StepChange Primer. Sidhant Pai, Chief Science Officer, StepChange Inc.
StepChange Primers provide brief overviews of important subjects in corporate sustainability. Follow us to receive notifications on future content.
In 1987, the United Nations established what has come to become the modern definition of sustainability - “meeting the needs of the present without compromising the ability of future generations to meet their own needs”. Since then, there has been a significant evolution in this space, including the formalisation of the UN Sustainable Development Goals (SDGs) in 2015. The 17 SDGs represent a collective call to end poverty and protect our planet, providing a general framework to call out unsustainable activities and define sustainable alternatives.
Over the past few decades, there has also been increasing global consensus that the responsibility to manifest the UN SDGs lies not only with the nation-state institutions that direct policy, but also with the organisations, corporations and individuals within these nations. In particular, corporations that form the backbone of the modern industrial economy are now being looked upon to take meaningful steps towards aligning their operations with these broader societal objectives. In practice, this has taken a few different forms, resulting in a complex amalgamation of corporate sustainability terms such as Environmental, Social & Governance (ESG), Corporate Social Responsibility (CSR), circular economy, etc. A detailed breakdown of these terms is the focus of an upcoming blog post. This particular primer is intended to provide a simplified introduction to corporate sustainability. In particular, corporate sustainability, as defined in this primer, relates to the sustainability of the underlying business (ie - the real impact the organisation has on the world via business-as-usual operations). In this regard, it is conceptually different from the principles of Corporate Social Responsibility (CSR) which usually emphasise the need for corporations to invest in environmental and social impact goals outside the scope of their core operations.
How do you measure corporate sustainability? Generally speaking, the purpose of corporate sustainability is to ensure the ‘sustainable’ use of both natural and human resources in the pursuit of economic sustainability. As a result, while there is no universal standard for measuring corporate sustainability, there are usually three broad pillars that are considered:
1. Environmental pillar: An accounting of the beneficial or deleterious impacts of the underlying business operations on the environment (air pollution, water pollution, land use, climate change, waste generation, ecosystem degradation, etc.).
2. Social pillar: An accounting of the beneficial or deleterious impacts of the underlying business operations on society (social justice, environmental justice, public health, labour participation, poverty alleviation, etc.)
3. Economic pillar: An accounting of the economic metrics associated with the underlying business operations (profitability, job creation, innovation, etc.)
While ESG frameworks are often used to define and track corporate sustainability goals, there are nuanced differences between Corporate Sustainability frameworks with Corporate ESG frameworks. However, the lack of any standardised use of these terms means they are often conflated and used interchangeably.
In order to account for this, it is worth noting that a fourth pillar of Governance (G) is also often included (either implicitly or explicitly) when developing corporate sustainability roadmaps. Governance metrics are intended to investigate a company’s internal processes, covering issues such as board diversity, compensation, transparency, corporate ethics, etc. Refer to our primer on ESG for more information!
How do you become a sustainable corporation?
While there are multiple pre-existing frameworks to approach corporate sustainability, the following list provides some generalised best practices.
Each of these will be the topic of future blog posts, but they are listed
below in brief:
1. A rigorous and structured corporate sustainability accounting (CSA) exercise to identify the points of highest leverage within the defined organisational boundaries. This is usually achieved via the development of in-house expertise, expert consulting partners and the use of specialised corporate sustainability software.
2. The development of a corporate sustainability strategy (CSS) based on the above accounting exercise. The CSS should set up a transparent and structured framework to design, develop and propose high-impact interventions within the context of a company’s regular operations.
3. The development of a corporate Theory of Change (ToC) model to reflect the impact hypotheses in the CSS proposals. The ToC should clearly map the intended outcomes of each proposed sustainability intervention in the CSS, outlining the causal links and assumptions are necessary to their execution.
4. The setting of sustainability targets that are specific, measurable, achievable, relevant and timely (SMART). These targets should align with the corporate ToC model and include a set of sustainability metrics that map to each individual target.
5. The development of an analysis and decision-making framework to inform science-based decision-making within the organisation in a manner that is consistent with the CSS.
6. A reporting and dissemination framework to communicate the impacts of various interventions, while dynamically benchmarking the company’s performance (relative to both itself and its peers). Given the increasing demands on our planet's resources, it is imperative that the companies of tomorrow look to build sustainable business practices that enable their long-term viability.
Corporate sustainability should thus be a core priority for any organisation. Stay tuned for more detailed primers on the various tools, techniques and methods to measure, analyse, track and report corporate sustainability performance.
StepChange is a climate-tech startup that helps companies and brands accelerate their sustainability journey and transition to NetZero. Learn how we may be able to help your organisation through our website or simply follow us on LinkedIn to stay tuned!
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