The concept of corporate sustainability has gained the profound attention of academicians and practitioners in the last two decades. The idea continues to grow exponentially today, given the recognized corporate responsibilities to align businesses’ operations with environmental and social well-being. Initially confronted by skepticism, integrating sustainability in the corporate sector is now a management imperative, enabling firms and businesses to deal with increased consumer demands, investor pressure, growing profits, and regulatory requirements.
According to Investopedia (2023), corporate sustainability has emerged as a buzzword for firms and businesses nowadays, as companies like Walmart Store and McDonald’s corporation have entitled sustainability as a key priority in the conduction of their business strategies. Currently, increased global climate activism, the COVID-19 pandemic, and resource depletion have increased the considerations of environmental sustainability in firms and business strategies.
The roots of sustainable Development date back to 1987, the time when World Commission on Economic Development (UNWCED) published its Brundtland report. The report proved to be a historical marker for the departure of the concept of sustainability. The well-cited report, known as Our Common Future defines sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
Later in the year 1998, the idea of sustainability was redefined by John Elkington as the Triple Bottom Line TBL, concerning three Ps people, planet, and profit. He attempted to highlight the importance of non-financial considerations such as environmental and social concerns while conducting business operations. The goal of TBL was to ensure businesses operate for the best of people and the planet, the thought widely shared by the rest of the world.
The concept of corporate sustainability appeared in mainstream business strategies when the investor community tended to recognize their investments’ social and environmental impact. The pressure imposed by investors regarding firms’ sustainability, formed the basis for the emergence of sustainability reporting frameworks to measure firms’ social and environmental impact such as Environment, Society, and Governance ESG, Global Reporting Initiatives, and Corporate Social Responsibility CSR at the beginning of the new millennium.
Previously, academicians concerned with corporate sustainability tended to research how firms “integrate” sustainability into their operations and how this integration can impact firms’ ability to generate more profits. However, little work has been done on how sustainability has emerged as a crucial element in working in corporate sectors. This article seeks to fill this gap by conducting qualitative research on the emergence of corporate sustainability that enables firms to incorporate sustainability primarily environmental strategies in their operations to minimize risks and maximize profits.
Emergence of Corporate Sustainability
The concept of sustainable development sprung into the mainstream discussion in the latter half of the 20th century, however, its roots can be traced back to ancient times of the 16th and 17th centuries. The idea of sustainability grew parallel to the emergence of economic progress and development in pre-modern times. The world economic system of that period caused the uneven distribution of wealth among poor and rich countries and formed a basis for environmental degradation that originated from the exploitation of raw materials at the global level, which eventually led to growing concerns about sustainable development.
These growing concerns were particularly mentioned in the writings of forestry experts of the 17th and 18th centuries such as Evelyn who aimed to draw attention towards sustainable yield to preserve the forests around Europe. Following the Industrial Revolution, political economists such as Adam Smith, David Ricardo, and Robert Malthus, questioned the unprecedented economic growth and the combined impact of demographic factors, on social justice.
The 19th century witnessed growing discussion regarding the social and environmental impact of industrialization. The era saw the formation of environmentalist groups such as the Sierra Club in 1892, to draw attention toward environmental conservation, and the surge in publications such as that of George Perkins in 1892, which predicted the extinction of the human race due to their unchecked intervention in the natural environment. The emergence of the idea of sustainability in its early history is dominantly facilitated by academic literature that aimed to draw attention to the social and environmental impact of economic growth. However, in the 20th century, the emergence was facilitated by interactions of a number of agents namely, literature, institutions, and stakeholders, the combined impact of which formed the basis for sustainability discourses to flourish.
The Debate of Anthropocentric Economic Growth vs. Ecocentric Conservation
One of the many factors that drive the emergence of sustainability in the 20th century, is tension or the line of divergence between proponents of anthropocentric development ideologies and ecocentric environmentalism. Although there exist doubts about the precise definitions of both terms, anthropocentric broadly focuses on human welfare, while ecocentric orientations demonstrate the preservation of the environment and its elements.
The advocates of anthropocentric economic development have confidence in humankind’s abilities to develop methods and resources to counter the impacts of unlimited economic growth such as environmental degradation, energy supplies, and population growth. They had a firm belief that the new technologies and scientific developments would eventually counter the negative impact of industrialization and wasteful consumerism, to ensure a better quality of life in the future. However, with the emergence of the resource shortages that occurred in the wake of the global economic recession of 1974-1976, and the first oil crisis of 1973, the optimism demonstrated by the advocates of economic growth was pretty much gone in the latter half of the 20th century.
It was this time when the advocates of the other side of the debate i.e. ecocentric conservationists played their part in ensuring the emergence of today’s concept of sustainability. The decades of the 1960s and 1970s experienced a wave of growing environmental movements in the West. The anxiety regarding environmental concerns became more acute and was visible in the growing body of academic literature. Famous publications such as Arson’s Silent Spring (1962), Ehrlich’s The Population Bomb (1968), and The Ecologist’s A Blueprint for Survival (1972), aided the awareness campaign regarding growing environmental degradation and potential demographic pressure on resources. The Limits to Growth (1972), a well-known report of the Club of Rome, and Small is Beautiful (1973) were prominent publications that pointed out the unsustainability of economic development.
