Three Sustainability Factors

While sustainability and the environmental movement are closely related, it is a myth that sustainability is exclusively concerned with the environment.

Three dimensions form the foundation of sustainability:

• When human consumption does not outpace natural replenishment rates, nor when human pollution and greenhouse gas emissions do not outpace natural repair rates, environmental sustainability is achieved.
• The ability of a society to respect fundamental human rights and provide for necessities like healthcare, education, and transportation is known as social sustainability. Healthy communities guarantee that everyone is shielded from prejudice and that their labor, cultural, and personal rights are upheld.
• The ability of human societies to remain independent and have access to the resources needed to meet their needs—that is, the availability of stable sources of income for all—is known as economic sustainability.

Obstacles Associated with Business Sustainability

Making the shift to sustainability can be challenging. Three main obstacles are listed by the Santa Fe Institute for businesses looking to lessen their environmental impact: First of all, it is challenging to truly comprehend the influence of a single company. Secondly, it might be challenging to prioritize the environmental impact of certain activities, and lastly, it can be challenging to forecast how economic actors will react to shifting incentives.

According to surveys conducted on sustainable investing in the last several years, the majority of investors, or perhaps even more than the majority, believe that sustainability is “fundamental” to investment strategy.

Not everyone interested in investing is as excited as they are. Environmental, social, and governance (ESG) disclosure obligations, for example, would contradict the Securities and Exchange Commission’s (SEC) power, according to Commissioner Hester Peirce’s argument from July 2021. ESG disclosure mandates may also “undermine financial and economic stability.”

The advantages of sustainable business practices

Businesses that successfully adopt sustainability techniques can profit monetarily in addition to the social benefits of enhancing the environment and advancing human needs. Just as reducing waste and pollution can help a firm save money, using sustainable resources can boost a business’s long-term profitability.

For instance, adopting more energy-efficient plumbing and lighting fixtures can reduce a company’s power costs and enhance its reputation. Government tax breaks might also be available to businesses that implement specific sustainable practices.

Additionally, investors may find a company more appealing if it is sustainable. According to a 2019 HEC Paris Research report, investors are willing to spend an extra $.70 for a share of a company that donates $1 or more to charity, demonstrating how much they value a company’s ethical aspects. The study also showed that companies that were thought to have a negative societal influence lost value.