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(Chapter 2) : Sustainability and Corporate Social Responsibility

Sustainability and corporate social responsibility involve managing organizations to create long-term economic, social, and environmental value. It is the responsibility of organizations to consciously manage their impact on surroundings. Sustainability transforms organizations and creates long-term value through innovation, intellectual capital, and stakeholder relations. It positions organizations to take advantage of sustainability opportunities.

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Shah Aasif
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291 views15 pages

(Chapter 2) : Sustainability and Corporate Social Responsibility

Sustainability and corporate social responsibility involve managing organizations to create long-term economic, social, and environmental value. It is the responsibility of organizations to consciously manage their impact on surroundings. Sustainability transforms organizations and creates long-term value through innovation, intellectual capital, and stakeholder relations. It positions organizations to take advantage of sustainability opportunities.

Uploaded by

Shah Aasif
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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(CHAPTER 2)

Sustainability and Corporate Social


Responsibility
By

Dr. Mohd Asif Shah


Sustainability is a comprehensive approach to management of organizations
which is focused on creating and maximizing long-term economic, social and
environmental value. It is a response to the challenges of the modern world
facing organizations from the public and private sectors.

It is the responsibility for the impact that the organization exerts on its
surroundings, in business, environmental and social terms. Conscious
management of the impact translates into lower costs, improved external
relations and better managed risks.

It is the transformation and development of the organization as well as creation


of its long-term value based on innovation as well as intellectual and relation
capital.
Sustainability is skilled positioning of the organization in the economic
reality, taking account of the social and economic challenges,
environmental opportunities and threats. The awareness that the
organization functions within a broader framework, amid complex
interrelations with many stakeholder groups, allows it to get ready and
make use of the opportunities linked with sustainability.

It is the awareness that each entity is surrounded by stakeholders.


Building and cultivating good relations with stakeholders based on
engagement and dialogue is crucial, because it not only affects the
possibilities to manage risks, but also supports development and gives
the organization a competitive edge.
How The Sustainability Can Help The Businesses To Grow

•Helps in the identification of the areas that create the organization’s long-term
value
•Assists in the reduction of operating costs due to more effective resource
management across the entire supply chain
•Supports in the effective economic, social and environmental risk management
•Helps in the business stability relying on good relations with key stakeholders
•Assists in the creating the loyalty and trust of customers through a dialogue and
engagement
•Helps in transforming the potential threats and risks into development
opportunities for organizations from the public and private sectors.
Corporate Sustainability

•The term “corporate sustainability” describes a new corporate


management model. It can also fall under the broader term
“environmental social governance” (ESG).

•Corporate sustainability emphasizes growth and profitability


through intentional business practices in three areas of society. The
goal is to provide long-term value for stakeholders without
compromising people, the planet, or the economy.
Three Pillars of Corporate Sustainability

1.The Environmental Pillar


•The environmental pillar is often the most talked-about of the
three pillars of corporate sustainability. It includes the various
actions companies can take to reduce their environmental impact
and carbon footprint.

•Examples include reducing packaging waste, reducing water


usage, recycling materials, and using sustainable energy sources.
Three Pillars of Corporate Sustainability

2.The Social Pillar


•The social pillar focuses on a company seeking the approval of its
stakeholders, employees, and the local community. A big part of
corporate sustainability is a company’s dedication to taking good
care of people inside and outside of the business.

•Social pillar practices include eliminating child labor, offering


paternity and maternity leave, and giving back to the community.
Three Pillars of Corporate Sustainability

3.The Economic Pillar


•The economic pillar involves implementing sustainable business practices to promote long
term profitability. After all, a company can’t have a positive impact on the environment or
community if it’s not profitable.

•Elements of the economic pillar include compliance and good corporate governance.
Meaning, the values of stakeholders and management align in terms of how to spend
resources. The economic pillar makes it possible for a company to strategize and invest in
new corporate sustainability methods.

•All that said, no one pillar should overshadow the others. Otherwise, businesses get caught
trying to cut corners and increase profits unethically.
Few Examples of Corporate Sustainability

1.To counteract the damage Ford's car industry causes to the


environment, they try to practice sustainability and community
responsibility in their CSR practices in order to be as environmentally
friendly as possible. They are trying to limit the harm they make on the
environment, and do so partially through corporate social responsibility.

