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Corporate Sustainability

The term sustainable development or sustainability comprises important challenges that have to do with three areas: the economy, social issues, and the environment (World Commission on the Environment and Development

1987). Loureco et al. (2014, 17) argued that “a firm’s reputation for being committed to sustainability is an intangible resource that can increase the value of a firm’s expected cash flows and/or reduce the variability of its cash flows.” A sustainability report is one produced by an organization that provides information about economic, environmental, social, and governance performance. Loureco et al. further argued that this information is valuable to investors, can contribute to reducing the threat of government regulation, and can improve the corporate reputation as well as relations with stakeholders.

The UN Guide to Corporate Sustainability (CS)

Supported by the 48-page guide, the five defining features set out in this section are prerequisites for CS. It is made abundantly clear that business must first operate responsibly, with integrity, respecting universal principles and take actions that support the society around them. Furthermore, to advance the course of sustainability as an integral part of a corporation the top management of companies must commit themselves to report yearly on their efforts, and engage locally where they operate. To be sustainable, companies must do five things46:

  • 1. Principled business by aligning with 10 principles on human rights, labor, environment, and anticorruption (listed previously);
  • 2. Strengthening society: In collaboration with others to advance global challenges, sustainable companies “look beyond their own walls and take actions to support the societies around them”;
  • 3. Leadership commitment: For long-term change to be effective, it must begin with a company’s leadership, which must send a strong signal to everybody in the organization that sustainability is important and all responsibilities are important;
  • 4. Reporting progress: Transparency in business practice (reporting to stakeholders in a transparent and public manner) is vital for sustainability; and
  • 5. Local action: Viewing sustainability through a local lens. Companies with operations and supply chains in other countries need to understand the local culture and view sustainability through the local lens.

A close reading of the five principles underpinning the UN Sustainability Guide shows that the notions of SR, business ethics, and CSR and CG (see next chapter) are merged.

Another well-known standard for sustainability reporting is the GRI. This is a nonprofit organization47 that promotes economic sustainability and produces one of the world’s most prevalent standards for sustainability reporting (also known as ecological footprint48 reporting), environmental and social governance reporting,49 triple bottom line50 reporting, and CSR reporting. GRI seeks to make sustainability reporting by all organizations comparable to and as routine as financial reporting. The GRI guidelines are widely used by more than 4,000 organizations (corporations, public agencies, smaller enterprises, NGOs, industry groups, etc.) from 60 countries to produce their sustainability reports. Municipal governments can use similar sustainability guidelines from the UN, International Council for Local Environmental Initiatives. This is an international association of local governments and national and regional local government organizations that have committed themselves to sustainable development. GRI-G451 indicators allow companies to provide comparable information on their economic, environmental, and social impacts and performance.

 
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