Sustainable business and Ethics

Topics: Value, Sustainability, Corporate finance Pages: 43 (11731 words) Published: November 19, 2013

Chapter 1: A new framework for implementing corporate sustainability

Key points:
Sustainability performance is the effect of corporate activity on the social, environmental, and economic fabric of society. A balance between economic progress, social responsibility, and environmental protection, sometimes referred to as the triple bottom line, can lead to competitive advantage. The evaluation of social, economic, and environmental impacts of organizational actions is necessary to make effective operational and capital investment decisions that positively impact organizational objectives and satisfy the objectives of multiple stakeholders. The financial payoff of a proactive sustainability strategy can be substantial. To become a leader in sustainability, one needs to articulate what sustainability is, develop processes to promote sustainability throughout the corporation, measure performance on sustainability, and ultimately link this measurement to corporate financial performance. Corporate citizenship is an important driver for building trust, attracting and retaining employees, and obtaining a “license to operate” within a community. Corporate citizenship is much more than charitable donations and public relations—it’s the way the company integrates sustainability principles with everyday business operations and policies and then translates all of this into bottom-line results. For sustainability to be long lasting and useful, it must be representative of and integrated into day-to-day corporate activities and corporate performance. If sustainability is seen only as an attempt to provide effective public relations, it does not create long-term value and can even be a value destroyer. The key to success is integrating sustainability into business decisions, identifying, measuring, and reporting (both internally and externally) the present and future impacts of products, services, processes, and activities.

I. Defining sustainability within the context of corporate responsibility The nine principles of sustainability share three attributes: 1. They make the definition of sustainability more precise.
2. They can be integrated into day-to-day management decision processes and into operational and capital investment decisions. 3. They can be quantified and monetized.
The nine principles of sustainability are as follows:
1. Ethics: The company establishes, promotes, monitors, and maintains ethical standards and practices in dealings with all company stakeholders. 2. Governance: The company manages all of its resources conscientiously and effectively, recognizing the fiduciary duty of corporate boards and managers to focus on the interests of all company stakeholders. 3. Transparency: The company provides timely disclosure of information about its products, services, and activities, thus permitting stakeholders to make informed decisions. 4. Business relationships: The company engages in fair-trading practices with suppliers, distributors, and partners. 5. Financial returns: The company compensates providers of capital with a competitive return on investment and the protection of company assets. 6. Community involvement and economic development: The company fosters a mutually beneficial relationship between the corporation and the community in which it is sensitive to the culture, context, and needs of the community. 7. Value of products and services: The company respects the needs, desires, and rights of its customers and strives to provide the highest levels of product and service values. 8. Employment practices: The company engages in human-resource management practices that promote personal and professional employee development, diversity, and empowerment. 9. Protection of the environment: The company strives to protect and restore the environment and promote sustainable development with products, processes, services, and other activities.

II. Identifying stakeholders
How an organization chooses to...
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