Europe is putting a lot of effort and resources into trying to become the first climate-neutral continent on Earth by 2050.

It’s an ambitious and complex plan that requires achieving multiple goals and the participation of all parts of society.

For this reason, it is necessary for the business world, including companies and corporations, to also do their part by adopting an innovative business approach called “Corporate Sustainability and Responsibility” (CSR).

Corporate sustainability is based on 3 pillars:

1- Environmental Sustainability: Minimizing the ecological impact of a company is possible. Various eco-friendly practices can be adopted, such as buying electricity from renewable sources, including eco-friendly materials in the manufacturing process, reducing and compensating for CO2 emissions, reducing water consumption and waste production, and ensuring that the supply chain is ethical and sustainable at all stages. 

2- Social Sustainability: Companies can have a positive impact on society and improve the lives of the people they affect, including not only their employees but also customers and local communities.

Respecting human rights is the foundation of social sustainability; this includes promoting inclusion through equal opportunities, granting fair labor practices and wages, being transparent with customers about the quality of service/product and the origin of resources, and declaring and paying the correct amount of taxes.

Additionally, corporations can make strategic social investments and promote positive public policies that provide long-term benefits to both populations and companies.

3-Governance Sustainability: Corporate sustainability doesn’t mean becoming a non-profit organization; companies should still be able to generate profit while adopting a sustainable approach. Implementing dedicated financial strategies, along with responsible management and sound investment decisions, can ensure that profitability is not compromised.

Positive impact for corporations: It’s important to note that not only can companies remain profitable, but they can also gain various benefits from adopting corporate sustainability models, which, in the long term, can become a competitive advantage and increase financial performance. Some of these benefits include: 

–Access to Quality Labels and an Improved Reputation: This allows companies to attract more customers, investors, and talent and to access new markets.

–Alignment with EU and National Regulations: This can lead to potential access to dedicated funding and help avoid fines for irregularities and subsequent damage to a company’s image.

Increased Resilience and Flexibility: Sustainability practices contribute to a company’s resilience and flexibility when facing challenges and crises, allowing the reduction of risks.

–Operational Efficiency and Growth: A sustainability model provides skills to identify corporate growth opportunities, operate more efficiently, reduce costs, and thus increase profits.

–Innovation and Skilled Workforce: Being ahead in innovation and research compared to non-sustainable companies can help attract more skilled workers, providing more profits in the long term.

Challenges

As expected, adopting such an approach includes some challenges, with the main ones identified as:

-Prioritizing Short-Term Profits: Companies, especially smaller ones, that prioritize immediate profits may require considerable support and funding to change their approach, as the sustainability approach is more profitable in the long term but less in the short term.

-Balancing Interests: Different decision-makers within the same corporation may disagree on the company’s priorities and strategies. This internal conflict may slow down or become a barrier to adopting a sustainable approach when some parties involved are not convinced.

-Greenwashing: Some companies may make false or exaggerated claims about their environmental efforts, overshadowing real sustainable initiatives and undermining the trust of customers and investors.

-Supply Chain Complexity: In the globalized world, ensuring that all parts of the supply chain use ethical and sustainable methods can be challenging. It requires a supervision system and the research and identification of trustworthy partners.

-Measuring Impact: Measuring the impact and performance of sustainability practices is not an easy task, but it’s important to create an infrastructure capable of doing so and to produce reports on it. This obviously incurs financial and management costs that need to be considered.

EU support

Encouraging corporate sustainability can be challenging, but the European Commission has a strategy and action plan dedicated to achieving this goal. The EU supports both new and pre-existing companies in various ways: providing guidelines and dedicated funding, sharing best practices, helping investors identify sustainable investment opportunities, promoting sustainable markets through quality labels, and acting as a mediator in transnational agreements between companies and workers’ organizations.

EU support may seem distant from our daily lives, but an example can help: Until a few years ago, single-use plastic straws were the norm, causing a lot of pollution and waste. Thanks to EU guidelines and support for governments and corporations, plastic straws have almost disappeared across Europe, creating a significant sustainable impact.

Similarly, corporate sustainability may seem like a topic beyond our control, but it’s important to remember that we all have the huge power to get informed and decide which companies will receive our money for their products. By adopting a sustainable consumerism approach, we can influence corporate decisions and support sustainability.

By Lithuanian ecommunity activators