Concept of Sustainability and its Relevance to Business

This report critically evaluates the concept of sustainability and its relevance to business. It discusses the importance of sustainability in enhancing brand image, increasing productivity, and complying with regulations. The report also analyzes the importance of ecosystem services and the concept of sustainable corporate governance.

Assessment

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Critically evaluate the concept of sustainability and explain its relevance to business..........1
2. Critically analyse the importance of ecosystem services........................................................4
3. Critically discuss the concept of sustainable corporate governance.......................................5
4. Critically discuss the importance of sustainability performance measurement......................7
5. Critically evaluate the role of marketing, supply chain management, and Operations
management in sustainability......................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Sustainability can be referred to as the process of judiciously using the resources in order
to address the needs of present generation while ensuring that the demands of future generations
are not compromised at any point (Yang, Hong and Modi, 2011). The need for sustainability
arises majorly because of two basic principles of economics which state that, 'resources are
limited' and 'human wants are unlimited'. Sustainability stimulates the corporations to take
business decisions while taking into due consideration the aspects like human, social and
environmental impact in the long run instead of just the short term goal of increasing the
revenues and profitability. With the passage of time, organisations have constantly laid down
sustainability goals like zero wastage packing by a specific year, reduction of total carbon
emissions by a specific percentage, and so on. Such companies can duly accomplish their
sustainability goals through cutting of carbon footprints, reduction of use of energy, sourcing of
offerings via fair trade organisation, proper disposal of physical waste and many more ways
(Schaltegger, Hansen and Lüdeke-Freund, 2016).
The present report seeks to gain an insight into the concept of sustainability. Also, it
includes the relevance of this concept for an organisation. Further, it constitutes the importance
of ecosystem services. In addition to this, the concept of sustainable corporate governance is
explored in the project. Along with this, the significance of measuring sustainability performance
is taken into account. Lastly, the report covers the role of supply chain management, operations
management and marketing.
1. Critically evaluate the concept of sustainability and explain its relevance to business
The concept of sustainability was first mentioned in the Brundtland Report which was
published during the year 1987 (Origin of sustainability. WHAT IS SUSTAINABILITY?, 2020).
This document was also commonly called “Our Common Future”. It was elaborated for the UN
in a bid to give a warning regarding the adverse environmental outcomes of economic growth as
well as globalisation. It was mainly written for the purpose of addressing the challenges
emerging from the population growth and industrialisation.
Basically, sustainability can be identified as an effective business approach applied for
the purpose of creating value for long term by considering the way in which an entity functions
in social and ecological environment. Sustainability is encouraged by businesses on the basis of
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the assumption that it promotes longevity of company. As the expectations of community,
customers and government from businesses regarding corporate social responsibility are rising,
corporations are acknowledging the need to act in a sustainable manner.
Relevance of sustainability to business
Over the course of time, sustainability has not remained a choice for business, instead it
has become its necessity. There are several reasons behind the concept of sustainability being
important to businesses. These reasons are comprehensively discussed as follows:
Enhanced brand image:
Sustainability provides assistance to an organisation in creating a stronger brand image in
global market place. This happens as community, government and customers expect the business
to operate in a sustainable manner (Lüdeke-Freund and et. al., 2018). So, when the business is
able to meet the needs and demands of these stakeholder groups, it implies enhanced market
share and brand image for the company. This instils a sense of trust within the people towards
the brand and leads to the development of effective relationship of the organisation with the
wider organisational context. This has been the key to the public awareness ads of Colgate aimed
at promoting conservation of water.
Increment of productivity and reduction of cost:
Sustainable business practices have the potential to draw the attention of investors. When
more and more investors are willing to invest their money into the company, the productivity
levels of the individuals as well as the company increase. This leads to the company performing
in a desirable manner to fulfil the objectives and goal of the corporation. Also, the facilitation of
sustainable practices within the organisational premises itself ensures streamlining of the
business operations (Breuer and et. al., 2018). This leads to the reduction of overall cost of
operations of organisation in the long run. These yield long term benefits in terms of increment
of profit margins.
Increment of ability of business to adhere to regulations:
With the increasing concerns about the climatic changes, reducing energy sources and
negative environmental impacts, the federal as well as state governmental agencies are duly
taking effective measures in order to enact regulations that can ensure the protection of
environment in the long run. In this regard, the incorporation of sustainability within the business
allows corporations to position in a manner such that they can easily meet the altering
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regulations as per the requirements of law, in the stipulated course of time. Thus, sustainability is
also relevant to businesses from the point of view of better compliance with the legal regulations
stipulated by governments.
