporting according to metrics such as environmental, social and governance (ESG): “The various ESG dimensions have become an important assessment parameter for companies. Not just access to financing, but also the way the company is seen by potential new employess as well as by the broader public depends on its own ESG transformation. To remain credible on sustainability issues, companies should bundle their sustainability projects strategically and operationally in top management.”
The concept became well-known on an international level primarily through its reference in the report of the Brundtland Commission. The United Nations had set up this World Commission on Environment and Development in 1983 under the leadership of the former Norwegian Prime Minister Gro Harlem Brundtland. Its mandate was to identify long-term prospects for a development policy that would also be environmentally friendly. Since then, the economic, ecological and social dimensions have shaped discussions of sustainability. The economic dimension focuses on the long-term returns from the use of available resources in the sense of capital preservation. The ecological dimension means the economic necessity to preserve the existing natural capital as far as possible, but also the general necessity to secure the ecological conditions for human survival.
Three strategies make sense:
SUFFICIENCY:
Lower resource consumption through a reduction in demand for goods.
EFFICIENCY:
More productive use of materials and energy (productivity of resources)
CONSISTENCY:
Use of nature-friendly technologies (material cycles, recycling, waste avoidance).
But is it sustainable to simply build electric cars, for example?
Sustainability integrates ecological, economic and social criteria. So, it’s not just about reducing the carbon footprint, supplier and raw material management, recycling or circular economy, it’s also about human rights. And it is about abolishing forced and child labor, corruption, and discrimination. The issue of comprehensive sustainable development has become increasingly important in recent years. In 2015, for example, the UN General Assembly adopted the “2030 Agenda for Sustainable Development” as part of the UN Summit on Sustainable Development.
Agenda 2030
17 UN Sustainable Development Goals as part of a corporate strategy.
In 2015, the United Nations adopted the Sustainable Development Goals (SDGs), 17 goals to be achieved by 2030 to address the world’s common challenges of poverty, hunger, discrimination, inequality, climate change, environmental degradation, prosperity, and peace and justice. With the achievement of SDGs, opportunities open for businesses with an estimated growth potential of around $12 trillion, in addition to creating or sustaining millions of jobs. As with any new growth opportunity, much depends on making the SDGs a central part of corporate strategy, as many stakeholders have already done. A so-called SDG roadmap sets out the scope, targets, and actions.
ESG criteria for reporting
ESG criteria (Environmental, Social, Governance) are a further development of the Corporate Social Responsibility and Sustainability Goals, they are partly identical with the contents of the Agenda 2030, and they have their roots in the financial sector. In recent years, ESG criteria and corresponding reports have become an integral part of the annual reports of listed companies. According to recent studies, 65 percent of investors consider ESG goals as a decisive factor before investing in a company. In addition to investors, consumers, particularly Millennials and Generation Z, are a most significant driver of ESG reporting: 92 percent of Generation Z consumers would switch to a brand that supports ESG issues as compared to one that does not, and will spend more money on a sustainable product.
Stricter EU standards
The EU Council and Parliament amended the 2014 Directive on Corporate Sustainability Reporting in June 2022. It now introduces more detailed reporting requirements and ensures that large companies are committed to publishing information on sustainability issues such as environmental rights, social rights, human rights and governance factors. The EU regulations on non-financial information cover all large companies and all companies listed on regulated markets, including those responsible for evaluating the information at the level of their subsidiaries. The regulations also apply to listed SMEs, taking into account their specificities. SMEs will be able to benefit from an exemption (“opt-out”) during a transitional period, i.e. they will be exempt from the implementation of the Directive until 2028. With regard to non-European companies, the obligation to submit a sustainability report applies to all companies that generate net sales of more than €150 million in the EU and have at least one subsidiary or branch in the EU. These companies must submit a report on their so-called ESG impacts, i.e. environmental, social and governance aspects as defined by the directive. French Economy Minister Bruno Le Maire commented: “This agreement is excellent news for all European consumers. They will now be better informed about the impact of companies on human rights and the environment. This means more transparency for people, consumers and investors. It also means that the information provided by companies will become more readable and simpler. Companies must fully play their role in society. Greenwashing is history. This text puts Europe at the top of the international race for standards by setting high levels in line with our environmental and social ambitions.”
High-performance
communication
systems provide the
competitive advantage
Companies and institutions are increasingly struggling to respond appropriately to the challenges of constant change. In the competition for the best places, the successful companies are the ones with the ability to communicate their economic, ecological, and social actions to their stakeholders in a convincing way. This requires the ability to communicate their economic, ecological, and social actions convincingly and to build up a correspondingly positive reputation among the (media) public. This works best with a high-performance communications system, in terms of speed, responsiveness, agility and learning skills. The competition for effective communication has become tougher, and resources such as time and money are becoming scarcer, while complexity is increasing. Efficient communication systems and effective communication ultimately define winners and losers in the markets.
We communicate for your business
Have we caught your attention?
We are your experienced specialist and partner with long-standing expertise.
We support you in all fields of communication.
Schedule your free initial appointment now!
Specialists for your industry
Our consultants have been working on the core topics for many years. More than two decades ago, they were already trendsetters in agencies and companies, identifying relevant issues and translating them into cutting-edge press and PR activities. Their experience and know-how bring the benefit to you – professional skills and PR expertise intertwine for an excellent result.
