Sustainability Performance in Business

Sustainability can be defined in many ways. The most common one is found in Brundtland Report (1987): meeting the needs of the present without compromising the ability of future generations to meet their own needs. 

In addition to the general importance of sustainability, there could also be a direct link between environmental behavior and performance.

Sustainability has a huge impact on performance management, but also on the assessment of management information. In addition to the financial information, businesses must consider the environmental and social aspects of performance. The information in these areas must be relevant, reliable provided in a meaningful and comparable manner. 

The specialists determine a company’s sustainable performance by measuring it not only economically, but also by the environmental and social value they add – or destroy.

• Environmental: The impact a company has on the natural environment, for example through use of natural resources, waste and emissions.
• Social: The impact a company has on its key stakeholders: employees and their families, customers, suppliers and local communities.
• Economic: The impact a company has on the local, national and international economy, for example creating employment, generating innovation, paying taxes and creating wealth.

Sustainability performance varies widely across industries. The studies show that industries such as food manufacturing and electronics show better sustainability performance and year-over-year improvements, while the financial, legal and consulting services do the best jobs in the area. According to the specialists, the transport industry and the wholesale services have the highest rate for sustainability growth.

Many of the industries are improving in the environmental areas, but on the other hand sustainable procurement is low in all industries. This tendency may indicate that the enterprises are unprepared to meet increasing supply chain regulations.

The experts say North America is generally ahead of Europe in terms of corporate sustainability. Europe has nearly half of the world’s most sustainable publicly listed companies.

The recent power crisis from China shows the sustainability risks and vulnerability in the country’s supply chains.

Governments have made these supply chain issues a priority and in many regions politics is becoming more and more common.

References:

Brundtland, G. (1987) Report of the World Commission on Environment and Development: Our Common Future, United Nations General Assembly document 4/42/427