In the past few years sustainable business models and strategies have become increasingly important for most companies. Today, it is almost impossible to browse a company’s website or its official reports without finding references to their “sustainability” efforts. These information are mostly divided into three pillars of a sustainable business.
According to the Brundtland report (the first document that coined the concept of “sustainable development”), businesses have a crucial role in managing impacts of population in ecosystems, ecosystem resources, food security, and sustainable economics in order to decrease the pressure humanity places on the environment.
When aiming to achieve these goals, companies have to keep in mind the three pillars of a sustainable business: economic, environmental, and social. Informally these three pillars are also referred to as planet, people and profits (the triple bottom line).
If any of these pillars is weak then the system as a whole is unsustainable. It is important that organizations are working on the sustainability problem as a whole, which means taking all three pillars into consideration when making business decisions.
Let’s dive right into each of them:
1. The Environmental Pillar (Planet)
The first of the three pillars of a sustainable business is the environmental pillar, which stresses the impact of business activities and business decisions on the environment.
Most companies are giving the environmental pillar the most attention. In fact more than 50% of sustainable leaders say that they only focus on environmental values. Environmental sustainability is defined by processes, systems and activities that reduce the environmental impact of an organization’s facilities, products and operations.
Now more than ever, it is important for companies to be aware how their business activities affect the environment, and to limit and change business activities that have damaging consequences for our earth.
Environmental initiatives that businesses take include finding alternative energy sources, reducing their carbon footprint, getting rid of plastic bags, and using sustainable materials for the packaging of their products such as paper. Last but not least, they might also make efforts to “green up” the entire supply chain of their products, pushing suppliers to act more environmentally responsible too.
A program can be considered “environmentally sustainable” when natural capital and environmental resources get preserved, maintained and not overexploited.
Unfortunately, for centuries human actions overutilized natural resources, such as soil, water, etc., and compromised long-term stability of the environment with short-term benefits, like profits.
Under this perspective, all actors seeking environmental sustainability should carefully interact with the environment, avoiding degradation or depletion of its resources. This allows them to mitigate their environmental footprints and ecosystems to recover by themselves. One way to tackle sustainability challenges, such as climate change, are so-called nature-based solutions. They involve conserving, restoring, or better managing ecosystems to remove carbon dioxide (CO2) from the atmosphere and have the overall aim to improve the interactions that humans have with the environment.
Again, the ultimate goal here is to meet the current needs of populations causing no harm to the environment and not compromising the ability to fulfill the needs of future generations.
2. The Social Pillar (People)
The second of the three pillars of a sustainable business is the social pillar. This pillar is concerned with how companies’ employees but also other internal and external stakeholders are affected and treated by a company. A socially sustainable business, should care about its employees’ welfare and should maintain a connection with its workforce and stakeholders that goes beyond just a business relationship.
Socially-oriented companies help with providing security, individual development and overall health to employees, suppliers and partners. Something as simple as acknowledging your own employees’ work and rewarding them accordingly is significant in order to create a long term loyal workforce.
On a global scale, a business needs to be aware of how its supply chain is being operated. In order to be socially sustainable, companies need to make sure that the work environment along its supply chain is safe, that people are being paid fairly and no child labor is involved.
A company that is known for poor social sustainability practices can quickly lose its reputation and customer base. The same goes for greenwashing. This is also one of the reasons why many people are turning away from fast-fashion giants like H&M or Zara to more sustainable fashion brands like Patagonia or MudJeans.
Firms and institutions acting towards social sustainability usually seek to provide all individuals with access to universal human rights and to improve living conditions. In other words, they contribute creating healthier, fairer and more livable communities. That’s why this concept is often associated – among others – to topics such as health, wellness, safety, inclusiveness and community empowerment.
3. The Economic Pillar (Profit)
The third of the three pillars of a sustainable business is the economic pillar. The economic pillar addresses the bottom-line of every business: profit! Companies have to make profit to remain sustainable.
