The importance of sustainability is a matter of concern these days in the global corporate world. Corporate sustainability plays a vital role in getting the targets of the company. Now the companies are not focusing on current goals which are the profit but also on the long-term sustainability of their business with the attainment of ultimate goals.
This term, corporate sustainability, had a long discussion among the various commercial experts, business houses, and prominent media. So we should understand what is corporate sustainability. Therefore, it has become very important to deeply understand the corporate sustainability reporting directive and its meaning and benefits.
Meaning of Corporate Sustainability
Corporate sustainability is mainly concerned with the traditional growth and profitability system. This is the latest and growing corporate management system developed for the sustainable growth and profit-making ability of the business. Apart from profit-making, this system also ensures social justice, environmental protection, equality, and economic development.
The main purpose of corporate sustainability is to develop sustainable stakeholder value through effective planning based on social, environmental, cultural, and social factors for running a business. So it is mainly designed to emphasize on present requirements of a business without disturbing future needs like environment, social development, people, and profit. For effective corporate sustainability, the following things must be given priority.
Benefits of Corporate Sustainability
The policies, planning, and procedures of the business houses should neither be self-oriented nor harmful to future growth and reputation but should continuously make efforts for future economic growth and stability in rates. The Sustainable company acquires goodwill from customers and attracts more and more customers resulting in increased sales and the company makes more profit.
Three Pillars of Sustainability
The sustainability of a company is based mainly on three pillars: 1. Social Piller 2. Environmental Piller 3. Economic PillerThese three pillars are the backbone of any company. Big multinational companies like LG, Samsung, KFC, and Honda give special attention to it. A summary of these pillars is as follows:
1. Social Piller
It represents the customers, people, employees, and stakeholders. If the company takes proper steps regarding their needs, welfare, and interests, the company will get sustainable for a long period.
The employees will make their full efforts to make their company profitable and customer satisfaction will help in addition to new customers and more and more people will come to know about the social policy of the company which will result in more profit and long sustainability.
2. Environmental Piller
Environmental also plays an important role in the long-term sustainability of the company by focusing on packaging wastage, smoke pollution, and wastage of water.
For example, taking effective steps to save the environment will not only clean our planet but also reduce the production costs of the company which will result in long sustainability and an increase in profit.
3. Economic Pillar
The Economic Pillar directly refers to the profile of the company. If a company is Continuously making a profit and holds very good equity that company will be able to sustain itself in the adverse market conditions. Therefore, any company working on these three pillars properly will get long sustainability.
Effects of Sustainability on Corporate Governance
Accountability, honesty, transparency, and regulatory compliance are the main components to affect sustainability in corporate governance. These help in increasing the goodwill of the company among the people globally which results in reaching the end users and making more profit and sustainability.
What is the Purpose of Corporate Sustainability
The main purpose of sustainability is to stop the policies and practices of the company which may cause damage to the environment and waste money through pollution, waste of water, and releasing factory-polluted water and release waste into rivers. This will affect society as a whole and may cause heavy fines. Non-compliance with stopping these practices will certainly damage the goodwill and economic growth of the company.
How to Attain Corporate Sustainability
For the long and successful running of a company, some most important steps must be taken into consideration. Now, let us discuss what are those steps and how can we achieve them.
Customers are a very valuable asset to any company. Companies that have good customers (give orders in bulk, make timely payments, not easily switch over to other companies for purchase) always concentrate on how to retain their customers for a long time. But how it could be done? Let’s see how.
- Hear on their Facebook
- Take care of your competitors
- Set the true expectation
- Give preference to other experience
- Regular communication with the customer
- Forecasting legal obligations
- Best Talent acquisition
- Set the desired targets
- Set your expertise
Cost savings also play an important role in enhancing the profile and sustainably of the company. The saving in costs of raw materials, labour, and other overheads results in increasing profitability which is the best way to achieve sustainability. There must be a certain cost-cutting plan during a recession or slowdown of the market.
The reputation of the company creates trust in the customers which results in the addition of more and more new customers and holds the old customers for a long period. This step increases the credibility of the company and results in sustainability. This changes the entire complexion of any company. It is, therefore, very important to forecast it and take timely action to save the company from any kind of loss.