Micheal Kenny (1994), in his book Ecologism, mentioned that the limits to growth transformed the scattered anxiety about environmental problems into focused discussion to challenge unrestricted and unsustainable economic growth. The ecologists of the late 20th century with a number of publications regarding sustainable society and sustainable development aided the emergence of sustainability by precipitating the schism that exists between environmental conservationists and preservationists guiding them towards the common grounds of sustainability.
Institutionalizing Sustainability
After winning the debate from the advocates of economic development, the proponents of sustainability paved their way toward the institutionalization of sustainability. The year 1972 proved to be a turning point in the history of sustainability, when the UN’s global summit on Human Environment in Stockholm, attempted to integrate economic development with environmental integrity, which were previously viewed as incompatible.
Later, in the year 1974, the concept of a “sustainable society’ was discussed at the Conference on Human and Technology for Human Development. In this conference, academicians, environmentalists, and practitioners together presented factors necessary for a sound sustainable society such as equitable resource distribution, control of pollution, and sound use of technological innovation as well as non-renewable resources. In this way, the environmental dimension of sustainable development remains dominant throughout the 1970s.
Sustainable development became the center of attention in public debates when it was mentioned in the World Economic Strategy, a document published by IUCN in 1980. But the decade witnessed the decline of environmental movements and a wave of social radical movements broke out. Even the document presented by IUCN was criticized for primarily focusing on ecological dimensions and neglecting broader social and economic issues while discussing sustainability.
Given these scenarios, a twin social and ecological critique of economic development emerged which was later termed “sustainable development.” The term was then popularized in 1987 by Brundtland Report famously known as Our Common Future, which mentioned a new era of economic growth, which is socially and environmentally sustainable. The Brundtland report unites the notion of sustainability and the pursuit of economic growth, the idea which attracted the attention of a wide range of actors.
The notion of sustainability popularized by the Brundtland report was institutionalized by the Rio Summit in 1992. The summit laid the foundation for global institutionalization of sustainable development by adopting the Rio Declaration of Environment and Development and by setting a global plan for sustainable development i.e. the Agenda 21. The Rio Summit attempted to set 27 principles for sustainable development which were operationalized by the means of Agenda 21. Since then, the notion of sustainable development has begun to appear in mainstream policy discourses, which were endorsed by institutions, governments, businesses, and civil societies.
The emergence of sustainable development in the corporate sector became evident when the concept began to be included in mainstream business strategies. This emergence is facilitated by stakeholder pressure as well as by institutions. The Rio Summit formed the basis for the formation of UNFCCC 1992 and Kyoto Protocol 1997, which mobilized industrialized nations to stabilize their GHG emissions by means of national strategy.
Parallel to institutional efforts to operationalize sustainability, there emerge growing concerns in the investing community about the social and environmental impact of their investments, which give rise to sustainable reporting strategies and the corporate social responsibility (CSR) agenda. In 1997, the Global Reporting Index GRI came into being to track businesses’ environmental and social impact. Later, the Triple Bottom Line, given by Elkington in 1998, advanced the concept of corporate sustainability. The Carbon Disclosure Project, a reporting framework that drives companies to disclose their environmental information to their stakeholders came into being in 2002. According to CDP Media Factsheet (2022), it is estimated that about 245 firms have disclosed their CDP reports to 35 investors who demand these disclosures.
The most prominent development that occurred in the history of corporate sustainability is the development of Sustainable Development Goals SDGs in 2015, which along with putting pledges on nation-states demands private firms and businesses to realize these goals in their business operations. The SDG agenda called for businesses to “apply their creativity and innovation to solving sustainable development challenges”. Later on, the Compact which was drafted by the World Economic Forum in 2017, gathered 140 CEOs, who committed to work together, to achieve UN SDGs. The last decade (2015 onward) facilitated the evolution of sustainable development in mainstream business strategy as this decade witnessed the implementation of the concept of sustainable development to its fullest.
Summing It Up
Currently, the notions of corporate sustainability are growing unprecedentedly. This growth is largely facilitated by increased global problems such as Climate change and the transformed public perceptions mainly of consumers which demand firms to provide solutions to emerging environmental issues. Managers and CEOs too are inclined toward the adoption of sustainable strategies given the recognized benefits of aligning business operations with notions of sustainable development. The benefits that come along with the adoption of sustainable strategies can be traced from Harvard Business Review 2017 which asserts that about 50% of consumers are inclined towards buying products at higher costs if the products cast a positive impact on society and the environment.
New regulations in the reporting framework have been established and companies are increasingly being evaluated in terms of CSR and ESG matrices. The most prominent example is of EU’s Corporate Sustainability Reporting Directives (CSRD) which legally binds large firms to report their operations’ environmental and social impacts. There is no doubt that in current times, the onset of COVID-19, increased environmental issues, global activism, and growing investor pressure have shifted the landscape of corporate sustainability.
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Tasmia Iman is currently pursuing an MPhil in International Relations from the National Defense University, Islamabad. Her research focuses on South Asia, with a special interest in security studies, climate change, and environmental diplomacy.