 MODULE2_A Theoretical Framework for Sustainability in Business

WHAT IS SUSTAINABLE DEVELOPMENT?

o “Sustainable Development is the development that meets the needs of the present
without compromising the ability of future generations to meet their own needs.”-
World Commission on Environment and Development (Brundtland Commission
1987)
o Sustainability can be achieved by maintaining the balance/ harmony among
environmental, economic and socio-political aspects of a business.

THE CONCEPT OF SUSTAINABILITY

A program or activity is considered sustainable if it meets all of the following criteria:

o Creates economic value

o Increases public wealth with proper mechanisms for its distribution
o Socially justified
o Environmentally sound
o Ethically conducted
o Conforms to all applicable laws, rules and regulations

A SYSTEMS PERSPECTIVE IN SUSTAINABILITY

o Business and society operate within the natural environment. The abundant but
finite resources we use to thrive come from the environment.
o For businesses and societies to survive, they must operate in a way that does not
destroy or deplete these natural resources for future generations.
o This holistic perspective is a fundamental truth which business leaders consider as
both a challenge and an opportunity.

EGSEE DIMESIONS OF BUSINESS SUSTAINABILITY PERFORMANCE

THE SUSTAINABILITY PERFORMANCE AND ACCOUNTABILITY

FRAMEWORK

o The Sustainability Performance and Accountability Framework consists of the 5

EGSEE Dimensions with the corresponding goals, reports, and assurances used to
assess sustainable business operations.
o This framework is essential in assessing the degree to which business operations
are sustainable.
KEY PERFORMANCE INDICATORS

o Quantifiable, visible, and tangible measures that are critical to the success of an
organization and important in the assessment of its overall performance.
o KPIs vary depending on the type of organization and the industry/sector where it
operates.
o KPIs are crucial in assessing the extent of sustainability practiced by an
organization.

THE ROLE OF BUSINESS IN SOCIETY

SUSTAINABILITY REPORTING

o Sustainability Reporting is a documentation of a company’s Environmental,

Social, and Governance (ESG) performance that may or may not be publicly
disclosed.
o Most businesses follow criteria of Sustainability indicators to determine over-all
Sustainability Performance and to assess poor performing indicators needing
improvement plans.
o Sustainability strategies, initiatives and actions can be publicly disclosed via
Sustainability Reports that follows Global Reporting Initiative (GRI) framework.
o According to their website, Global Reporting Initiative is an independent
international organization that helps businesses, governments, and other
organizations to understand and communicate the impacts of business on critical
issues.
o Issues such as climate change, human rights, anti-corruption and many others are
being reported
o GRI Sustainability Standards enhance the global comparability and quality of
sustainability information, resulting in greater transparency on economic,
environmental and social impacts

GRI STANDARDS CRITERIA & INDEX SAMPLE

REVIEW OF SUSTAINABILITTY FRAMEWORK - OPERATION'S
PERFORMANCE

MATERIALITY ASSESSMENT

o “Materiality is a principle used in decision making to define whether an aspect or

issue is sufficiently important to warrant attention.”
o Remember the 3 P’s:
 Purpose
 Perspectives
 Process

o Key format in presenting materiality assessment is the materiality Matrix:

EXAMPLE OF SUSTAINABLE DECISIONS

o PEPSICO

The food and beverage company presents its sustainability strategy and goals
during its annual shareholder meeting and identifies and discloses climate change,
 water scarcity and public health issues as core sustainability challenges in its
annual financial filings.

o NIKE

The sports-gear multinational integrates sustainable design across its product

portfolio and created the Making app in 2013, allowing the data in its materials
sustainability index to be public. This lets designers from across the industry and
beyond make more sustainable design decisions, and ultimately, lower-impact
products.

o COCA-COLA

The drinks company has improved the efficiency of its water use by 20% and
identified the need for a rigorous third-party evaluation of its water management
approach.

o DELL

The computer company's integrates alternative, recycled and recyclable materials

in its product and packaging design, improvements in energy efficiency, and
design for end-of-life and recyclability. One of the company's commitments is to
reduce the energy intensity of its product portfolio by 80% by 2020.

o ADOBE

The software company aims to achieve a 75% reduction, from 2000 levels, in
company emissions by 2015. It is using renewable energy technologies, including
hydrogen fuel cells and solar arrays, and is also focused on reducing energy needs
by improving the cooling efficiency of its data centers and "virtualising" many of
its systems, platforms and devices.