Corporate Sustainability is an Old Age Concept – But Why is There So Little Success?
Corporate sustainability has been in the corner of the business owners’ minds for ages, yet only a few businesses have succeeded in fostering a sustainable change. Globally, more than 2,500 businesses follow the GRI reporting framework to evaluate how effectively their enterprise is integrating sustainability. Despite this, the businesses’ contribution to improving the triple bottom line is still insubstantial.
Many business executives and CEOs design a sustainability approach and begin by spending numerous management resources and millions of dollars in the name of sustainability yet the crusade loses its momentum along the way. In truth, only 2 percent of programs targeting corporate sustainability successfully achieve their goals.
Comparing this number to the success rate of other corporate transformation strategies indicates how far behind businesses are lagging. On average, 12 percent of businesses’ transformation program reaps success as compared to the bleak 2 percent of corporate sustainability programs.
According to Jenny Davis-Peccoud – An industry leader in corporate responsibility practices, “Too often, corporate sustainability gets stuck in first gear, while the need to change is always accelerating” However, Jenny claims, once a business finds a way to navigate this roadblock to sustainability, the progression becomes easy and such businesses often become leading change agents.
The Complexities of Sustainable Development Goals (SDGs)
In the words of John F. Kennedy, “Defining goals clearly and making goals less remote and more manageable is the right way to encourage people to see them, understand them, and drive towards its achievement” This is something SDGs fail to achieve with a long list of complex and hard-to-manage goals. Difficult-to-remember and hard to adopt SDGs is the leading reason why companies still find it hard to integrate corporate sustainability.
On the other hand, clearly defined and simple Millennium Development Goals (MDGs) present the best example of how complex issues such as hunger, poverty, and preventable diseases can be resolved with simplicity.
The Adversities of Climate Change
The thirteenth sustainable development goal signifies the urgency to combat climate change and yearn to make climate actions and global responses more resolute and strong. The changing weather patterns, rising sea levels, and the severity of weather events continue to increase. Furthermore, the greenhouse gas emissions have exceeded their highest level and the surface temperature of the earth will likely add in another 3 degrees centigrade in this century.
The population of the world is reaching 8 billion and this climate change is costing people, affecting lives, damaging communities, and continually disrupting national economies. The disastrous impacts of climate change are evident yet, the progression is slow. This often makes it hard for businesses to realize the rising importance of addressing such adversities and complicates the adoption of corporate sustainability.
The Impact of Carbon Stocks & Exchanges
Carbon markets have already made us lose 15 years in the fight against climate change and the corruption in the markets is only making things worse. Global corporations are keen to continue with the massive production of carbon and ignore its impact on the environment. However, sustainable corporations are the ones driving more profitability.
According to a recent study, businesses that are actively planning & managing climate change have an 18% higher ROI than businesses that aren’t. In addition to this, their profitability is higher than 67% of the businesses that refuse to disclose their carbon emissions.
Corporate Sustainability Major Hurdles & Challenges
There is a rising need to adopt corporate sustainability yet, the sustainability strategies rarely succeed. One of the leading reasons for this lack of success of corporate sustainability is that businesses still haven’t built familiarity with its core concepts.
Many businesses still fail to realize the positives of adopting corporate sustainability as the resulting constructive impact on the environment & society is often insignificant and immeasurable.
Many of the corporate sustainability challenges remain unmet and the crucial elements of sustainability such as the poverty gap, ecological gap, trust gap, and governance gap continue to broaden. The following are the major hurdles to corporate sustainability and the reasons why its success is still fairly limited:
- Multitudes of Corporate Sustainability Metrics
There are metrics to measure the effectiveness of corporate sustainability initiatives such as ecological footprint, life-cycle assessment, and the Global Reporting Initiative (GRI). Yet, there isn’t a single defined suite or metric to measure and contrast the sustainability efforts of all businesses. In a way, the multitudes of corporate sustainability metrics often impose more harm than good and lead to needless confusion.
- Inadequate Government Policies
By implementing the right set of rules & principles, the government can encourage businesses to become compliant with the values of corporate social responsibility. The idea is to build a medium of collaboration between businesses and the government to advocate for the need to protect the environment and society. In truth, this ideology seizes to exist and there are minimal chances of transitioning this notion into a reality without adequate governance policies.
- Consumers Fail to Acknowledge Sustainability
The consumers can have a strong voice in the matter of corporate sustainability yet, they are unaware of the positive impact the right choices can bring. By simply valuing sustainability in their purchase decisions, consumers can bring a drastic change to the entire system. The acknowledgment of sustainability from the consumers’ end is the fastest way to trigger a change in business approaches.
- Corporate Sustainability Fails to Fit into Business Case
Business managers often claim that corporate sustainability initiatives fail to fit into their business case and they are not completely wrong. Corporate sustainability certainly reaps fruit yet the rewards are intangible and long-term. On the other hand, businesses are keen to adopt approaches reaping short-term benefits and augmenting productivity. In this way, corporate sustainability fails to comply with the common business case.
- The Complexities of Business Threats & Opportunities
Many businesses are incapable to evaluate the looming business threats & lack the skills needed to prioritize the ongoing societal & environmental challenges. This is another reason why corporate sustainability initiatives fail to flourish as businesses aren’t aware of the plausible consequences. Besides threats, businesses also fail to realize the business opportunities the society and environment brings. Equipped with the right set of knowledge, businesses can even maximize their profitability by minimizing the negative externalities.
- Fear of Greenwashing
Businesses planning to adopt corporate sustainability do also fairs the underlying risks of skepticism & cynicism. Such hurdles in communicating good deeds often invite public criticism and make businesses wary of the negative impacts of doing something positive. Businesses heavily rely on reputation and this fear of being perceived as greenwashers is too big a risk to take in the name of corporate sustainability.
- Lack of Sustainable Sourcing Rules
There are hardly any sustainable sourcing rules and this only brings about complexities for businesses trying to identify suppliers valuing sustainable sourcing. Sustainable sourcing isn’t just an effective sustainability measure but can also help successfully mitigate and manage business risks. The lack of sustainable sourcing rules only makes things difficult for businesses striving to adopt corporate sustainability.
The Right Way Forward
Understanding the importance of corporate sustainability, the correct business sustainability approach should strive to resolve the rising issues relating to child labor and unethical mineral sourcing. In addition to this, corporations must adopt and follow global agreements such as the Crypto agreement that are keen to adopt sustainability.