Business and Sustainability

Module – 1

UNESCO formulated a distinction between concepts of Sustainability and Sustainable Development as

follows:
"Sustainability is often thought of as a long-term goal (i.e. a more sustainable world), while sustainable
development refers to the many processes and pathways to achieve it."

What is Sustainability?
Sustainability is the capacity to endure. It involves using resources responsibly to ensure they are
available for future generations. It is widely accepted that to achieve sustainability we must balance
economic, environmental and social factors in equal harmony. This is also known as the three pillars of
sustainability. These pillars represent the interconnected aspects that must be considered when making
decisions to ensure long-term well-being and development.

“Sustainability is a vision of the future……by which we guide our actions” – (Viderman, 1995)
➢ It focuses on
• A set of values
• Ethical and moral principles
➢ Sustainability is a community’s control and prudent use of all forms of capital
• Physical capital
• Human capital
• Natural xcapital
• Social capital
• Cultural capital
➢ Sustainability aims to ensure that present and future generations can
• Attain a high degree of economic security and achieve democracy
• While maintaining the integrity of ecological systems upon which all life and production
depends
•

The three pillars of Sustainability

Environmental Sustainability: Environmental sustainability means that we are living within the
means of our natural resources. To live in true environmental sustainability, we need to ensure that we are
consuming our natural resources, such as materials, energy fuels, land, water…etc, at a sustainable rate.
Some resources are more abundant than others and therefore we need to consider material scarcity, the
damage to environment from extraction of these materials and if the resource can be kept within Circular
Economy principles. We need to aspire to net zero carbon and then move beyond to ultimately achieve
climate positive principles.
Economic Sustainability: Economic sustainability requires that a business or country uses its
resources efficiently and responsibly so that it can operate in a sustainable manner to consistently produce an
operational profit. Without an operational profit a business cannot sustain its activities. Without acting
responsibly and using its resources efficiently a company will not be able to sustain its activities in the long
term.
Social Sustainability: Social sustainability is the ability of society, or any social system, to
persistently achieve a good social well being. Achieving social sustainability ensures that the social well
being of a country, an organization, or a community can be maintained in the long term.
Taking these three pillars of sustainability further if we only achieve two out of three pillars then we end up
with:
• Social + Economic Sustainability = Equitable
• Social + Environmental Sustainability = Bearable
• Economic + Environmental Sustainability = Viable
Only through balancing economic + social + environmental can we achieve true sustainability and a
truly circular economy.
 What is Environmental Crisis?
An environmental crisis refers to a critical situation where the natural balance of the environment is severely
disturbed due to human activities, particularly rapid economic growth and industrialization. When industries
exploit natural resources without considering sustainability, it leads to ecological damage, social problems,
and even economic instability.
Major Environmental Crises
• Ozone Layer Depletion: Caused by CFCs from refrigerators, aerosols, and industries, leading to
harmful UV radiation that increases skin cancer and damages crops.
• Global Warming: Result of greenhouse gas emissions (CO₂, methane), leading to rising
temperatures, melting glaciers, rising sea levels, and extreme weather events.
• Air Pollution: Emissions from factories, vehicles, and power plants cause smog, acid rain, and
serious health hazards in urban and industrial regions.
• Loss of Biodiversity: Industrial expansion, deforestation, and pollution threaten species survival,
disrupt food chains, and reduce ecological resilience.

What is Sustainable Development?

