GOVERNANCE AND SUSTAINABILITY

CONTENTS
INTRODUCTION......................................................................................................................1

IMPORTANCE OF CORPORATE SUSTAINABILITY.........................................................1

Defining Corporate sustainability...........................................................................................1

Significance of corporate sustainability.................................................................................2

ROLE OF STAKEHOLDERS IN CORPORATE SUSTAINABILITY...................................4

SIGNIFICANCE OF STAKEHOLDER-PARTNERSHIPS IN CORPORATE

SUSTAINABILITY...................................................................................................................5

CONCLUSION..........................................................................................................................6

REFERENCES...........................................................................................................................8
TABLE OF FIGURES

Figure 1: The evolution of corporate sustainability...................................................................2

INTRODUCTION
The current market has now became too competitive and the speed of change is
driving the firms under unparalleled force not only to achieve succeed, however for
sustaining their success into the future. In recent years, corporate sustainability has gained lot
of focus because firms, clients as well as investors equally are turning their interest in regards
with critical corporate sustainability (Snider, Hill and Martin, 2003). Furthermore,
organizations are expected to move forward from narrow and short term financial emphasis
and stretch into incorporating environmental social and economic sustainability. Pertaining to
this, the main aim of the current study is to demonstrate comprehension of governance and
sustainability and significance of corporate sustainability. The report will also going to
evaluate the role of stakeholders in corporate sustainability and will also analyse the
significance of stakeholder partnerships in corporate sustainability.

IMPORTANCE OF CORPORATE SUSTAINABILITY

Defining Corporate sustainability
Speaking in relation with sustainability, it is being referred as fulfilling the needs of
today without comprising the capability for meeting the needs of the future generations.
Whereas corporate sustainability is all about increasing the financial bottom line of the firms
into a triple bottom line which significantly encompasses social as well as environmental
facets of corporate performance (Blowfield and Murray, 2011). In this changing markets as
organizations ascent to stay pertinent, they understood that it is not sufficient to just
emphasize only on the economics of the business. Scheming a vigorous business strategy is
progressively more relied on the ways firms position themselves in relation with sustainable
development which helps in balancing human, financial as well as environmental
development. According to Dyllick and Hockerts (2002), corporate sustainability is fulfilling
the wants of the current direct as well as indirect stakeholders of the firm without
compromising on the capability to fulfil the wants of future stakeholders. Besides this, as per
Schaltegger, Burritt, and Petersen (2003), corporate sustainability is defined as an approach
of the business being created for shaping the economic, social and environmental effects of
the organization in such a manner that leads to sustainable development of the firm and also
offers significant involvement in regards with the ecological growth of both the community
and the economy.

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Significance of corporate sustainability
Corporate sustainability can be considered as a novel as well as developing corporate
management standard. Further, the term standard is being utilized purposefully, wherein
corporate sustainability is a substitute to the outmoded progress as well as maximization of
profit model. On the other hand, corporate sustainability identifies that both growth of the
corporates as well as profitability are vital, however it also necessitates corporations to follow
communal objectives particularly, the one which is related to social justice, sustainable
development, protection of the environment and economic development (Carroll, 2016). It is
suggested from the review of varied literatures that the perception of corporate sustainability
pirates components from 4 additional recognised concepts i.e. sustainable development,
corporate accountability theory, stakeholder theory and corporate social responsibility. The
involvement of all these four concepts is being exemplified in the above figure.

Figure 1: The evolution of corporate sustainability

(Wilson, 2003).

The relationship of each concept with corporate sustainability is being defined below:
 Sustainable development – It is being referred as the development that satisfies the
present needs without comprising the capability to meet out the needs for future
generation. Each and every industry plays a crucial role in sustainable development.

