Discussion
There has been a lot of conversation about “corporate sustainability” in the corporate, educational, and prevalent media in the latest days. This phrase is frequently used in connection with, and in certain instances as a generic term for, phrases like “sustainable development” and “corporate social responsibility.” There has been a massive wave of organisations perpetrating “sustainability” in the last 2 years. They may establish net zero carbon targets, expand their working population, or enter new, relatively clean business units. And this is only the tip of the iceberg. As business owners face pressure from progressive movements and environmental degradation, focus on sustainable development is expected to increase even more in the next few years. However, several individuals are still perplexed by corporate sustainability (Engert, Rauter and Baumgartner 2016).
The term “corporate sustainability” is derived from the notion of “sustainable development.” That notion was described in 1987 by a United Nations action plan, namely the World Commission on Environment and Development. “Sustainable development” refers to activities that address current generations’ requirements without adversely affecting the requirements of the future generations. Business organisations must make money to eradicate inequality and poverty while not negatively affecting the natural habitat to promote sustainable development. Business organisations aid the world nowadays while ensuring that future generations can prosper (Lozano 2015).
This paper mainly focuses on the discussion of the importance of corporate sustainability. While discussing the same, it also highlights the importance of stakeholder partnerships in achieving sustainability and why it was necessary to create ISSB.
Corporate sustainability became a catchphrase in both startups and enterprises. Sustainability has been identified as a central priority for McDonald’s Corporation (MCD), Walmart Stores, Inc. (WMT), and many other corporate powerhouses progressing forward. Other corporate entities are now under compression to devote themselves to discovering more environmentally friendly ways of providing their products and services. Before discussing the importance of corporate sustainability, it is important to discuss what corporate sustainability is. If the pages of the history are turned over, it would be observed that the term “corporate sustainability” is derived from the notion of “sustainable development.” That notion was described in 1987 by a United Nations action plan, namely the World Commission on Environment and Development. The concept of corporate sustainability can be regarded as an emerging and developing framework of corporate management. The phrase “framework” is used intentionally, as corporate sustainability substitutes the conventional development and model of profit-maximization. Whereas corporate sustainability recognises the importance of organisational productivity, development, and profitability, it also necessitates the pursuit of societal objectives, particularly those related to sustainable development, social justice and equity, environmental conservation, and financial growth (Saratun 2016).
Numerous authors believe that by incorporating a corporate sustainability initiative, someone’s company is perpetrating utilising natural resources wisely, making investments for the planet’s lengthy well-being, and guaranteeing that all individuals involved in one’s business operations are treated with dignity and respect. In the corporate sustainability plan, “sustainability” is regarded as one of the most crucial elements. Sustainability implies assisting and encouraging something in order to keep things running. The concept of sustainability refers to maintaining life and assisting the globe. As a practice, this entails behaving in a way that conserves the earth’s natural resources while still satisfying the needs of the present generation. There is more to consider than only environmental concerns when explaining sustainability. Sustainability is divided into three components, sometimes referred to as the three dimensions of sustainability: environmental, financial, and social dimensions. A sustainable business will consider all dimensions when developing a sustainability strategy in a perfect world (Engert and Baumgartner 2016).
Multi-stakeholder partnerships and Their Importance
Sometimes people become confused to describing the terms “corporate sustainability” and “corporate social responsibility.” Both of these phrases are catchphrases under corporate ethics. While they appear to be identical, they are not. In fact, the term “corporate sustainability” falls under the overarching concept of “corporate social responsibility.” Whereas corporate sustainability refers to the strategic plan used to attain business goals in an environment-friendly manner, corporate social responsibility is regarded as a wider concept. Corporate social responsibility is regarded as a self-regulation technique used within business strategies to guarantee that all attempts have been used to leave a positive effect through its actions. It is frequently concerned with what a corporation already has accomplished in sustainability endeavours, whereas corporate sustainability is concerned with what can be accomplished in the coming years (Braam and Peeters 2018).