“Sustainable development is development that meets the needs of the present without compromising the
ability of future generations to meet their own needs.” – (World Commission on Environment and
Development, 1987, UN General assembly)
The concept of sustainable development was born to address the growing and changing environmental
challenges that our planet is facing. Sustainable development is crucial for ensuring a healthy planet and
prosperous future for all. This approach integrates environmental protection, economic growth, and social
equity to create a balanced and resilient society.
Background of Sustainable Development Goals
Due to Industrial Revolution, economic and industrial activities had a significant impact on the
environmental and social balance causing ecological, economic and social crisis.
Impact of Economic and Industrial Activities on
Ecological Imbalance
• Industries release harmful gases, waste, and chemicals, leading to air, water, and soil pollution.
• Excessive use of fossil fuels contributes to global warming and climate change.
• Deforestation and over-exploitation of land cause loss of biodiversity and disturb ecosystems.
Social Imbalance
• Communities near industrial zones suffer from poor air and water quality, leading to health issues
like asthma, cancer, and respiratory diseases.
• Climate change results in extreme weather, floods, droughts, and displacement of vulnerable
populations, creating climate refugees.
• Inequality increases, as the poor are more affected by environmental degradation.
Economic Imbalance
• While industries create jobs and profits in the short term, long-term costs raise due to resource
depletion and health expenses.
• Natural disasters linked to global warming (floods, cyclones, wildfires) damage infrastructure,
agriculture, and livelihoods, slowing economic growth.
• The loss of biodiversity affects agriculture, fisheries, and pharmaceuticals, reducing future economic
opportunities.
These crises highlighted the urgent need to balance economic progress with environmental protection and
social well-being. This realization gradually gave birth to the concept of Sustainable Development and
Sustainable Development Goals (SDGs)
Milestones Towards SDGs
1962 – Silent Spring by Rachel Carson
• Rachel Carson, an American biologist, published Silent Spring highlighting the dangers of pesticides
like DDT on the environment, birds, and human health.
• It created massive public awareness about how human actions damage ecosystems.
 • Considered the beginning of the modern environmental movement and led to stricter environmental
laws in many countries.
1972 – Limits to Growth – commissioned by the Club of Rome
• The Club of Rome (established in 1968) published the famous report “The Limits to Growth”,
prepared by MIT (Massachusetts Institute of Technology) researchers.
• The report used computer-based models to study the impact of population growth, industrialization,
pollution, food production, and resource depletion.
• It warned that if these trends continued without control, the Earth’s carrying capacity would be
crossed, leading to serious environmental damage and possible economic collapse.
1972 – United Nations 1st Conference on the Human Environment (Stockholm Conference)
• The first major global conference on environmental issues.
• Leaders recognized that economic growth and environmental protection are interconnected.
• Resulted in then Stockholm Declaration and the creation of the United Nations Environment
Programme (UNEP).
• Marked the start of global cooperation on environmental issues.
1987 – Brundtland Commission Report (Our Common Future)
• The World Commission on Environment and Development (WCED), chaired by Gro Harlem
Brundtland, published this report title “Our Common Future”.
