FOR CS PROFESSIONAL, CA, CMA
Sustainable Development
• Role of Business in Sustainable Development
• Sustainability Terminologies
• Corporate Sustainability
• Corporate Sustainability and Corporate Social Responsibility
• KYOSEI & TRIPLE BOTTOM LINE (TBL)
• One of the fundamental characteristics of a corporate is perpetuity. In the eyes of law, it is treated as a separate legal entity which can hold assets and bear liabilities, can sue and be sued.
• The word sustainable is derived from sustain or sustained. The synonyms of the word sustained as per the Collins Thesaurus include perpetual, prolonged, steady.
• Sustainable development is a broad, concept that balances the need for economic growth with environmental protection and social equity.
• WCED recognized that the achievement of sustainable development could not be simply left to government regulators and policy makers. It recognized that industry has a significant role to play.
• Four fundamental Principle of Sustainable Development- Principle of Intergenerational equity; Principle of sustainable use; Principle of equitable use or intergenerational equity; Principle of integration.
• Corporate Sustainability is a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments. corporate sustainability describes business practices built around social and environmental considerations • Key drivers need to be garnered to ensure sustainability - Internal Capacity Building strength; Social impact assessment; Repositioning capability; Corporate sustainability.
• Kyosei philosophy reflects a confluence of social, environmental, technological and political solutions. It works in five stages-- First is economic survival of the company. Second is cooperating with labour. Third is cooperating outside the company. Fourth is global activism, and fifth is making the government/s a Kyosei partner
• In 1999 Elkington developed the concept of the Triple Bottom Line which proposed that business goals were inseparable from the societies and environments within which they operate.
• The emergence of corporate responsibility, from being a niche interest of environmentalist and pressure groups to one public. Concern, has in part, stemmed from the realization that corporate governance and social and environmental performance are important elements of sustained financial profitability.
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CH 14 SUSTAINABILITY
1.
2. Introduction
• Sustainable Development
• Role of Business in Sustainable Development
• SustainabilityTerminologies
• Corporate Sustainability
• Corporate Sustainability and Corporate Social
Responsibility
• KYOSEI &TRIPLE BOTTOM LINE (TBL)
3. • One of the fundamental characteristics of a corporate is perpetuity. In the eyes of law, it is
treated as a separate legal entity which can hold assets and bear liabilities, can sue and be sued.
• The word sustainable is derived from sustain or sustained. The synonyms of the word sustained
as per the Collins Thesaurus include perpetual, prolonged, steady.
• Sustainable development is a broad, concept that balances the need for economic growth with
environmental protection and social equity.
• WCED recognized that the achievement of sustainable development could not be simply left to
government regulators and policy makers. It recognized that industry has a significant role to
play.
• Four fundamental Principle of Sustainable Development- Principle of Intergenerational equity;
Principle of sustainable use; Principle of equitable use or intergenerational equity; Principle of
integration.
• Corporate Sustainability is a business approach that creates long-term shareholder value by
embracing opportunities and managing risks deriving from economic, environmental and social
developments. corporate sustainability describes business practices built around social and
environmental considerations
4. • Key drivers need to be garnered to ensure sustainability - Internal Capacity
Building strength; Social impact assessment; Repositioning capability;
Corporate sustainability.
• Kyosei philosophy reflects a confluence of social, environmental,
technological and political solutions. It works in five stages-- First is
economic survival of the company. Second is cooperating with labour.Third
is cooperating outside the company. Fourth is global activism, and fifth is
making the government/s a Kyosei partner
• In 1999 Elkington developed the concept of theTriple Bottom Line which
proposed that business goals were inseparable from the societies and
environments within which they operate.
•The emergence of corporate responsibility, from being a niche interest of
environmentalist and pressure groups to one public. Concern, has in part,
stemmed from the realization that corporate governance and social and
environmental performance are important elements of sustained financial
profitability.