It has been observed by several scholars that there are several reasons for which it is important to incorporate “corporate sustainability” within a business organisation. It can be hard to envisage the larger-scale effect that these principles can have (Saratun 2016). The importance of corporate sustainability is discussed below:
- Environmental benefits: As a globe, individuals frequently face several environmental challenges that must be addressed in order to safeguard their residence and ensure its safety for following generations. It is only possible if everybody does their part; the collaborative power of individuals and businesses across the globe can decrease harmful hazards and increase the planet’s durability. The notion of sustainability identifies that the planet’s resources are not unlimited and strives to overcome excessive usage of those resources. Individuals will be capable of maintaining resources for upcoming generations if everyone works together to conserve the earth (Lozano 2015).
- Pollution: Pollution is deemed to be the emergence of hazardous or toxic materials into the natural surroundings, which can take various types. Land pollution, air pollution, and water pollution are examples of these. Whenever a natural habitat has become contaminated, it becomes hazardous to those who live there. Air pollution can be hazardous because it makes it difficult for humans and wildlife to breathe. Land pollution can also endanger wildlife because it frequently results in living creatures consuming dangerous substances.
- Climate change: Climate change, which includes the fiercely debated subject of global warming, is defined as a long-term transition in average global temperature and weather patterns (including rainfall) over a longer time. Unfortunately, climate change is considered a consequence of human behaviour, and greenhouse gas emissions are primarily liable for the earth’s rising temperature. The impacts of these high global temperatures comprise the damage of icebergs and increasing sea levels, which have serious consequences for wildlife (Baumgartner and Rauter 2017).
- The diversification of all living creatures on the planet, starting from microorganisms to animals, and the ecosystem in which they live side by side, is essential for the sustainability of the entire globe. As several scholars discussed earlier in the annihilation mitigation article, the creatures that coexist to establish biologically diverse ecological systems are essential to the survival of the earth. Human interference has put the planet’s biodiversity in danger, with factors such as habitat destruction and plastic pollution-reducing organisms’ numeric values.
- Trade benefits: The primary goal will always be to preserve the environment and decrease someone’s company’s carbon footprint. Being concerned about the environment, on the other hand, tends to be associated with success in business and financial development (Zimek and Baumgartner 2017).
- Consumers: The expectations and desires of a business’s consumer base are perhaps the most significant consideration. Most individuals want what is best for their earth, and the company’s sustainability can create or break an individual’s wish to use its goods and services. Devoting to an ecologically responsible strategy for achieving someone’s business objectives will attract consumers and demonstrate that one company cares, thereby increasing public confidence. If somebody does not concede to one company’s ethical practices and operations, they may lose their business entirely.
- Investors: With increased emphasis on sustainability, a successful company is especially convincing to prospective investors. Someone can encourage new investors to finance their business enterprises by integrating sustainable components into their corporate strategy. The concept of impact investment is becoming increasingly popular. These impact investments are those created with a constructive environmental effect in mind and monetary benefit in mind. With both of these in mind, it comes down to the fact that attempting to depart a positive environmental and social effect will enhance investment options within one’s company and propel their financial enhancement (Neugebauer, Figge and Hahn 2016).
It cannot be ignored that there is a high demand for sustainability; thus, a corporate sustainability strategy is good for the environment and may also be essential to someone’s business venture.
In the latest days, the phrase “multi-stakeholder partnership” (MSP) has surpassed the prominence of Public-Private Partnerships in advancement circles. Nevertheless, evidence of effective practice in Information and Communication Technologies for Development is limited due to the scarcity of documented instances of highly viable “multi-stakeholder partnerships.” Multi-stakeholder partnerships are all about forming larger partnerships than the sum of their portions and having a long-term and significant effect at every level of operation. They are intended to encourage a more comprehensive approach to growth and increased governance. Multi-stakeholder partnerships as a tool for attaining advancement objectives are reasonable, especially when stakeholders with appropriate expertise or key competencies add value to continued development projects and pool their assets and resources in conflict resolution (MacDonald et al. 2018).
However, while several people talk about the importance of multi-stakeholder partnerships, most of them have difficulty making them perform. The primary issue appears to be the development of a collaborative partnership built on confidence, mutual respect, effective discussions, and a shared understanding of each other’s benefits and drawbacks among stakeholders. Each industry’s stakeholders introduce their organisational interests, mandates, skills and knowledge, and vulnerabilities to partnerships. Efficacious multi-stakeholder partnerships will not arise unless these variables are openly acknowledged, and procedures enable stakeholder bargaining for beneficial results (Haywood et al. 2019).