• Introduced the concept of Sustainable Development, defined as:
“Development that meets the needs of the present without compromising the ability of future
generations to meet their own needs.”
• It highlighted the need to balance economic growth, social equity, and environmental protection.
1992 – Earth Summit (Rio de Janeiro)
• Known as the United Nations Conference on Environment and Development (UNCED)**.
• Adopted Agenda 21, a detailed global action plan for sustainable development.
• Important agreements were signed:
▪ Convention on Biological Diversity (CBD)
▪ United Nations Framework Convention on Climate Change (UNFCCC)
▪ Forest Principles
• Put sustainability firmly on the world agenda.
2000 – Millennium Development Goals (MDGs)
• UN leaders adopted 8 goals to be achieved by 2015.
• Focus areas included:
▪ Eradication of extreme poverty and hunger
▪ Universal primary education
▪ Gender equality
▪ Reducing child and maternal mortality
▪ Combating HIV/AIDS and other diseases
▪ Ensuring environmental sustainability
▪ Developing global partnerships
• MDGs achieved partial success, but showed the power of setting measurable global goals.
2012 – Rio+20 Conference (The Future We Want)
• Reviewed the progress of MDGs.
• Identified gaps and emphasized the need for inclusive, green, and sustainable economic growth.
• Recommended the creation of a new set of global goals that would integrate environmental, social,
and economic dimensions.
• This directly paved the way for SDGs.
2015 – Adoption of Sustainable Development Goals (SDGs)
• In September 2015, all UN member countries adopted the 2030 Agenda for Sustainable
Development.
• It includes 17 Sustainable Development Goals and 169 targets to be achieved by 2030.
• These cover all aspects of human well-being and planetary health:
▪ Poverty eradication
▪ Zero hunger
 ▪ Health and well-being
▪ Quality education
▪ Gender equality
▪ Clean water and sanitation
▪ Affordable clean energy
▪ Decent work and economic growth
▪ Industry, innovation, infrastructure
▪ Reduced inequalities
▪ Sustainable cities
▪ Responsible consumption and production
▪ Climate action
▪ Life below water
▪ Life on land
▪ Peace, justice, and strong institutions
▪ Partnerships for the goals
Vision 2030
Vision 2030 refers to the global roadmap set under the United Nations Sustainable Development Goals
(SDGs), adopted in 2015, with the target year of 2030 for achieving them. It represents the collective
commitment of countries to build a world that is free of poverty, inclusive in opportunities, and sustainable
for future generations.
The vision is based on three main pillars of sustainable development – economic growth, social inclusion,
and environmental protection.
Key areas under Vision 2030 are:
1. Ending Poverty and Hunger – ensuring basic needs, food security, and nutrition for all.
2. Quality Education and Healthcare – making people more skilled, healthy, and productive.
3. Gender Equality – providing equal rights and opportunities for women and men.
4. Economic Growth and Employment – promoting industries, innovation, and decent jobs.
5. Environmental Protection – tackling climate change, conserving biodiversity, and using resources
responsibly.
6. Peace and Good Governance – building fair, just, and strong institutions.
7. Global Partnership – cooperation among nations for finance, technology, and knowledge sharing.
For countries like India, Vision 2030 also means focusing on modern agriculture, clean energy, digital
inclusion, urban development, and social equity. It serves as a guiding framework for policies to ensure that
development today does not compromise the needs of future generations.
In short, Vision 2030 is about creating a balanced world where growth is inclusive, societies are just, and the
environment is protected for future generations.