Attraction of new investors and employees:
The organisations that have a sustainable approach to working are likely to have a greater
potential to attract fresh and young candidates to join the workforce. Individuals appearing for
interviews or recruitment process do not like to be associated with organisations having adverse
ethical or environmental background (Painter-Morland and et. al., 2016). When an entity is
cautious of the environment and the society to which it is accountable, large number of investors
prefer to invest their funds into the business. This will further provide the corporations with
sufficient funds to invest in sustainable practices and activities in order to attract more number of
candidates and investing parties.
Reduction of wastage:
It is acknowledged to be one of the most obviated and basic reasons behind the
organisations being keen on adopting a sustainable approach to working. The sustainable
working practices began in the era of 90s when offices sought to collect the empty cans for the
purpose of recycling. Since then efforts have been taken by businesses to incorporate waste
reduction in the form of paper in order to prevent the falling of trees (Foot and Ross, 2017).
Also, companies have emphasized upon the replacement of incandescent lights with LED lights,
value engineering of product, etc. Thus, making sustainability as the priority provides a
competitive edge to the company in the long run by reducing wastage and conserving natural
resources.
Acceleration of customer loyalty:
In the present era, customers have largely become aware of the need for businesses to
operate in a sustainable manner. This has created pressure upon the organisations operating
within the confines of global economy to address the needs and demands of customers in due
course of time, while making sure that the approach to business operations is sustainable. This
renders assistance to businesses in instilling a sense of loyalty within the customers and making
them stay connected with the brand for a longer period of time (Freudenreich, Lüdeke-Freund
and Schaltegger, 2019). Thus, the relevance of sustainability to business can also be
acknowledged from the perspective of customer base.
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Keeping key stakeholder groups happier:
Sustainability not just helps in lowering the overall cost of operations, but also provides
due assistance in inflating the profit margins and enhancing the brand image. Thus, all the
stakeholder groups that are associated with the company somewhere get benefited with the
sustainable approach to business operations adopted by the organisation (6 Benefits of Becoming
a Sustainable Business, 2020). Especially the shareholders are happy with high gains earned by
the company. Thus, sustainability is relevant to a business from the point of view of taking into
account the interest of wide array of stakeholder groups.
2. Critically analyse the importance of ecosystem services
Ecological system is defined as a biological community of interacting organisms and
their physical environment. Ecosystem services are benefits to individuals from nature, benefits
like cultural values, food, soil stabilization, water purification, recreation and more promote
lives. A healthy terrestrial ecosystem acts as vital element for survival and welfare of human as it
is the most important source of essential benefits and products. Ecosystem services provide
significant benefits to individuals in number of way in direct and indirect manner. This makes
essential for individuals to pay great attention towards ecosystem services. In this government of
a country plays an essential role to have biodiversity protection services in order to support
sustainability development (Schaltegger and Wagner, 2017). This has been identified that by
managing ecosystem services other socio-economic important goals can also be accomplished
such as employment or reduction in poverty. It has been evaluated that many nations around the
world have significantly developed different type of policies to effectively promote sustainable
utilization of resources. For instance, EU biodiversity Strategy 2020 involves different set of
actions as well as strategies that are mainly framed and dedicated to protect ecosystem services.
In this many initiatives such as CICES (Common International Classification of Ecosystem
Services) and MAES (Mapping and Assessment of Ecosystems and their Services) provide
adequate support to develop awareness concept of ecosystem services.
According to the evaluation, it is being determined that ecosystem services acts as most
important aspect for each and every individual as it provide boundless benefits, plays crucial role
for foundation for sustainable development and essential element for survival. Services of
ecosystem effectively contribute in good and quality life of individual as well as communities.
Thus, it becomes essential for decision makers, researchers and policy makers to develop
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policies and frameworks by including perceptions of social and environmental attributes. As
because of infrastructural and policy costs there is significant loss of these services that lead
towards reduction in basic human well-being, illness, losses in fertility of soil and more (Why are
Ecosystem Services important for our society?. 2019). Thus, with the help of effective decisions
and policies quality of ecosystem services can be improved. In accordance to the evaluation, this
is being evaluated that both life and economy is greatly dependent upon services and well as
goods that are being offered by natural ecosystems. Maintenance of these services thus acts as
greatest challenge which is required to effectively promote quality of life and economic growth.
However, it has been determined that many nations around the globe by practising sustainable
practice change disrupted ecosystem in effective way from last decades as to meet significant
increase in demands for fuel, food, freshwater and other form of needs of billions of individuals.
