- Fifty or so years ago, corporate reporting consisted of a little more than a profit and loss account and balance sheets.
- In recent years however, businesses are increasingly being called upon to address social, environmental and economic issues.
Fifty or so years ago, corporate reporting consisted of a little more than a profit and loss account and balance sheets. In recent years however, businesses are increasingly being called upon to address social, environmental and economic issues while also disclosing their strategy and information on the context, both opportunities and risks, in which they are working to achieve it.
According to McKinsey, more consumers and customers are demanding greater accountability from corporations, top young talent are increasingly attracted to companies with a proactive environmental agenda, and investors are beginning to favour companies that are leading in this arena. More firms than ever before are now integrating sustainability in core business strategies and treat sustainability strategically and at a much higher level in the corporate ladder.
Even though Sustainable Development Goals (SDGs) were defined just in 2015, companies are increasingly aware of the SDGs and use them to set corporate performance targets.
CORPORATE ENVIRONMENTAL RESPONSIBILITY EXAMPLES
According to a sustainability report by Deloitte and the UN Global Compact, numerous examples exist of companies improving performance and profitability while simultaneously reducing environmental costs. For instance, since 1996, KPMG focuses its efforts on corporate environmental responsibility and it is currently preparing for the ISO 14001, according to the environmental management standard.
The company has an environmental impact in five areas: water, waste, paper, energy, and transport.
Car manufacturers such as BMW and Toyota have made strides in energy efficiency and pollution reduction, not to mention Tesla as an outsider also challenging the industry’s overall footprint.
According to a research by The University of Nairobi: Assessing the utility of corporate social responsibility as a tool for improving environmental management in Kenya, a growing number of companies in Kenya have also discovered the competitive advantages of taking environmental initiatives in many areas such as energy efficiency, pollution prevention, supply-chain management, and industrial ecology. Such companies include Safaricom PLC, Equity Group, Bamburi Cement Limited, and the Kenya Railways Corporation, inter alia. These firms have all made strong commitments to sustainability, in large parts, through transparency and addressing material issues.
GAPS TO BEWARE OF
For all this interest, we should expect the world to become more sustainable. However, challenges such as climate change, water scarcity, and many others continue to worsen. Sustainable business is reaching the limits of what it can accomplish in its present form.
It is slowing the velocity at which we are approaching a crisis, but we are not changing course.
In Kenya, for instance, even though the concept of sustainability is gaining some prominence within policy debates, it is not applied widely and it is usually associated with philanthropy. This, therefore, lacks the set regulatory, legislative, and institutional framework to act as guidelines upon which the practicing corporations can base and check their practice.
PUTTING PURPOSE AT PAR WITH PROFIT
A sustainable business adheres to the triple bottom line, a term coined in 1994 by John Elkington, the founder of a British consultancy called SustainAbility. The three components of the triple bottom line are profits, people, and the planet.
A sustainable business earns profits by being socially responsible and protecting our use of the planet’s resources.
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