Boards are beginning to acknowledge that sustainability is no longer a siloed concept, but a crucial strategy at the heart of responsible business. Sustainability has become more than a trendy buzzword in business in the past few years as an increasing number of companies are putting it at the centre of their strategies.
Boards are waking up to the fact that there is more to a sustainably run business than eco-friendly behaviour. They are seeing the broader picture and shifting to a business model that takes more responsibility for all stakeholders—including employees and supply chains—and focuses on efficient, cost-effective operational strategies that can help boost the bottom line.
“Business leaders are realising that it is not possible to run a successful company in isolation from society and the natural environment in which it operates,” says Stephen Farrant, director of sustainability at Business in the Community, the responsible business network. “Profits and value for both shareholders and society are at the heart of the model.”
He believes that the United Nations’ Sustainable Development Goals, rolled out two years ago to tackle poverty, inequality and climate change by 2030, are playing an important part in global business thinking.
In the UN Global Compact–Accenture Strategy CEO Study carried out last year, 87% of global chief executives said the goals triggered a rethink on approaches to sustainability (see box, below). And nearly half (49%) agreed that the role of business was vital to achieving the UN goals. George Dallas, head of policy at the International Corporate Governance Network—led by investors responsible for more than $26trn of assets—points to an evolution in the way companies and investors view sustainability. “In the past, sustainability was seen more as a separate CSR [corporate social responsibility] silo but now boardroom conversations are focusing on this,” he says.
Over the past decade a number of factors have driven the shift. Among these are environmental disasters, climate change, an increasing exposure of abuse of labour rights, particularly in supply chains, and inequality of opportunity, forcing companies to improve their governance and responsibility. “These issues can no longer be avoided,” Dallas says.