Difference between Sustainability and Sustainable Development

Sustainability focuses on the balance of what nature provides us, that is, a limit to the consumption of
natural resources to promote quality of life.
On the other hand, sustainable development focuses on preserving the ecosystem, while meeting the
socioeconomic needs of communities. Sustainable development looks at using nature as a way to promote
development. In the words of UNESCO “Sustainable development is the pathway to sustainability”.

Business Sustainability/Corporate Sustainability

Business sustainability, also known as corporate sustainability, refers to a company's ability to operate in a
way that minimizes negative impacts on the environment, society, and the economy, while ensuring its own
long-term success. It's about balancing financial goals with social and environmental responsibility.
Concepts related to Corporate or Business Sustainability
• Environmental, Social, Governance (ESG)
• Corporate Social responsibility (CSR)/Corporate responsibility (CR)
• Green management
• Triple Bottom Line (TBL) and 3 Ps (Profit, Planet, People)
• 3 Es (Economy, Environment, Equity)
 Environmental, Social, Governance (ESG)
Though the term “ESG” made its first mainstream appearance in a 2004 UN report, it was not until the late
2010s and into the 2020s that ESG emerged as a much more proactive (instead of reactive) movement.
The ESG factors are:
• Environmental: This factor evaluates a company’s impact on the environment. It considers carbon
emissions, waste management, pollution, and climate change.
• Social: This factor evaluates a company’s impact on society. It considers labour practices, human
rights, community involvement, diversity, and customer satisfaction.
• Governance: This factor evaluates the company’s management and decision-making processes. It
considers board composition, executive pay, shareholder rights, and transparency.
Some key points:
• ESG is a framework that helps stakeholders understand how an organization manages risks and
opportunities around sustainability issues.
• ESG has evolved from other historical movements that focused on health and safety issues, pollution
reduction, and corporate philanthropy.
• ESG has changed how capital allocation decisions are made by many of the largest financial services
firms and asset managers in the world.
• An emerging class of ESG specialists is stepping into the industry and supporting both net zero and
carbon neutrality goals.
Why ESG is important for companies
• ESG factors can be used to identify and manage potential risks that may impact a company’s
financial performance or reputation. For example, a company operating in a region prone to
environmental disasters may be at risk for supply chain disruptions, regulatory fines, or damage to its
brand.
• Companies prioritizing ESG can gain a competitive advantage by differentiating themselves from
their peers. Consumers and investors are increasingly looking for companies that are active in
sustainability and social responsibility, and companies that do so may be more attractive to these
stakeholders.
• ESG can also impact a company’s reputation. For example, a company with a history of
environmental violations may face public backlash and damage to its brand. On the other hand, a
company seen as a leader in sustainability may enhance its reputation and attract positive attention
from stakeholders.
• ESG can also drive innovation and creativity within a company. For example, a company that
focuses on reducing its carbon footprint may develop new technologies and processes that are more
efficient and cost-effective.
• A company with active environmental, social and governance can increase employee engagement
and motivation. Employees who feel that their company is committed to sustainability and social
responsibility are more likely to feel connected to their work and more motivated to stay with it.
• Focusing on ESG factors can also create a positive company culture. Companies that embrace
sustainability and social responsibility are often seen as more ethical and values-driven, enhancing
employee morale and retention.
• Companies practicing environmental, social and governance are often more attractive to job
seekers, particularly younger generations. Millennials and Gen-Z workers, in particular, are more
likely to seek out companies that align with their values, including sustainability and social
responsibility.
• Strong social governance can also help to create a healthier and safer work environment. For
example, companies that act on environmental sustainability may take steps to reduce pollution and
toxins in the workplace, which can improve employee health and safety.