That said however, profit still can’t outweigh the other two pillars. Profit at any cost is not what the economic pillar is about. The economic pillar rather stands for compliance, proper governance and risk management. While these are already met at many Western companies, they are not globally.
Traditionally, economic sustainability has been the easiest to understand. Companies seeking economic sustainability aim for profitability, by efficiently using their assets and maintaining their capital.
For corporate institutions, it’s all about not squandering economic resources when trying to improve the standards of life of local communities. Same goes for families and individuals. In light of that, economic sustainability may be narrowed down to this fundamental principle: carrying out both short-term and long-term activities without running out of money nor increasing debt.
Economic sustainability goes hand in hand with the circular economy, which is a systems solution framework that tackles global challenges like climate change, biodiversity loss, waste, and pollution.
This is also where social entrepreneurship comes in…
Social Entrepreneurship
Individuals who start their own business are motivated by many different things. Some people want the freedom of being their own boss or want to pursue their true passion. Others have dreams of making a lot of money and building an empire. However, in the past several years, a new type of entrepreneur has emerged: the social entrepreneur.
Social entrepreneurship is an approach by companies, in which they develop, fund and implement solutions to social, cultural, or environmental issues. When it comes to social entrepreneurship, sustainable business models are those that help social organizations incorporate and champion all four pillars of sustainability into their core activities.
While sometimes confused with nonprofit organizations, social entrepreneurship is a for-profit endeavor, even though a greater emphasis is placed on creating social or environmental changes. Read on to learn more about three companies who practice social entrepreneurship.
Examples for Sustainable Businesses
Patagonia
Patagonia is an iconic outdoor gear maker, that has holistically integrated sustainability into their DNA. At Patagonia, there is no contradiction between saving the world and the bottom line.
This billion-dollar global brand demonstrates that businesses can be both radically responsible and very profitable.
Patagonia was founded in 1973 by outdoor enthusiast Yvon Chouinard. His opposition to traditional business has coalesced around sustainability. This is the central pillar around which the company ethos was formed.
Patagonia is minimizing its energy and emissions footprint, its also working to reduce its water consumption and waste. The company challenges injustice at the highest levels and their successful business is a model that is being followed by other companies, especially in the fashion industry.
Ben & Jerry's
Since 1985, the Ben & Jerry’s Foundation has funded 7.5% of its annual pre-tax profits to community organizations across the country. That amounts to 1.8 million dollars annually, not including the hundreds of thousands of dollars they’ve donated to progressive causes over the years such as racial justice, climate change, peacebuilding, and more.
You may be wondering how this ice cream company became one of the best social impact companies in the world. Is it because of their give-back model to charitable causes? Or is it because they take a public stand on progressive social and environmental justice issues? Perhaps it’s the sustainable way that they make and package their ice cream? The answer is yes to all of the above!
Ben & Jerry’s three-part product, economic, and social mission combined with their linked prosperity concept is an exemplary model for conscious capitalism done right.
TOMS
While it wasn’t the first company to explore social issues, TOMS is arguably the brand that popularized social entrepreneurship and sustainable business practices over the past decade.
Founded by Blake Mycoskie in 2006 after a trip to Argentina, TOMS began a one-for-one social entrepreneurship model, in which a pair of shoes would be given to children in need for every pair of shoes they sold.
Today, TOMS has given over 95 million shoes to people in need, and has expanded their giving model to include access to safe drinking water, eye surgery, bullying prevention and safe births.
Conclusion
So, what have we learned from all of this?
As humanity, we rely on a healthy environment and society, as well as on a stable economy. If one of these three pillars is left out, we will simply not have a long-term future.
While more and more businesses are trying to become sustainable, there are many challenges and paradoxes to be solved.
However, the examples above show that it is totally possible for businesses to focus on all of the three pillars. Let’s hope others will follow and implement sustainable business models, for example by the concept of the stakeholder theory.
But it is not only about companies becoming more sustainable. It also about YOU becoming more sustainable! Here are 15 ways to live a more sustainable lifestyle!
