Sustainable business refers to business practices that aim to engage in business activities while minimizing negative impacts on the global or local environment, community, and society. Businesses that undertake these practices aim to achieve the triple bottom line: profit, people, and the planet, by integrating environmental, economic, and social considerations when making business decisions. Sustainable businesses often adopt practices that promote environmental protection, and long-term economic growth.
A green business is characterized by several key pillars: First, the business incorporates environmentally friendly products or services that reduce the demand for harmful products and services, and may contribute to conserving natural resources. Second, the business preserves financial capital through responsible and efficient business models. Third, the company focuses on social responsibility by upholding human rights. Finally, it emphasizes cultural sustainability by supporting inclusion and respect for local and global communities.
Sustainable business encompasses a wide variety of practices and strategies implemented across diverse sectors and industries. These approaches may focus on reducing the environmental impact of the company and improving how efficiently the company utilizes its resources. While many of these practices are associated with long-term benefits, adopting them may present challenges and trade-offs.
Context The concept of sustainable business developed within discussions of sustainable development in the late 20th century. In 1987, the World Commission on Environment and Development published Our Common Future, a report focused primarily on public policy and international development. Ultimately, this publication influenced private-sector perspectives and approaches to environmental management and long-term use of resources.
Terminology The concept of sustainability refers to the ability to meet the needs without compromising the ability of future generations to meet their own. In business, sustainability includes aligning economic growth with environmental protection. It emphasizes practices that minimize ecological damage, such as the reduction of waste and the limitation of greenhouse gas emissions that contribute to rising atmospheric CO2 levels.
The term sustainable business is related to other concepts such as corporate social responsibility (CSR), corporate citizenship, and responsible business. The triple bottom line, introduced by John Elkington in the 1990s, expands all this idea by evaluating business success across people, planet, and profit dimensions.
In contrast, short-termism refers to the prioritizing short-term financial outcome at the expense of long-term interests. Short-termism discourages investment in sustainable initiatives, contributing to source depletion and increased CO2 emissions. Short-termism has become a relevant theme in sustainability discussions, as balancing financial outcomes with environmental and social considerations is a challenge within modern business practices.
Green businesses are sometimes considered as possible mediators of economic-environmental relations, even if the business has a minimal effect on lowering atmospheric levels. The definition of "green jobs" is ambiguous. Still, it is generally agreed that these jobs, the result of green business, should be linked to sustainable energy and contribute to reducing greenhouse gases. These corporations can be seen as generators of not only "green energy" but as producers of new "materializes" that are the product of the technologies these firms developed and deployed.
Environmental dimension A major initiative of sustainable businesses is to eliminate or decrease the environmental impact caused by the production and consumption of their goods. The impact of such human activities in terms of the number of greenhouse gases produced can be measured in units of carbon dioxide and is referred to as the carbon footprint. The carbon footprint concept is derived from the ecological footprint analysis, which examines the ecological capacity required to support the consumption of products.
Businesses can adopt a wide range of green initiatives: Tao et al. refer to a variety of "green" business practices including green strategy, green design, green production and green operation.Tao, Z., A. L. Guiffrida, and M. D. Troutt, "A green cost based economic production/order quantity model", in Proceedings of the 1st Annual Kent State International Symposium on Green Supply Chains, Canton, Ohio, US, 29–30 July 2010 One of the most common examples of a "green" business practice is the act of "going paperless" or sending electronic correspondence in instead of paper when possible. On a higher level, examples of sustainable business practices include: refurbishing used products (e.g., tuning up lightly used commercial fitness equipment for resale); revising production processes to eliminate waste (such as using a more accurate template to cut out designs), and choosing nontoxic raw materials and processes. For example, Canadian farmers have found that hemp is a sustainable alternative to rapeseed in their traditional crop rotation; hemp grown for fiber or seed requires no pesticides or herbicides. Another example is upcycling clothes or textiles, in which businesses can upcycle products to maintain or increase their quality.
Sustainable businesses aim to reduce environmental harm caused by production and consumption. This includes measuring carbon footprints, minimizing greenhouse gas emissions, and adopting practices such as: Refurbishing or upcycling products, Revising production processes to reduce waste, Using nontoxic materials, implementing design for the environment principles.
Examples include using hemp as a crop alternative, adopting paperless practices, and designing products for longer lifespans.