5. Sustainability is based on a simple principle: Everything that we need for our
survival and well-being depends, either directly or indirectly, on our natural
environment.
Sustainability is important to making sure that we have and will continue to have,
the water, materials, and resources to protect human health and our environment.
Sustainability has been comprehensively defined in Paul Hawkin’s book –The
Ecology of Commerce .
The generations followed these fundamental natural laws for thousands of years.
In 1987, a report of theWorld Commission on Environment and Development
(WCED) of the United Nations (popularly known as Brundtland Report) first
introduced the concept.
WCED recognized that the achievement of sustainable development could not be
simply left to government regulators and policy makers.
The contribution of sustainable development to corporate sustainability is twofold.
First, it helps set out the areas that companies should focus on: environmental,
social, and economic performance.
Second, it provides a common societal goal for corporations, governments, and
civil society to work toward: ecological social, and economic sustainability
6. Four fundamental Principle of Sustainable
Development agreed by the world community are:
1. Principle of Intergenerational equity: need to
preserve natural resources for future generation.
2. Principle of sustainable use: use of natural
resources in a prudent manner without or with
minimum tolerable impact on nature.
3. Principle of equitable use or intergenerational equity: Use of
natural resources by any state / country must take into
account its impact on other states.
4. Principle of integration: Environmental aspects and
impacts of socio-economic activities should be
integrated so that prudent use of natural resources is
ensured
7. Trade and Industry being an integral part human society has a pivotal role to play.
UN Global Compact work in the areas of human rights, labour, environment and anti-corruption.
The UN Global Compact has two objectives:
1. Ten principles in business activities around the world
2. Catalyze actions in support of broader UN goals, including the Millennium Development
Goals (MDGs)
The initiative is voluntary in nature. The benefits of engagement include the following:
— Adopting an established and globally recognized policy framework for the development,
implementation, and disclosure of environmental, social, and governance policies and
practices.
— Sharing best and emerging practices to advance practical solutions and strategies to
common challenges.
— Advancing sustainability solutions in partnership with a range of stakeholders, including
UN agencies, governments, civil society, labour, and other non-business interests.
— Linking business units and subsidiaries across the value chain with the Global Compact's
Local Networks around the world - many of these in developing and emerging markets.
— Accessing the United Nations' extensive knowledge of and experience with sustainability
and development issues.
— Utilizing UN Global Compact management tools and resources, and the opportunity to
engage in specialized work streams in the environmental, social and governance realms.
8. Carbon footprint
A carbon footprint is an estimate of how much carbon is produced to support your lifestyle.
Essentially, it measures your impact on the climate based on how much carbon you produce.
Factors that contribute to your carbon footprint include travel methods and general home
energy usage.
Carbon footprints can also be applied on a larger scale, to companies, businesses, even
countries.
The word ‘carbon’ in the phrase ‘carbon footprint’ is often used as a short-cut to describe the
main greenhouse gases - carbon dioxide (CO2), methane and nitrous oxide - in terms of
carbon dioxide equivalents.
Carbon offsetting
Carbon offsets are used to reduce the amount of carbon that an individual or institution emits
into the atmosphere.
Carbon offsets work in a financial system where, instead of reducing its own carbon use, a
company can comply with emissions caps by purchasing an offset from an independent
organization.
The organization will then use that money to fund a project that reduces carbon in the
atmosphere.
An individual can also engage with this system and similarly pay to offset his or her own
personal carbon usage instead of, or in addition to, taking direct measures such as driving less
or recycling.
9. Carbon Neutral
Through carbon offsetting organization to individual are counterbalancing the emissions
they produce to make themselves carbon neutral.
Clean Development Mechanism (CDM)
UN regulated scheme that allows countries with an emission-reduction or emission-
limitation commitment under the Kyoto Protocol to implement an emission-reduction
project in developing countries.
Cradle to grave
The life of a product, from creation to end use.