2.The clothing brand Patagonia has a corporate model centered on


reducing and recycling, and their efforts to reduce their carbon footprint
is evident in their environmentally friendly practices.
Yvon Chouinard describes Patagonia as a holistic approach to business.
“You are taking care of the damage that you do as much as you can, and
you are involving your customer”. Because of this philosophy, Patagonia
focuses on quality and longevity of products, rather than cutting costs. The
company believes this is important for their social responsibility because it
keeps job security, products lasts longer, and it reduces overall waste.

Patagonia not only believes it is their role as a corporation to promote change,


but they also value education for their customers through environmental articles
in their catalogues. They encourage customers to repair their Patagonia
equipment and clothing and only purchase items if necessary, and to buy
used products whenever possible. This is all an attempt of Patagonia to be
ethical and responsible to the environment and the community.
Benefits of Corporate Sustainability

1.Way To Gain Social Power: The “green movement” is a popular social and
environmental cause, and consumers are attracted to supporting companies with
ethical practices. Companies can use their CSR to increase their social capital and
attract customers who support green initiatives. By making these green changes,
they gain an edge in the community and make themselves more marketable, thus
increasing social power.

2.Public Image: Companies that focus on being green in their practice are seen well
in the view of the public. Being socially responsible gives corporations something
to brag about to the public. Public image is crucial for business as generations
become more progressive.
Benefits of Corporate Sustainability

3.Money And Wealth. Many environmental practices focus on the reuse, reduce,
recycle, repurpose model, which in turn saves money on materials. Patagonia is a
good example, since they repurpose used clothing to either make new products, or
to fix and reuse. Reusing materials is good for the environment and lowers cost, and
this sustainable social practice can help a company financially.

4.Conformity. With the increasing competition in the business sector, and the
growing green movement, it is important for companies to match up with
competitors. Out of pressure, the companies try to be competitive in the market and
conform to ethical practices and meet expectations of customers. The conformity
motivation is one reason for Patagonia’s work to maintain the sustainability index.
Ways To Promote Corporate Social Responsibility and Sustainable Business
1.Positive Press and Reputation Building: One of the most powerful effects of
sustainable, responsible business is its ability to quickly generate positive publicity
for an organization.
2.Consumer Appeal: As corporate responsibility initiatives have become more
common, consumers are increasingly interested in patronizing businesses that
support causes they value. Business leaders can benefit from partnering with
charities that are important to its customers.
3.Stronger Client and Community Relations: One way company leaders can put
this into practice is by working with multiple organizations in a competition to raise
the most money or accumulate the highest number of volunteer hours. Similarly,
companies can sponsor and organize days of service that involve entire communities.
These events not only increase the positive impact a company has, but they serve as
great opportunities to network, connect with other professionals and set the
groundwork for future collaborations.
Drivers Of Corporate Responsibility
1.Government Legislation: In many countries across certain industries, the
government has imposed legislation that requires companies to conform and behave
in a certain manner.
2.Customers’ Expectations Of Firms: Consumers are becoming more aware of
social and environmental issues and the consideration of the future is becoming
slightly more important when consumers consider purchase decisions.
3.Consumer Lobby Groups: In conjunction to the previous driver of corporate
social responsibility, the Internet and social media has made it much easier for
consumer lobby groups to form, to generate attention and adverse media coverage,
and therefore achieve its goals of change.
4.The Extent Of Costs Involved: A shift to increase social responsibility may
come at a reasonable cost to the organization.
Drivers Of Corporate Responsibility

5.The Type Of Industry In Which They Operate: There are a number


of more significant industries where there is greater pressure an
expectation on the firms to become responsible corporate citizens.
6.Potential For A Competitive Advantage By Image: There are some
companies that are attempting to build their core image, or at least parts
of their brand association around their socially responsible behavior.
7.Corporate Culture And Top Management Values: Corporate social
responsibility is also a reflection of the overall corporate culture and of
top management values.

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