Key to the future: Sustainability is critical to business success

Clarity around how sustainability impacts the bottom line is gaining ground. Sustainability is no longer seen as only as a risk, but also as a driver of innovation and opportunity. The task now remains to communicate this in the language of business and capitalise on sustainable market opportunities.

MORALITY AND MATERIALTY

At the turn of the millennium, the efforts of most companies to address social
and environmental issues largely followed two models. The first was essentially
a ‘do no harm’ compliance-driven risk management approach, often developed
in the wake of big corporate scandals. The second approach was philanthropy,
driven primarily by a sense of a moral responsibility to give back to society,
often motivated by a marketing or brand perspective.
Today, a growing number of leading companies realise that sustainability
issues impact business value in many ways, positively and negatively, and both
short and long-term.

On an issue like climate change, many companies see that long-term success
can only be achieved with new and less carbon intensive technologies. However,
in the case of some social issues and human rights in particular, the clarity
around the significance for business performance is only now starting to
emerge.


FROM RISK TO OPPORTUNITY – MEETING THE NEEDS OF THE 21ST CENTURY

As an increasing number of companies recognise sustainability as critical for

long-term success, business mind-sets are shifting towards seeing the opportunity-
side of the equation. More investment is challenged towards new models,
technologies and products that generate business value, whilst at the same time
address social and environmental challenges.

For key resource issues like access to water or energy, large and small companies
alike are actively engaged in developing new strategies to reduce their
needs and optimise performance.

New business models are zero-footprint, sharing, circulate and Companies
which recognise that meeting the needs of the 21st century differs from the past
will emerge as the winners in the future.


SPEAKING THE LANGUAGE OF BUSINESS AND FINANCE
Although mind-sets are clearly shifting across the globe, a challenge remains to
translate the language of sustainability into concrete goals, actions and business
metrics.

This has been particularly true in the social space, where identifying the
right language has been a complex process. The introduction of the phrase ‘due
diligence’ in the UN Guiding Principles on Business and Human Rights was a
significant step forward in enabling human rights to be communicated in the
language of business.

“The most prominent development is the fact that corporate sustainability has progressed from being a moral obligation or argument, to making business sense: the ability for a business to grow and perform well in the long-term depends on the collective well-being of the society in which it operates.”
PAUL BULCKE, CEO, NESTLÉ

THE ROLE OF THE UN GLOBAL COMPACT:
MAKING THE BUSINESS CASE

As the global business community increasingly start to see the relevance of sustainability for business performance, what has been the role of the Global Compact in catalysing change?

Since its launch, the Global Compact has been active in clarifying and developing
the business case for sustainability. It has developed and disseminated
numerous tools and resources that have raised awareness on the business case
for corporate sustainability.


WORKING ON THE DRIVERS

The Global Compact initiative to launch the Principles for Responsible Investment
together with UNEP Finance Initiative in particular has helped shift
mind-sets in both business and finance towards increasingly focusing on how
environmental, social and governance performance impacts financial value.


FROM ‘DO NO HARM’ TO ‘DO MORE GOOD’

At its core, the ten principles of the Global Compact set a minimum requirement for how companies should operate in order to be sustainable, outlining
the shared responsibility of business to safeguard societal and environmental
needs.

A call to action and innovation to ‘do good’ is inherent to the initiative, as
exemplified with Principle 1 on supporting the protection of human rights
and Principle 7 on developing environmentally friendly technologies. The
Global Compact also asks companies to ‘take action’ to support broader UN
goals, opening up for innovation and collaboration to find new solutions, new
business models that at the same time meets societal needs and contribute to
long-term value creation for business.