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 As the firms are the engines of economic development of the nation, they should be
more active towards balancing this determination with environmental and social
conditions because somewhat they are the cause for some of the indefensible
conditions plus they too possess resources for addressing these problems (Palmer,
2012). Thus, the contribution of sustainable development to corporate sustainability is
that it will set boundaries for the firms to focus and secondly, it will also going to
provide common communal objective for government, organizations and society to
work towards them.
 Corporate social responsibility – Similar to sustainable development, CSR is also
regarded as a broad concept that is related with the role of business towards the
community. The basic ground of this thought is that each and every manager of the
corporations do possess some ethical responsibility to take into account and discourse
the desires and wants of the community. It contributes to corporate sustainability by
offering ethical arguments regarding the reason of considering work by the corporate
managers in relation with sustainable development (Albers, Wohlgezogen and Zajac,
2016).
 Stakeholder theory – It is relatively modern concept being popularized by R. Edward
Freeman which work on the premise that if the association with the external parties of
the firm is strong than it becomes easier for the corporations to fulfil their business
objectives. The goal of the stakeholder theory is to strengthen the relationship amid
the external groups for the purpose of achieving a competitive edge over others. This
theory entails the reason as to why corporations should work in regards with
sustainable development.
 Corporate accountability theory – Corporate accountability is nothing but the ethical
responsibility of the firm in order to offer a calculation of the activities for which the
firm is held liable. Further, it entails that there exists some association amid corporate
managers as well as shareholders. The contribution of this theory towards corporate
sustainability is that it supports in defining the association amid the managers and the
society and sets arguments for the reason of reporting by the firms on social,
environmental and economic performance (Simerly, 2003).
It is quite evident from the discussion of above academic theories that three pillars of
corporate sustainability i.e. social, environmental and economic, functions collectively in
order to support firms to make every effort for added sustainable activities. Moreover, it is

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also vital for the business corporations to move far ahead from old-fashioned wisdom of fast
profits on the cost of environment towards a more communal interdependence as well as eco-
innovation. Embracing practices which are sustainable will not only going to support the
environment but it will also help in augmenting the brand image and productivity. Corporate
sustainability also supports in reducing costs and provide maximum satisfaction to the
customers.

ROLE OF STAKEHOLDERS IN CORPORATE SUSTAINABILITY

Stakeholders are being referred as the person or group of people that have rights,
claim and some or the other concern in the activities of the organization. There are two kinds
of stakeholders i.e. primary and secondary. The primary stakeholder are necessary for the
firm and they shares close association with the firm. On the other hand, the secondary group
of stakeholders are being referred as those groups which impacts or are influenced by the
firm, however they are not involved in the dealings with the organization and are also not
considered necessary for the existence (Godfrey, Merrill and Hansen, 2009). In recent
decade, the interest of non-governmental bodies, consumers, governmental bodies and firms
and many other groups of stakeholders has been increasing at as fast pace to contribute for
the firm in regards with the development of the society. With this, more emphasis and
importance is being given on the concept of corporate sustainability within the managerial
circles all across the world economic network with each passing day. For comprehending the
role of stakeholders in corporate sustainability deeply, stakeholder identification theory can
be considered here. As suggested by Mitchell, Agle and Wood (1997), this theory pays
attention on three attributes such as power, urgency and legitimacy by which one can
describe the prominence of the stakeholder. All these attributes are as follows:
 Power – There are 3 kinds of power as per the resources being utilized to implement it
such as utilitarian power which is based on resources, coercive power which is based
on physical resources and normative power which is based on symbolic resources.
Further, power is temporary in nature and thus, it can be lost any time.
 Legitimacy – Another definition being defined by Schuman, which states that the
actions of the business organization are suitable, desirable as well as accurate within
some socially assembled system of norms, definition, values and beliefs. Lawfulness
is being viewed as a required social good (Allouche and Laroche, 2005).
 Urgency – Talking in relation with this attribute, it has a contribution towards the
dynamicity of the model which is stationary when taking into account only legitimacy

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 as well as power. As per the dictionary of Merriam-Webster, urgency is nothing but
calling for instant attention or in other words pressing. There is a belief that urgency is
present only when two features are being present such as criticality and time
sensitivity.
All the three roles being defined above are some way or the other shares relationship
with each other. For instance, power is being gained by legitimacy and it is then exercised by
urgency. Only power alone cannot give assurance of a significant role in the association amid
the company as well as the stakeholder. On the other hand, legitimacy is achieved by power
and voice is achieved by urgency (Fernandez, Junquera and Ordiz, 2006). Thus, it can be said
that one attribute or role of stakeholders is dependent on the other attributes. Further, alone
urgency is not sufficient for assuring high consideration, however combining with legitimacy
it can helps in promoting the right of entry to any complex decision making channels and also
facilitate one sided action of the stakeholders.
Other than this, from the analysis few other roles of stakeholders in corporate
sustainability have been emerged such as proactive role, reactive role and mixed roles.
Focusing in relation with the proactive role, the stakeholders act as stimulator which involves
calling for ideas or providing initial funding in order to resolve any environmental or social
issue that helps the firm to achieve sustainability. Furthermore, in the reactive roles, the
stakeholder act as a legitimator and offer help to the firm in building credibility and faith in
the sustainability of the company (Worley and Mirvis, 2013). Additionally, in the reactive
roles, stakeholders sometimes plays a crucial role of educator as well. In such kind of a role,
stakeholders helps and educate the general public on certain environmental and social issue
so that there can be a wider shift in the sustainable lifestyle.