Involving stakeholders in a conversation to learn what environmental and societal issues are most important to them will enhance decision-making and responsibility. Several authors believe that Every project, no matter how big or small, will have stakeholders, members of the general public, or community members affected by the project. The number of individuals a venture will impact is proportional to its size. However, many organisations fail to consider how to effectively involve these groups (Brouwer et al. 2019). When stakeholder partnership involvement is executed successfully, it enhances channels of communication between stakeholders, generates and sustains project support, accumulates data for the organisation, decreases the likelihood of disagreement or other project grievous concerns, and strengthens the organization’s and, eventually, the program’s prestige. Thus, concerning the importance of stakeholder partnerships in achieving sustainability, it can be stated that stakeholder involvement allows for greater alignment of practices with societal requirements and aspirations, thereby promoting long-term sustainability (Dahiya and Okitasari 2018).
Challenges in Forming Multi-stakeholder Partnerships
However, before discussing the necessity of creating the International Sustainability Standards Board (ISSB), it is also vital to discuss the International Financial Reporting Standards Foundation. The International Financial Reporting Standards Foundation (IFRS) was founded in 2001 as a non-profit organisation. It protects the public interests by creating internationally accepted disclosure requirements that satisfy the need for straightforward and equivalent information to create financial choices among investment firms and other capital market players (IFRS – ISSB: Frequently Asked Questions, 2022). The International Accounting Standards Board (IASB) of the IFRS Foundation is in charge of the IFRS Accounting Standards, considered necessary by more than 140 parts of the world. The International Sustainability Standards Board (ISSB), which was recently established, will define IFRS Sustainability Disclosure Standards (IFRS SDS). The Trustees of the IFRS Foundation are in charge of the organisation’s plan, management, and supervision. Essentially, they are responsible to a Monitoring Board of financial market officials of corporate reporting in their respective domains, ensuring public oversight (Abdi, Kordestani and Rezazade 2019).
The International Sustainability Standards Board is a private-sector, self-governing organisation that creates and endorses International Financial Reporting Standards Foundation Sustainability Disclosure Standards. The International Financial Reporting Standards Foundation supervises the International Sustainability Standards Board. The International Sustainability Standards Board was established in 2021 due to two discussion processes on demand for worldwide sustainability benchmarks and the Foundation’s role in their advancement and proposed changes to the Constitution of the International Financial Reporting Standards Foundation to establish a new sustainability benchmark board under the Foundation’s ascendency (Delimatsis 2015).
There are some reasons why it becomes necessary to create the International Sustainability Standards Board (ISSB) in 2021. According to the Constitution of the IFRS Foundation, the ISSB is solely responsible for all IFRS Foundation sustainability-related technicalities, including:
- Full confidentiality in constructing and seeking its technical plan, about some discussion prerequisites with the Trustees and the community at large; and
- The preparatory work and release of Sustainability Disclosure Standards and revelation drafts following the Constitution’s judicial oversight (IFRS – ISSB: Frequently Asked Questions, 2022).
Conclusion
Thus, from the above discussion, it can be concluded that corporate sustainability is regarded as a new and growing framework in corporate management. Even though it recognises the requirement for revenue growth, the notion varies from conventional development and the profit-maximization model. It puts a much larger focus on social, environmental, and financial performance and public disclosure of this achievement. Some other concepts have been incorporated into corporate sustainability. Sustainable development specifies the performance regions in which businesses must concentrate their efforts and the foresight and social and cultural objectives that the corporate entity must strive for, namely protecting the environment, social equity, and financial progress. Stakeholder theory offers business assertions for why corporate entities must collaborate toward these aims, while corporate social responsibility offers moral assertions. Corporate accountability explains why businesses must disclose their achievement in all of these regions to the community.
However, not all businesses today conform to corporate sustainability doctrines, and it is highly improbable that all will, at least not knowingly and willingly. However, a considerable number of business organisations have made public pledges to conserve the earth, promote equity and social justice, and promote financial growth. Their number is increasing. This trend will be amplified if investors and other stakeholders assist and reward business organisations that operate in a sustainable manner.
References
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