Sustainable business leaders also take into account the life cycle costs for the items they produce. Input costs must be considered regarding regulations, energy use, storage, and disposal. Designing for the environment (DFE) is also an element of sustainable business. This process enables users to consider the potential environmental impacts of a product and the process used to make that product.
The many possibilities for adopting green practices have led to considerable pressure being put upon companies from consumers, employees, government regulators, and other stakeholders. Companies may resort to greenwashing in order to create a more environmentally-friendly image by presenting products or practices as sustainable or environmentally beneficial without implementing corresponding operational changes. For example, various producers in the bamboo fiber industry have been taken to court for advertising their products as "greener" than they are. In their book Corporate Sustainability in International Comparison, Schaltegger et al. (2014) analyze the current state of corporate sustainability management and corporate social responsibility across eleven countries. Their research is based on an extensive survey focusing on the companies’ intention to pursue sustainability management (i.e. motivation; issues), the integration of sustainability in the organization (i.e. connecting sustainability to the core business; involving corporate functions; using drivers of business cases for sustainability) and the actual implementation of sustainability management measures (i.e. stakeholder management; sustainability management tools and standards; measurements).Schaltegger, S.; Windolph, Harms, D. & Hörisch, J. (Eds.) (2014): Corporate Sustainability in International Comparison: State of Practice, Opportunities and Challenges. Cham: Springer International Publishing An effective way for businesses to contribute towards waste reduction is to remanufacture products so that the materials used can have a longer lifespan.
Examples of sustainable companies
The Harvard Business School business historian Geoffrey Jones traces the historical origins of green business back to pioneering start-ups in organic food and wind and solar energy before World War 1. Among large corporations, Ford Motor Company occupies an odd role in the story of sustainability. Ironically, founder Henry Ford was a pioneer in the sustainable business realm, experimenting with plant-based fuels during the days of the Model T. Ford Motor Company also shipped the Model A truck in crates that then became the vehicle floorboards at the factory destination. This was a form of upcycling, retaining high quality in a closed-loop industrial cycle. Furthermore, the original auto body was made of a stronger-than-steel hemp composite. Today, of course, Fords aren't made of hemp, nor do they run on the most sensible fuel. Currently, Ford's claim to eco-friendly fame is the use of seat fabric made from 100% post-industrial materials and renewable soy foam seat bases. Ford executives recently appointed the company’s first senior vice president of sustainability, environment, and safety engineering. This position is responsible for establishing a long-range sustainability strategy and environmental policy, developing the products and processes necessary to satisfy customers and society as a whole while working toward energy independence. It remains to be seen whether Ford will return to its founder's vision of a petroleum-free automobile, a vehicle powered by the remains of plant matter.
The automobile manufacturer Subaru has also made efforts to tackle sustainability. In 2008 a Subaru assembly plant in Lafayette became the first auto manufacturer to achieve zero landfill status when the plant implemented sustainable policies. The company successfully managed to implement a plan that increased refuse recycling to 99.8%. In 2012, the corporation increased the reuse of Styrofoam by 9%. And from the year 2008 to the year 2012, environmental incidents and accidents were reduced from 18 to 4.
Smaller companies such as Nature's Path, an organic cereal and snack-making business, have also made sustainability gains in the 21st century. CEO Arran Stephens and his associates have ensured that the quickly growing company's products are produced without toxic farm chemicals. Furthermore, employees are encouraged to find ways to reduce consumption. Sustainability is an essential part of corporate discussions. Another example comes from Salt Spring Coffee, a company created in 1996 as a certified organic, fair trade, coffee producer.Jensen, C (May 11, 2012). Brewing a Coffee Company with a Social Mission . Axiom News. Retrieved on: 2012-05-12 In recent years they have become carbon neutral, lowering emissions by reducing long-range trucking and using bio-diesel in delivery trucks, upgrading to energy-efficient equipment, and purchasing carbon offsets. The company claims to offer the first carbon-neutral coffee sold in Canada. Salt Spring Coffee was recognized by the David Suzuki Foundation in the 2010 report Doing Business in a New Climate. A third example comes from Korea, where rice husks are used as nontoxic packaging for stereo components and other electronics. The same material is later recycled to make bricks.
Some companies in the textile industry have been moving towards more sustainable business practices. Specifically, the clothing company Patagonia has focused on reducing consumption and waste. The company limits its environmental impact by ensuring only recycled and organic materials, repairing damaged clothes, and by complying with strong environmental protection standards for its entire supply chain.