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The 3 Pillars of Corporate Sustainability

The 3 pillars of corporate sustainability are economic, environmental, and social. The environmental pillar focuses on reducing carbon footprint and waste. The social pillar aims to gain community support through fair treatment of employees and being a good neighbor. The economic pillar ensures profitability while complying with governance and managing risks. Together these pillars define a sustainable business that meets present needs without compromising the future.

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Micah Valencia
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95 views

The 3 Pillars of Corporate Sustainability

The 3 pillars of corporate sustainability are economic, environmental, and social. The environmental pillar focuses on reducing carbon footprint and waste. The social pillar aims to gain community support through fair treatment of employees and being a good neighbor. The economic pillar ensures profitability while complying with governance and managing risks. Together these pillars define a sustainable business that meets present needs without compromising the future.

Uploaded by

Micah Valencia
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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The 3 pillars of corporate sustainability

Corporate sustainability has become a buzzword in companies big and small. Wal-Mart Stores, Inc. (WMT), McDonald’s
Corporation (MCD) and many of the true corporate giants have named sustainability as a key priority moving forward.
(For more, see: "Yum! Brands Believes in Sustainability.") Now other corporations are under pressure to show how they
plan to commit, and deliver their goods and services in a sustainable manner. This, of course, begs the question of what
exactly this all means.
Sustainability is most often defined as meeting the needs of the present without compromising the ability of future
generations to meet theirs. It has three main pillars: economic, environmental, and social. These three pillars are
informally referred to as people, planet and profits.

The Environmental Pillar


The environmental pillar often gets the most attention. Companies are focusing on reducing their carbon footprints,
packaging waste, water usage and their overall effect on the environment. Companies have found that have a beneficial
impact on the planet can also have a positive financial impact. Lessening the amount of material used in packaging
usually reduces the overall spending on those materials, for example. Walmart keyed in on packaging through their zero-
waste initiative, pushing for less packaging through their supply chain and for more of that packaging to be sourced from
recycled or reused materials. (For more, see: "Where Can I Find a Company’s Stance on the Environment?")
Other businesses that have an undeniable and obvious environmental impact, such as mining or food production,
approach the environmental pillar through benchmarking and reducing. One of the challenges with the environmental
pillar is that a business's impact are often not fully costed, meaning that there are externalities that aren't being
captured. The all-in costs of wastewater, carbon dioxide, land reclamation and waste in general are not easy to calculate
because companies are not always the ones on the hook for the waste they produce. This is where benchmarking comes
in to try and quantify those externalities, so that progress in reducing them can be tracked and reported in a meaningful
way.

The Social Pillar


The social pillar ties back into another poorly defined concept: social license. A sustainable business should have the
support and approval of its employees, stakeholders and the community it operates in. The approaches to securing and
maintaining this support are various, but it comes down to treating employees fairly and being a good neighbor and
community member, both locally and globally.
On the employee side, businesses refocus on retention and engagement strategies, including more responsive benefits
such as better maternity and paternity benefits, flexible scheduling, and learning and development opportunities. For
community engagement, companies have come up with many ways to give back, including fundraising, sponsorship,
scholarships and investment in local public projects.
On a global social scale, a business needs to be aware of how its supply chain is being filled. Is child labor going into your
end product? Are people being paid fairly? Is the work environment safe? Many of the large retailers have struggled
with this as public outrage over tragedies like the Bangladesh factory collapse, which have illustrated previously
unaccounted for risks in sourcing from the lowest-cost supplier. (For more, see: "Go Green With Socially Responsible
Investing.")
The Economic Pillar
The economic pillar of sustainability is where most businesses feel they are on firm ground. To be sustainable, a business
must be profitable. That said, profit cannot trump the other two pillars. In fact, profit at any cost is not at all what the
economic pillar is about. Activities that fit under the economic pillar include compliance, proper governance and risk
management. While these are already table stakes for most North American companies, they are not globally.

It is the inclusion of the economic pillar and profit that makes it possible for corporations to come on board with
sustainability strategies. The economic pillar provides a counterweight to extreme measures that corporations are
sometimes pushed to adopt, such as abandoning fossil fuels or chemical fertilizers instantly rather than phasing in
changes.
The Impact of Sustainability
The main question for investors and executives is whether or not sustainability is an advantage for a company. In
practical terms, all the strategies under sustainability have been co-opted from other business movements like Kaizen,
community engagement, the BHAG (Big Hairy Audacious Goal), talent acquisition and so on. Sustainability provides a
larger purpose and some new deliverables for companies to strive for and helps them renew their commitments to basic
goals like efficiency, sustainable growth and shareholder value.

Perhaps more importantly, a sustainability strategy that is publicly shared can deliver hard-to-quantify benefits such as
public goodwill and a better reputation. If it helps a company get credit for things they are already doing, then why not?
For the companies that cannot point to an overall vision to improve in these three pillars, however, there isn't a real
market consequence — yet. The trend seems to be making sustainability and a public commitment to it basic business
practices, much like compliance is for publicly traded companies. If this comes to pass, then companies lacking a
sustainability plan could see a market penalty, rather than proactive companies seeing a market premium.

Although it very much a buzzword, sustainability is here to stay. For some companies, sustainability represents an
opportunity to organize diverse efforts under one umbrella concept and gain public credit for it. For other companies,
sustainability means answering hard questions about the how and why of their business practices that could have a
serious, if gradual, impact on their operations.

The Bottom Line


Sustainability encompasses the entire supply chain of a business, requiring accountability from the primary level,
through the suppliers, all the way to the retailers. If producing something sustainably becomes a competitive edge for
supplying multinational corporations, this could reconfigure some of the global supply lines that have developed based
solely on low-cost production. Of course, that scenario depends on how strongly corporations embrace sustainability
and whether it is a true change of direction or just lip service.

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