Corporate Responsibility Steps Aside

The term ‘corporate sustainability’ is increasingly uttered in the business world, and is gradually taking over from ‘corporate responsibility’ – and ‘corporate social responsibility’ (CSR) before it – as the dominant paradigm of international corporate conduct.  In the wake of the global financial crisis, it is evident that increasing numbers of business leaders around the world are implementing corporate sustainability programmes. Defined, rather inhumanly, as the integration of economic, environmental, and social factors in enterprise decision-making, corporate sustainability is not just a tag-on, but an integral shift in how businesses are run. 

So how can we explain the increasing prevalence of corporate sustainability in the international business community? For one, growing regulatory pressures around the world are forcing investments in environmental protection and consumer safety. Rising commodity prices are also playing their part – making it more important to conserve resources. But perhaps the main driver is that businesses and corporate conduct are – rightly in my view – facing increasing public scrutiny, altering the way they report, and ultimately shifting the level of attention they pay to individual business ‘priorities’. In an uncertain world, they need to show strength and resilience, economically, environmentally, and socially. 

Adoption of corporate sustainability varies depending on company size, industry, geography and ownership structure. Adoption rates are unsurprisingly highest in industries that are heavily regulated and highly brand-sensitive. Right now, European companies are more ‘corporately sustainable’ than American companies, probably because of the stronger regulatory and stakeholder pressures in the European Union. In other regions, corporate sustainability programmes are expanding s (e.g. Africa, Middle East, Asia-Pacific, Latin America), reflecting the growing commitment of governmental agencies and non-governmental organisations to sustainable development. A number of multinational corporations headquartered in emerging markets such as Mexico, South Korea and Taiwan, now rank among the global leaders in sustainability. The growing sensitivity of shareholders to sustainability issues means implementation is greater among public than private companies, and although corporate sustainability take-up is quickening among SMEs, large, resource-rich companies are the more aggressive adopters. 

RSM’s Talking Points article on the topic points out that evidence to date suggests the implementation of corporate sustainability programmes positively correlates with financial performance. This shows us its value as a vehicle not only to instill (and be seen to be instilling) corporate responsibility, but moreover, if corporate sustainability is integrated into the ethos of a company, it can boost competitiveness and stimulate profitable growth. 

For a fuller analysis of corporate sustainability, see the following link to RSM Talking Points.

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