Cradle to cradle
Using an end use product for the source of a new product.
Ecological Footprint
The ecological footprint is a measure of human demand on the Earth's ecosystems. It
compares human demand with planet Earth's ecological capacity to regenerate it.
It represents the amount of biologically productive land and sea area needed to regenerate
the resources a human population consumes and to absorb and render harmless the
corresponding waste, given prevailing technology and resource management practice.
10. Greenhouse effect
Gases produced naturally and by human activities that have contributed to the warming of the planet, known as
Global warming, by trapping the suns rays.
Greenwashing
Greenwashing is a form of corporate misrepresentation where a company will present a green public image and
publicize green initiatives that are false or misleading
. A company might release misleading claims or even true green initiatives while privately engaging in
environmentally damaging practices.
Companies are trying to take advantage of the growing public concern and awareness for environmental issues
by promoting an environmentally responsible image. Greenwashing is used by companies to win over investors
(especially those interested in socially responsible investing), create competitive advantage in the marketplace,
and convince critics that the company is well-intentioned.
There is a profit-driven motive to greenwashing as well— green products are among the fastest growing
segments in the market. Internationally, the increase in green advertising claims has become a cause for
concern.
Life Cycle Assessment
Life Cycle Assessment tracks the environmental impacts of a product from its raw materials through disposal at
the end of its useful life.
LCA is an important tool for developing an environmental self-portrait and for finding ways to minimize harm. A
good LCA can shed light on ways to reduce the resources consumed and lower costs all along the value chain.
A Life Cycle Assessment looks at this complete circle and measures environmental impact at every phase. It
provides the foundation for understanding the issues a company must address and clues to help find
EcoAdvantage
11. Environmental Performance Index
Environmental Performance Index (EPI) is a method of quantifying and numerically
benchmarking the environmental performance of a country's policies.
This index was developed from the Pilot Environmental Performance Index, first published in
2002, and designed to supplement the environmental targets set forth in the U.N. Millennium
Development Goals.
Energy Star
Energy Star is a program that evaluates the energy efficiency of appliances, house fixtures
and other home utilities.
Ethical consumerism
The purchasing of products that do not harm or exploit the workers that help produce a
product and to minimise the impact on the environment.
EUI
EUI, or energy use intensity, is a unit of measurement that describes a building’s energy use.
EUI represents the energy consumed by a building relative to its size.
Global Warming
Global warming is an average increase in the temperature of the atmosphere near the Earth’s
surface and in the troposphere, which can contribute to changes in global climate patterns.
Global warming can occur from a variety of causes, both natural and human induced.
In common usage, “global warming” often refers to the warming that can occur as a result of
increased emissions of greenhouse gases from human activities. See climate change,
greenhouse effect, enhanced greenhouse effect, radiative forcing, troposphere.
12. Profit motive is not only motive but is responsibility towars
protection, social justice and equity, and economic development
Following key drivers need to be garnered to ensure sustainability
Internal Capacity Building strength – In order to convert various
risks into competitive advantage.
Social impact assessment – In order to become sensitive to various
social factors, like changes in culture, living habits etc.
Repositioning capability through development and innovation.
Crystallisation of all activities to ensure consistent growth
Corporate sustainability is a business approach creating
shareholder value in long run.
It is a business approach that creates long-term shareholder value
13. Absolute Value Creation for the Society
Organisations should set its goal towards creation of absolute value to the society.
Ethical Corporate Practices
In the short run, enterprise can gain through non-ethical practices. However those cannot be
sustained in long run. Society denies accepting such products or services.
Worth of Earth through Environmental Protection
Resources which are not ubiquitous and have economic and social value should be preserved for
long term
Equitable Business Practices
Corporates should not divulge themselves in unfair means and it should create candid business
practices, ensure healthy competition and fair trade practices.
Corporate Social Responsibility
As a Corporate citizen, every corporate is duty bound to its society wherein they operate and serve.