SIGNIFICANCE OF STAKEHOLDER-PARTNERSHIPS IN
CORPORATE SUSTAINABILITY
Speaking in relation with corporate sustainability goals, it unambiguously recognizes
the relationship of the prosperity of the environment, business and the society. Further, these
goals signifies an essential alteration in the method identifying all the communal sectors as
the main evolving actors and demanding an unparalleled cooperation level as well as
partnership between the government, non-governmental organizations, foundations,
business, civil society and others stakeholders for their achievement. According to Selsky and
Parker (2005), Stakeholder partnership are being referred as the partnerships of different
sectors and society which have one or more than one partner from non-profit, business as

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well as government sectors. Such kind of partnership are being designed usually when any
type of social issue is measured too multifaceted as well as complicated for a solitary firm or
segment to sort out single-handedly. Therefore, this situation necessitate actions jointly all
throughout the sectors.
Underpinning the discussion further, as per Clarke and MacDonald (2016), seeking
help from stakeholder partnerships, organizations can achieve corporate sustainability goals
and can endorse their environmental as well as social accountabilities. In addition to this, the
core part of business environmental management and corporate sustainability is moving
further than economic and legal obligations. Precisely through involving in stakeholder
partnerships for seasonable business, all the departments of the government, non-profit
organizations and business corporations makes contribution to their society and support in
addressing the environmental, social and economic concerns. Moreover, the shared ability of
stakeholder partnership to execute their collaborative plan is concerned with its usefulness in
fulfilling the goals of corporate sustainability. In simple words, if the capacity of the
stakeholder partnership in order to realize the objectives is greater than there will be more
effective corporate sustainability efforts by the partners (Greenwood, 2007).
Besides this, there are many other ways as well in which stakeholder partnership
supports in achieving corporate sustainability goals. Some of them are being defined in the
subsequent paragraph:
 Joining manpower, resources and institutional abilities from the public as well as
private sector – Stakeholder partnership helps in bringing together different sources
and resources and leverage competencies from these sources. With this collaboration,
business organizations can complement capabilities of each other. In addition to this,
the businesses can also address the funding gaps in the sustainability projects
 Enabling transfer of knowledge between different sectors – Stakeholder partnerships
includes variety of problem solving skills and perspectives. Organizations can impart
their auditing, budgeting and planning practices to stakeholder partnership that leads
to have entry in new markets and helps in utilizing the resources more efficiently
(Kazadi, Lievens and Mahr, 2016).
 Paving the path of varied approaches to reach the goals of corporate sustainability –
It also supports in transferring of knowledge as well as information in regards with
sustainability issues all throughout the sectors.

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CONCLUSION
From the above analysis, it can be concluded that each and every business
organization do carry significant ethical, legal and economic accountabilities. Nevertheless,
they still do not extensively contribute in regards with broader societal issues like fighting
poverty, human rights, starvation and many more. Further, it is important for the
organizations to perform more activities that proves that each and every stakeholder is being
regarded in a comprehensive sense. Moreover, it was originated from the study that business
organizations possess narrow perception of their social responsibilities, at the same time
maintaining that it is conceivable to remain profitable as well as reverent to its stakeholders.

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REFERENCES
Books and journals
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between corporate social and financial performance. Revue de Gestion des Ressources
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Blowfield, M. and Murray, A., 2011. Corporate Responsibility. 2nded. Oxford University
Press.
Carroll, A.B., 2016. Carroll’s pyramid of CSR: Taking another look. International Journal of
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Identification and Salience: Defining the Principle of Who and What Really Counts.
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Palmer, J.H., 2012. Corporate Social Responsibility and Financial Performance: Does it
Pay to Be Good? Claremont McKenna College. CMC Senior Theses.

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Schaltegger, S., Burritt, R. and Petersen, H., 2003. An Introduction to Corporate
Environmental Management: Striving for Sustainability. Sheffield, U.K: Greenleaf
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Online references
Wilson, N., 2003. Corporate sustainability: what is it and where does it come from?
[Online]. Available through: <https://iveybusinessjournal.com/publication/corporate-
sustainability-what-is-it-and-where-does-it-come-from/>. [Accessed on 10thMarch
2020].