Sustainability Performance and Reporting

Irene M. Herremans

• Publisher: Business Expert Press
• Year: 2020
• Print ISBN: 9781951527204
• eBook ISBN: 9781951527211
• Topic: Business
• Subtopic: Financial Accounting
• Index: Business

This book provides a step-by-step approach for organizations to reap benefits from a more sustainable approach. As organizations tackle global challenges, the faces of our businesses and our economic system are changing to consider the interests of all stakeholders rather than just shareholders. This book provides a step-by-step approach for organizations to reap benefits from a more sustainable approach. It begins with a brief history of the concept of sustainability as it applies to both performance and reporting. Implementing sustainability in an organization begins with the development of policies which are consistent with the expectations of its stakeholders. An organization's active participation in multi-stakeholder initiatives helps to align the policies with societal trends. Once the policies are developed, a management system is crucial to ensure congruence of policies with actual performance. Then, periodic reporting of performance based on well-recognized standards aids stakeholders in assessing an organization's performance–reporting also helps stakeholders to determine if performance aligns with their expectations. Both internal and external assurances build stakeholder trust in the organization's performance and reporting. Finally, the book concludes with a reflection on key messages and potential future actions for continuous improvement.

CHAPTER 1

The Concept of Sustainability

Main purpose: To comprehend sustainability as a concept: models, definitions, its relationship to capitalism, and its evolution.

Objectives: After reading this chapter, you should be able to do the following:

• • Recognize that companies are rethinking capitalism to be inclusive of the concepts of sustainability and stakeholders.
• • Clarify the dimensions of sustainability and the role of stakeholders.
• • Identify events that helped to shape the concept of sustainability over the years.
• • Compare and interpret various models used to represent sustainability.

The purpose of any company should be to make people’s lives better. Otherwise, it shouldn’t exist.

—Ford Motor Company, Letter from William Clay Ford, Jr. ­Executive Chairman Jim Hackett, President and Chief Executive Officer

Rethinking Capitalism: Sustainability and Stakeholders

We are living in exciting times as we move forward to clean up our planet and make it a better place for everyone to live. No doubt we face challenges, but as we work together to share knowledge and resources, our journey will be made easier. Our journey is one of sustainability, not sustainability as a final destination or as an afterthought, but rather sustainability as an integrated and innovative approach to the way we conduct business, referred to as sustainable capitalism or sustainable business. To begin this journey, let’s review a few basic characteristics of these two concepts: capitalism and sustainability. We will then be in a position to discuss how a capitalistic system might be adjusted to serve society’s needs and expectations in a more sustainable manner.

Capitalism

A capitalistic economy generally has the following characteristics:

• • Private ownership of most resources through shareholder ownership;
• • Competitive markets providing high-quality goods and services based on supply and demand;
• • Low amount of government interference and regulation;
• • Individuals working to create wealth in their own self-interest; and
• • Growth and expansion through reinvestment of profits.

Sustainability

These characteristics of capitalism worked well in a very different era: one of plentiful natural resources and fewer people. However, today’s capitalism needs to address societal concerns, such as climate change; air and water quality; land contamination and reclamation; scare resources for a growing population; harmful working conditions; and equal opportunity regardless of race, religion, or gender. Self-interest and low government regulation do not address these concerns well.

The capitalism of today needs to fit within today’s context: one that recognizes the expectations of all stakeholders affected by a company’s activities, not just the shareholders (owners). As well, companies are expected to carry out their operations while respecting their employees, customers, and communities. At the same time, they should produce products and services efficiently to conserve resources and lessen their impacts on the environment. Because the wealth in large corporations is often greater than the economies of small countries, businesses should be expected to use that wealth to solve society’s problems and provide a higher quality of life for everyone.

To address society’s problems, companies of today are integrating environmental and social issues into their operations to become more sustainable. A sustainable business is cognizant that a healthy environment and prosperous communities lead to a more stable and resilient world for current and future generations. Sustainability considers three dimensions that strive to include everyone:

• • economic (products and services are provided profitably);
• • social (all members of society share the wealth and enjoy a high quality of life);
• • environment (economic and social activities should leave the planet with diverse, plentiful resources for the use by, and enjoyment of, current and future generations).

These three dimensions of sustainability are also known as the 3Ps of profits, planet, and people. Considering all stakeholders, sustainable businesses produce profits as if the impact on the planet and people is important as well. Even though other models of sustainability have appeared over the years, we will use this original depiction of sustainability, still very popular today, to contemplate how capitalism can integrate sustainability into business operations (Figure 1.1).

Figure 1. Sustainability Venn diagram model

Source: Based on Sadler (1990)

Sustainable capitalism assumes a higher purpose than just making profits. That is the reason some of the more recent models of sustainability have substituted the term prosperity for profits. Prosperity broadens the purpose of a business to benefit all members of society, not just maximizing value for the shareholders. The purpose of our economic system, and thus our business...

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Dedication
• Abstract
• Contents
• Introduction
• Chapter 1
• Chapter 2
• Chapter 3
• Chapter 4
• Chapter 5
• Chapter 6
• Chapter 7
• Chapter 8
• Glossary
• Referenxe
• About the Author
• Index
• Backcover