Innovate new technology/process/system to achieve eco-efficiency
Innovation is the key to success. Risks and crisis can be eliminated through innovation
Creating Market for All
Monopoly, unjustified subsidies, price not reflecting real economic, social environmental cost, etc.
Switching over from Stakeholders Dialogue to holistic Partnership
A business enterprises can advance their activities very positively if it makes all of stakeholders
partner
Compliance of Statutes
Compliance of statutes, rules and regulations, standards set by various bodies
14. Although scholars and practitioners often interpret Corporate Sustainability and
Corporate Social Responsibility as being nearly synonymous, pointing to similarities
and the common domain.
‘Corporate Sustainability is a business approach that creates long-term shareholder
value
Corporate Sustainability includes an attempt to assimilate the environmental and
social dimensions
The evolutionary part of the concept of Corporate Social Responsibility is different
from that of Corporate Sustainability.
Although Corporate Sustainability and Corporate Social Responsibility gave
different roots and gave developed along diverse theoretical paths, they ultimately
converged
The concept of sustainable development has been transposed from the macro to the
corporate dimension.
SEBI considering the framework given under the NVG guidelines, inserted clause 55
to the listing agreement to give mandate to top 100 listed companies
In 2011(MCA), Govt. of India issued the first voluntary reporting framework for
reporting on Business Responsibility in the form of ‘National Voluntary Guidelines
(NVG) on Social, Environmental and Economic Responsibilities of Business
15. Kyosei is a Japanese technique meaning “a spirit of cooperation”.
A concise definition of this word would be "living and working together for the common
good,"
Kyosei philosophy banks upon the theory of corporate governance that makes governance
function look outside in
• Governance leadership will pull and push executive leadership towards satisfaction of all
stakeholders
• Conflicts and tension will be replaced by creative living and working together
• Spirit of happy cooperation is made all-pervasive
Kyosei establishes harmonious relations between the company and -
• Customers
• Suppliers
• Competitors
• Governments
• Natural Environment
It works in five stages
• First is economic survival of the company - profits and to establish
• Second is cooperating with labour –Manage managers and workers
• Third is cooperating outside the company -customers, suppliers, community groups, and even
competitors
• Fourth is global activism- company assumes global social responsibilities
• Fifth is making the government/s a Kyosei partner
16. “People" (Human Capital)
pertains to fair and
beneficial business
practices toward labor and
the community
"Planet" (Natural Capital)
refers to sustainable
environmental practices.
“Profit" is the bottom line
shared by all commerce.
17. The need to apply the concept of TBL is caused due to—
(a) Increased consumer sensitivity to corporate social
behaviour
(b) Growing demands for transparency from
shareholders/stakeholders
(c) Increased environmental regulation
(d) Legal costs of compliances and defaults
(e) Concerns over global warming
(f) Increased social awareness
(g) Awareness about and willingness for respecting human
rights (h) Media’s attention to social issues
(i) Growing corporate participation in social upliftment
18. Leading sustainability companies display high levels of competence in
addressing global and industry challenges in a variety of areas:
Strategy: Integrating long-term economic, environmental and social
aspects in their business strategies while maintaining global
competitiveness and brand reputation.
Financial: Meeting shareholders' demands for sound financial returns,
long-term economic growth, open communication and transparent
financial accounting.
Customer & Product: Fostering loyalty by investing in customer
relationship management and product and service innovation that
focuses on technologies and systems, which use financial, natural and
social resources in an efficient, effective and economic manner over the
long-term.
Governance and Stakeholder: Setting the highest standards of corporate
governance and stakeholder engagement, including corporate codes of
conduct and public reporting.
Human Capital: Managing human resources to maintain workforce
capabilities and employee satisfaction
19. I M POSSIBLE
1
I M POSSIBLE
Bibek Prajapati
(FCMA, CS , MBA, M COM, ).
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