Thus, according to the above evaluation it has been signified that it is essential for countries and
decision makers to develop informative and useful relationship between community well-being
and ecosystem services in order reduce unintended consequences in effective way. Along with
this it is important for governments to make companies to learn the value for ecosystem services
in order to undertake advantage of significant opportunities. Ecosystem plays important role for
an organisation as it facilitate entities to undertake advantage of freshwater, fuel and other
ecological factors to conduct business in effective manner.
3. Critically discuss the concept of sustainable corporate governance
Corporate governance can be comprehensively referred to as the structure as well as
system of practices, rules and procedures through which an organisation is controlled and
directed, organisational objectives and goal are laid down and tracking of the company's
performance takes place in an effective manner (Sustainability and Corporate Governance,
2020). Conventionally, corporate governance has emphasized upon the owners of corporation
who supply the organisation with necessary financial capital for carrying out the business
operations, directors, members of execute team, control environment, disclosure & transparency
of business activities and performance, etc. However, with the passage of time, corporate
governance has largely evolved from accumulation of regulation, laws and contract to being the
driver of profitability and competitive advantage. In the present time, corporate governance
serves as a means to undertake as well as execute strategic decisions and to ensure that
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organisations duly accomplish the goal and objectives in the predefined time frame. The
significance of corporate governance underlies within the quest to constantly refine the
regulation, contract and laws which govern the operations of businesses, and making sure that
the rights of shareholders are safeguarded, the interests of stakeholders and managers are
reconciled. Besides this, in context of sustainability, corporate governance facilitates the
development of a transparent environment whereby every party duly assumes its roles and
responsibility, thereby giving its contribution to the growth and creation of value. Thus, it can be
acknowledged that governance of a company has the potential to set the tone for the entity,
clearly defining the manner in which authority is exerted and decisions are undertaken.
Looking upon the constant demands of stakeholder groups from the corporations running
within an economy to operate in a sustainable manner, it has become imperative for
organisations to lay down activities and business practices which can attain customer and
community support. Thus, in the present context, when corporate governance converges with the
concept of sustainability, it implies a striking balance between social and economic goal &
individual and communal goal (Bini, Bellucci and Giunta, 2018). Sustainable corporate
governance thus provides due aid to an enterprise in reinforcing behaviour which can ensure
execution of business operations and activities in a manner aligned with the sustainable
approach. It streamlines the business practices such that optimum utilisation of resources can
take place. It assists the organisation in being accountable for the stewardship of the resources.
The purpose is to align the corporation with the interest of community, society and environment
(Sustainability and its Integration into Corporate Governance Focusing on Corporate
Performance Management and Reporting, 2020).
Further, there is an evolving interplay between corporate governance and CSR, both of
which hold economic and legal features that may be altered through socio-economic processes in
which competition within the product market is the most powerful force. This evolution has
taken place over a number of decades beginning with “the sophistication of consumers in the
1960s, the environmental movement of the 1970s and the increasing interest in the social impacts
of business in the 1990s” (Ma and et. al., 2018). While these changes and movements did not
always trigger specific CSR initiatives, they did set the stage along with “the global social urge
to include the previously excluded social costs of production and the hidden costs incurred by the
environment as a result of business activities with the corporate balance sheet; the lack of
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confidence in the institutions of the market economy; and the demand for ensuring sustainable
development”.
However, sustainable corporate governance shifts the focus of company from long term
objective and goals of the organisation to sustainability perspective. This implies that the
governance structure emphasizes more upon acting in a sustainable manner, than ensuring the
achievement of long term objectives like maximisation of profits and revenues.
4. Critically discuss the importance of sustainability performance measurement
Sustainability can be said to be the need of hour for the businesses functioning in market
at present (Martínez-Martínez and et. al., 2019). When companies put to application sustainable
practices and activities, it becomes duly important to measures the outcomes of the same. The
same can be referred to as sustainability performance measurement. In simple terms,
sustainability performance measurement can be comprehensively defined as the quantitative
valuation of outcomes of employing sustainable approach within the premises of the company. In
this relation, it has been identified that the metrics put to use by an entity for carrying out the
measurement of sustainability performance of an entity (encompassing economic, social and
environmental dimensions) include index, audit, benchmark, indicator, accounting, assessment,
appraisal and other kinds of reporting frameworks (Hawkins and et. al., 2018). Some of the most
commonly used measures of sustainability consist of Triple Bottom Line accounting,
Environmental Sustainability Index, corporate sustainability reporting, estimates of the quality of
sustainability governance for individual countries using the Global Green Economy Index
(GGEI), and Environmental Performance Index. As against this, a substitute approach utilised by
the UN Global Compact Cities Programme that is critical of TBL approach of an entity is
acknowledged to be the Circles of Sustainability.