Three basic principles of market standards must be met:
Towards the environment, regulations, and clients.
Towards staff, business relationships, financial statements, and market.
Bonafide interest and efficiency towards the primacy of customers.
Enhancing employees’ talent and trust is another important factor for companies’ sustainability. There are several steps to achieve it. Some important steps must be taken include:
- Always be supportive and honest.
- Sometimes be quiet keeping in view the situation at a particular time.
- As far as possible create accountability.
- Respond to the suggestion of Facebook.
- true appreciation of others.
- Maintain consistency.
Forecasting severe regulations is also one of the important factors that must always be taken into consideration. Though the company is running smoothly and producing a very good profit still unfavorable regulations can change the entire complexion of any company. It is therefore very important to forecast it and take timely action to save the company from any kind of loss.
- Concentration on the current marketing needs
- Encourage teamwork and boost them for competition.
- Find out an effective solution to any problem.
- Emphasize the group discussions
- Why Sustainability is Important?
- For Social Development
It is mainly concerned with the development of the community, employees, and stakeholders.
Under this policy all the employees are treated fairly, respectfully, and motivated properly with will be very helpful in increasing productivity and profitability in the present and long term.
Effective development planning by way of fair wages, a safe work environment, and respectful treatment of labour will help in increasing the workforce with greater skills for the future.
This is the most important part of corporate sustainability because by this the management reviews the better alternatives of a better work environment by way of greenery, reducing carbon in the air, and removing the packaging and other waste from the workplace.
The business houses are on the way to deploy battery transportation in factories and offices to reduce the pollution to the minimum level which will increase the health and efficiency of workers for the short and long-term sustainability of the business.
This is mainly focused on balancing economic development, social equity, and environmental protection. The present needs must be considered notwithstanding the ability of the upcoming generation.
Sustainability growth should not only depend on government policies and procedures but industries must play an important role in development in the present and also in the future. The industries must develop in a way that should not only be useful for the present but for the future also.
It is concerned with the investor’s interest in the industries which deals with the person(s) deeply interested in the development of any industry in the present and the future. It is based on the business and the investor’s relationship which is created by trust and respect because it will always be helpful for the business to achieve its motives easily.
The companies must identify them and agree with all like shareholders, investors, employees, suppliers, and customers to ensure that social and legal trust is maintained with them in the present and future.
The word sustainability itself denotes that continuous growth in the present and future means growth in the present which is continuously transferred to the future.
Corporate sustainability means the policies and plans of the government, business, and society must be for the continuous development of industries by way of social development, environmental protection, stakeholder relationships, and economic development for the present and the future.
Companies and corporate houses must review and take the necessary steps to retain and maintain corporate sustainability without which it will be very difficult to exist in today’s competitive business environment.
Frequently Asked Questions (FAQ)
It has been noticed from the last so many years that companies who take timely steps regarding sustainability get various benefits like getting an increasing brand image in the market which also helps to beat the competition
- Best acquisition and retention of employees
- Ensure an increase in production
- Helps in cost-cutting
- Meet the requirements of all regulations
- Helps in reducing waste
- Increase in the profitability of the company
The main three elements of corporate sustainability are the social elements, environmental elements, and economic elements.
Most importantly the word corporate sustainability refers to the way of doing business that helps to establish long shareholding, a favourable business environment, create an economic and social strategy, and consumer hold.
Every company in the world wants to make the best economic, social, and environmental decisions which are possible only with long planning therefore sustainability plays an important role in achieving them.
Governance ensures transparency and accountability which are the main factors of sustainable decision making.
Environmental sustainability can be practiced in different ways like recycling metal, plastic, and materials. The recycling of mining waste is also an effective way of environmental sustainability.
Save energy, water conservation, and recycling factory and mining waste will help in reducing the cost and result in more profitable and sustainable business.
According to the latest research, it is found that high-sustainability companies are preferred by wealthy investors. Companies that have good sustainability get more investment (about 15% more) than those with low sustainability.