Last November, I was invited by the Malta Employers’ Association to participate in a panel discussion being organised in the context of their annual conference. This was one of many conferences and events this year which tackled the concept of corporate sustainability. Having started off working in this field a few years ago, I was pleasantly surprised with the momentum that the concept has received in the past year or so….what a contrast to previous years, where the mere mention of corporate sustainability would be met with cynism and resistance. It can be safely said that in the last few months the concept of sustainability has moved from the fringes to the mainstream.
But what do we mean with ‘corporate sustainability’? And how does this relate to ESG? By definition, Corporate Sustainability is an approach aiming to create long-term stakeholder value through the implementation of a business strategy that focuses on the ethical, social, environmental, cultural and economic dimensions of doing business. The strategies created are intended to foster longevity, transparency, and proper employee development within business organisations. This therefore requires a fundamental shift in mindset : whereas traditionally businesses were solely focused on the ‘bottom line’ and on bringing ‘value’ to shareholders, today the expectation is to bring value to a wider range of stakeholders. It ties in with the concept of corporate social responsibility, which entails companies taking responsibility for their impact on society. The terminology has now evolved further towards the concept of ‘ESG’. ESG (Environmental, Social and Governance) criteria are used by socially-conscious investors and shareholders to screen investments and assess a company’s impact on the world. They affect how your company will gather and retain funding from investment funds who have a ’socially responsible’ investment strategy.It is therefore imperative to keep in mind that the implementation of sustainability within an enterprise needs to be holistic in order to effective – that is, it needs to factor in all the 3 ESG pillars. This kind of approach is what is required for the fostering of the Green economy.
A green economy is defined as ‘low carbon, resource efficient and socially inclusive. In a green economy, growth in employment and income are driven by public and private investment into such economic activities, infrastructure and assets that allow reduced carbon emissions and pollution, enhanced energy and resource efficiency, and prevention of the loss of biodiversity and ecosystem services.’Thus the term ‘green’ does not only relate to environmental considerations, but it also takes into account the social dimensions, not to mention the tenets of good governance.
So what is driving this impetus? There are various factors – the push being created at the EU level with the adoption of the ‘Green Deal’, the upcoming introduction of the Corporate Sustainability Reporting Directive, not to mention the growing consumer trends towards brands which are aligned with positive values. However one must not underestimate the fact that a corporate sustainability approach ultimately makes good business sense. A well thought out and executed sustainability programme can not only help the enterprise make substantial cost savings, but if done strategically, it can also help the enterprise become more efficient and profitable by attracting and retaining the best employees, innovate its product and service offering, and attracting a wider client base – not to mention attracting partners and investors. All this has been amply studied and the correlation between sustainability and profitability cannot be ignored.
This approach is not just for the larger corporations. Being smaller and leaner, SME’s enjoy a substantial advantage in that they can better leverage the power of a well- executed sustainability strategy to compete with the larger players. And the good news is that we don’t need to re-invent the wheel … with established frameworks to follow, the development and implementation of such a strategy does not need to turn into a complex and costly exercise. Furthermore, with Malta Enterprise’s recently launched schemes, the bulk of the cost can also be covered. With all these tools and resources in place, it would be just madness for an SME to delay the adoption of a corporate sustainability strategy, which can be the main strategic tool that would enable it to not only survive, but thrive, in the new ‘Green’, post-covid economy.
Dr. Roberta Lepre
Managing Director & Lead Consultant
WEAVE CONSULTING – the ESG Specialists
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