Measurement of sustainability performance provides due assistance to organisation with
assessment of progress, encouraging engagement, assessment of trade-offs, anticipation of new
requirements, reward excellence, and so on. Sustainability performance measurement further
enables the organisations operating within the bounds of global business environment to keep
proper track of and examine the progress of the investments made by the entity in fostering
sustainability in the organisational premises. This provides corporations with a true picture of the
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extent to which the business expectations in context of sustainability are being met by its actual
performance (Ma and et. al., 2018).
The measurement of sustainability performance also provides the stakeholder groups with
a true image of the brand in terms of its potential to meet the promises made in relation to
employment of sustainable practices and consequent reduction of negative environmental
impacts (Walsh and Dodds, 2017). When the stakeholder groups acknowledge the sound
sustainability performance of brands as per the sustainability reports, they get eager to give their
proactive participation in the activities, practices and decisions of the enterprise.
An organisational having superior or exceptional sustainability performance get the
opportunity to attract more number of customers and investors by demonstrating the ways in
which the sustainability approach is being applied by the company in the organisational premises
(Gliedt, Hoicka and Jackson, 2018). This even creates a favourable image of the brand in front of
the public at large.
5. Critically evaluate the role of marketing, supply chain management, and Operations
management in sustainability
It has been analysed that marketing plays a viable role in promoting sustainability
through promotion of e-products and other activities which provide due assistance in
conservation of environment. Further, green marketing is another practice by way of which
marketing demonstrates sustainability in the wider context (Amankwah‐Amoah, Danso and
Adomako, 2019). Thus, it can be observed that marketing can be leveraged to maintain and
promote sustainability at the forefront of the market place.
Supply chain management is an extended process comprising of activities such as
transportation, logistics and so on. Supply chain has a crucial role to play in facilitation of
sustainability as a company can duly reduce environmental footprints and wastage if it focuses
upon employment of sustainable practices such as doing green supply chain management. This
implies addressing the economic, social, environmental, and legal concerns across the whole of
the supply chain (Wiesner, Chadee and Best, 2018).
Operations management also plays a crucial role in promoting sustainability within an
organisation. It allows the enterprise to reduce the wastage through employment of effective
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technologies and techniques. This duly assists the enterprise in promoting sustainability and
receiving support on the part of customers and community.
CONCLUSION
As per the analysis of above discussion, it can be inferred that sustainability is one of the
most crucial considerations for businesses running within the bounds of an economy. This is
relevant for businesses as they have been pushed by the constantly increasing demands of
customers for offerings which cause least harm to the ecosystem. Thus, corporations have over
the course of time duly focussed upon integrating sustainability into the culture of the company.
Also, the investors drive the business to perform in a sustainable manner in order to make sure
that the business exists in market place for a longer period of time in future context. So, this
makes it important for the companies running within the bounds of global business environment
to timely measure their sustainability performance. The results of this measurement provide an
organisation with the true picture of outcomes or consequences of the initiatives or efforts taken
by company to incorporate sustainability into the practices and activities of businesses. In this
relation, it can be stated that the organisations which do not include the aspect of sustainability
within corporate governance and business practices are likely to lose the faith of investors.
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REFERENCES
Books and Journals
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Gliedt, T., Hoicka, C. E. and Jackson, N., 2018. Innovation intermediaries accelerating
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Management, 70, pp.381-389.
Martínez-Martínez, A. and et. al., 2019. Knowledge agents as drivers of environmental
sustainability and business performance in the hospitality sector. Tourism
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Painter-Morland, M. and et. al., 2016. Beyond the curriculum: Integrating sustainability into
business schools. Journal of Business Ethics, 139(4), pp.737-754.
Schaltegger, S. and Wagner, M., 2017. Managing and measuring the business case for
sustainability: Capturing the relationship between sustainability performance, business
competitiveness and economic performance. In Managing the business case for
sustainability (pp. 1-27). Routledge.
Schaltegger, S., Hansen, E.G. and Lüdeke-Freund, F., 2016. Business models for sustainability:
Origins, present research, and future avenues.
Walsh, P. R. and Dodds, R., 2017. Measuring the choice of environmental sustainability
strategies in creating a competitive advantage. Business Strategy and the
Environment, 26(5), pp.672-687.
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Wiesner, R., Chadee, D. and Best, P., 2018. Managing change toward environmental
sustainability: A conceptual model in small and medium enterprises. Organization &
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Yang, M. G. M., Hong, P. and Modi, S. B., 2011. Impact of lean manufacturing and
environmental management on business performance: An empirical study of
manufacturing firms. International Journal of Production Economics, 129(2), pp.251-
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