Why should sustainability be at the heart of any corporate strategy?
Sustainable development has become a strategic area for the business sector. According to a recent Accenture survey, “Consumers pay real attention to where companies stand on social and environmental issues. If there is a match between the purposes of both parties (company and customer), the consumer will engage with the company and feel part of […]Blogs
Sustainable development has become a strategic area for the business sector. According to a recent Accenture survey, “Consumers pay real attention to where companies stand on social and environmental issues.
If there is a match between the purposes of both parties (company and customer), the consumer will engage with the company and feel part of the corporate tribe. If not, 42% of consumers will walk away from the brand, and 21% are unlikely to return and won’t give these companies a second chance.” 1
Business leaders have understood that sustainability is an investment. The 2030 Agenda- with the United Nations 17 Sustainable Development Goals (SDGs) -is one of the leading frameworks to guide them on this path.
Read on to find out what the SDGs are all about, the importance of corporate sustainability. And which brands have already started to work towards a resilient- and profitable- future.
What are the Sustainable Development Goals?
The 17 SDGs with their 169 associated targets are part of the United Nations 2030 Agenda for Sustainable Development. This action plan seeks countries and stakeholders to collaborate to address the three dimensions of sustainable development: economic, social, and environmental.
Why businesses have a pivotal role in the achievement of the SDGs?
The private sector is an engine of economic growth, employment, and as a source of finance, technology, and innovation.
However, businesses’ undeniable ecological footprint makes companies’ collaboration essential to tackle significant environmental changes.
Hence, as part of the efforts to strengthen companies’ corporate responsibility in different industries, the Global Corporate Sustainability Index rates their adherence to Environmental, Social and Corporate Governance (ESG).
How can a business adhere to ESG?
Environment: there are many ways a business can reduce its environmental impact: reducing waste, preventing pollution, adopting clean energy, conserving water, greening the planet by planting trees, using sustainable materials, or adopting sustainable production processes.
Social Impact: Brands need to look at their corporate culture in terms of diversity and inclusivity, which will impact the broader community. This criterion also comprehends the partnerships and collaborations with non-profit organizations and local governments to join efforts to reach goals aligned with the betterment of society.
Governance: This aspect comprehends two areas: one aims to ensure transparency and the industry best practices, and the other one refers to the internal configuration of the company to manage, control, and make effective decisions. And since everything that can be measured can be managed, it goes without saying that good governance is based on good data.
Why is it essential for a company to comply with the ESG?
Following the ESG guidelines allows brands to stay on top of:
- Government policies worldwide: The United States’ net-zero emissions target by 2050 or the European Green Deal aims to reach a circular economy by the same year.
Policies like the above drive different companies to adhere to new rules, and those who have not started making changes are at risk of disappearing from the picture.
- The changes in the financial and banking sectors, where ESG rules have been integrated and, as stated in STOXX® Global Climate Change Leaders Index, “firms that implement ESG strategies tend to outperform the other top global companies.” 2
- The public perception: According to the 2021 Global RepTrack on 100 business Outcomes Drivers, “ESG is the No. 1 metric in determining whether or not Millennials will say good things about your business, whether they will give your company the benefit of the doubt in a time of crisis, or trust you.”
What are the biggest challenges for companies when it comes to setting and achieving sustainability targets?
One of the biggest challenges is their supply chain operations. Starting with the cost of materials, including tariffs, etc., companies have to start making changes and looking for rapid solutions.
That’s why solution approaches like blockchain technology in data management across value chains are taking over several industries, no matter their shape or size.
Ford Motor Company traces cobalt supply for their electric car batteries, De Beers, to verify diamonds’ authenticity and ethical source. FedEx traces to guard their chain of custody, and these companies have already started to enhance their production processes while meeting ESG guidelines.
Having access to real-time data in a centralized space allows companies to understand if their suppliers meet their expectations and ensure customers can rely on their products and the processes involved for their consumption.
This need for quality assurance and product safety is even more urgent in the food industry, where food traceability is the new standard.
To follow sustainability guidelines and compliance with ESG through complete digitization is already an integral part of doing business, and blockchain technology its best – and most reliable – ally.
Companies are beginning to notice that understanding, managing, and controlling data that is also auditable and transparent is the only way to build resilient and responsible companies that align with conscious consumers’ needs.