Updated: February 2023
Companies play a huge role in creating a more sustainable world – arguably, one of the most important. And as the public becomes more knowledgeable around sustainability issues and starts to make more informed decisions, companies need to listen to their customers in a heightened way. Because of this, sustainability management is climbing to the top of the agenda for plenty of business leaders out there – but knowing how to effectively implement new processes starts with knowing what sustainability management actually entails.
In this post, we’ll bust four common misconceptions about what it means to incorporate sustainability into business practices – because ruling out what sustainability isn’t will help bring into focus what’s truly most important.
Myth #1: Sustainability is all about the environment
Because media coverage tends to have a narrow focus on global environmental movements, many people only associate sustainability with the natural world and climate change. In reality, sustainability is much more comprehensive. Here's a better way to break it down:
- Environmental sustainability focuses on biodiversity conservation without preceding economic and social progress. This means safeguarding water, saving energy, reducing waste, recycling, limiting or eliminating the use of plastics, using sustainable transport, and protecting flora and fauna.
- Social sustainability concerns people's living conditions; for example, health, security, education, justice, and how power is exercised, as well as opportunities to improve them. It also concerns how these conditions are distributed, since the basis for a sustainable society is a fair distribution of resources and economic, social, and political influence.
- Economic sustainability is about ensuring that financial systems and growth do not stand in the way of ecological and social sustainability and finding new, fair, and resource-efficient business models, such as an economic system based on renewable resources.
The three dimensions of sustainability are all connected and influence one another, and the economic and social aspects of sustainability are a huge driving force in sustainability management for businesses. Businesses become more sustainable most effectively by investigating and gaining insight on where their biggest areas of impact are – and focusing their efforts on reducing the negative and doing more of the positive.
Myth #2: Being sustainable is expensive
Sustainability management may feel like an extra cost to your business – but these costs are mainly short-term. You may need to invest in sustainability management software, or hire staff members responsible for identifying sustainable business opportunities. There may also be indirect costs associated with readjusting your business focus.
But in the long run, sustainability is an investment with high return; you create business value for long-term resiliency. Studies have found that companies with high ESG performance scores enjoyed average operating margins that were 3.7 times higher than those of lower ESG performers. Moreover, insights into your company’s impact can inform new business opportunities that focus on turning your largest area of impact into more innovative solutions. This can help you stay ahead of the competition and grow your business, while the alternative could risk (for example) damage to your reputation due to uncovered labor issues in your supply chain.
Read more about how to turn sustainability into a business opportunity here.
Myth #3: Sustainability is just a phase
When it comes to consumption and its effects on the environment, awareness is growing amongst consumers. People are beginning to make demands on companies around the sustainability, authenticity, and traceability of their products – and those demands are coming from everyone, from Gen Z to older generations.
However, consumers aren't the only ones becoming more aware. Recently, we’ve seen several new laws come into place, such as the SFDR and the EU Taxonomy. Legislators are increasingly coming to grips with the importance of enforcing sustainability in businesses and other organizations.
Myth #4: Sustainability is only one part of your strategy
As “sustainability” becomes a more common buzzword, many companies mention it as something they’re implementing into their strategy. However, sustainability shouldn't just be one aspect of a strategy – it should be the foundation.
Just as financial information is necessary to identify areas of risk, business opportunities, and the overall health of an organization, so too should sustainability inform crucial business decisions. Again, sustainability is a mindset that constantly changes, develops, and adapts to the needs at hand, both in the short-term and long-term.
At Worldfavor, our product is built around the idea that sustainability isn't a static, once-a-year review used to endorse decisions. Rather, sustainability data is equally important as financial information to inform decisions and build strategies, because it is, in fact, financial information – just in a new form. For example, using the SDGs as a framework to build your business strategy not only takes your business objectives into account, but also incorporates central goals that progress society.
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