Corporate Social responsibility (CSR)

Corporate social responsibility (CSR) is the idea that a business has a responsibility to the society that exists
around it.
Firms that embrace CSR are typically organized in a manner that empowers them to act in a socially
responsible way to positively impact the world. It’s a form of self-regulation that can be expressed in
initiatives or strategies, depending on an organization’s goals. Many organizations communicate these
efforts to external and internal stakeholders through corporate social responsibility reports.
Types of CSR
CSR is traditionally broken into four categories: environmental, philanthropic, ethical, and economic
responsibility.
1. Environmental Responsibility
Environmental responsibility is the belief that organizations should behave in as environmentally friendly a
way as possible. It’s one of the most common forms of CSR. Some companies use the term “environmental
stewardship” to refer to such initiatives.
Companies that seek to embrace environmental responsibility can do so in several ways:
• Reducing harmful practices: Decreasing pollution, greenhouse gas emissions, the use of single-
use plastics, water consumption, and general waste
• Regulating energy consumption: Increasing reliance on renewable, sustainable resources, and
recycled or partially recycled materials
• Offsetting negative environmental impact: Planting trees, funding research, and donating to
related causes
2. Ethical Responsibility
Ethical responsibility is about ensuring an organization operates fairly and ethically. It involves treating all
stakeholders with fairness, paying livable wages, and sourcing materials responsibly. Many firms also take
steps to avoid products linked to slavery or child labor.
3. Philanthropic Responsibility
Philanthropic responsibility refers to a business’s aim to improve society by giving back. Besides acting
ethically and sustainably, such firms often donate part of their earnings to charities or causes, sometimes
even creating their own trusts or organizations to support social good.
4. Economic Responsibility
Economic responsibility is the practice of a firm backing all of its financial decisions in its commitment to
do well. The end goal isn’t just to maximize profits, but also to make sure the business operations positively
impact the environment, people, and society.
CSR in India
• In India, the CSR framework is established by Section 135 of the Companies Act, 2013, which
mandates eligible companies to contribute towards societal development.
• Eligibility Criteria for CSR: The CSR law applies to companies that meet any of the following
criteria: a net worth of Rs. 500 crore or more, an annual turnover of Rs.1,000 crore or more, or a net
profit of Rs. 5 crore or more in the previous financial year.
• CSR Spend Requirement: Eligible companies must allocate at least 2% of their average net profit
from the previous 3 years towards CSR activities.
• Penalty for Non-Compliance: Penalties are imposed if companies fail to meet the 2% CSR spend
requirement and do not transfer the unspent amount to a specified fund.
• CSR Registration: Companies intending to undertake CSR activities must register with the Registrar
of Companies. This ensures their CSR initiatives comply with the legal framework and
are monitored.
Evolution of CSR in India
• Corporate Social Responsibility (CSR) has evolved from a philanthropic activity to a strategic business
approach, integrating societal and environmental concerns into business practices.
• Early Stages (1950s-1970s): CSR was initially viewed as a moral obligation, with businesses focusing
on charities and basic community needs without strategic alignment.
• Expanding Dimensions (1980s-1990s): In the 1980s and 1990s, CSR adopted the Sustainable Impact
Nexus; people, planet, profit, focusing on ethics and sustainability, which marked a shift towards long-
term strategies.
• 21st Century Comprehensive Approach: CSR is central to business strategy, emphasizing human rights,
labour rights, environmental sustainability, and transparency. Companies incorporate CSR for long-term
value.
Benefits of CSR
Social Impact
• Education: CSR funding has significantly improved education, particularly in underserved and rural
areas, bridging the education gap and empowering future generations. E.g., TCS invested in rural
digital education, helping communities’ access to quality education.
• Healthcare: CSR investments have enhanced healthcare infrastructure and supported public
health initiatives, especially in rural regions, improving health outcomes. E.g., Reliance Industries
focused on rural healthcare and COVID relief initiatives.
• Environmental Sustainability: CSR has played a key role in promoting environmental sustainability,
with investments in renewable energy and conservation projects. E.g., ONGC’s investments in
renewable energy align with India’s climate goals.
Economic Impact
• Corporate Profits: CSR spending is linked to profitability, as companies leverage success to
contribute to society, promoting business growth and social welfare. E.g., HDFC Bank’s CSR
investment highlights the connection between profits and CSR.
• Job Creation and Skill Development: CSR initiatives in skill development have enhanced
employability in rural areas, boosting livelihoods and economic growth. E.g., HDFC Bank’s
financial literacy programs have empowered rural communities.
Governance Impact
• Enhanced Transparency: CSR committees have ensured efficient fund management, promoting
better outcomes.. E.g., 990 companies formed CSR committees to provide better transparency in
fund allocation.
• Efficient Fund Management: The transfer of unspent CSR funds to the Unspent CSR Account
ensures that funds are efficiently utilised for future projects. E.g., Unspent funds are transferred for
future use.
Sector-Specific Impact
• National Heritage Preservation: CSR funding has supported the preservation of national heritage,
enhancing cultural pride & promoting tourism. E.g., TCS played a role in preserving national
monuments.
• Infrastructure and Community Development: CSR has funded infrastructure and healthcare projects,
particularly in underserved areas, contributing to inclusive development.
Societal Impact
• Improved Quality of Life: CSR investments in education, healthcare, and sustainability have directly
improved the quality of life for millions of Indians. E.g., CSR investments in education and
healthcare have improved access to services.
• Community Empowerment: CSR has empowered local communities, providing access to resources,
skills, and opportunities, thus fostering social inclusion. E.g., Many CSR programs focus on
women’s empowerment and skill development.
Challenges to CSR funding in India
• Regional and Sectoral Disparity: CSR spending remains concentrated in a few developed states (like
Maharashtra, Tamil Nadu) and sectors (mainly education and health), leaving backwards
states and critical areas like the environment neglected.
• Lack of Transparency and Impact Assessment: Many companies do not disclose detailed CSR
activities, making it difficult to track outcomes, build public trust, or ensure accountability.
• Superficial CSR and Greenwashing: Some firms view CSR as a mere statutory obligation, engaging
in superficial projects for branding rather than achieving meaningful social or environmental impact.
• Weak Community Participation: CSR initiatives often exclude local communities from decision-
making, leading to a mismatch between actual needs and project execution.
• Poor Coordination and Strategic Gaps: Lack of cooperation between corporations, NGOS, and local
bodies leads to duplication of efforts and reduces the effectiveness of CSR projects.

Green Management
Green management is an approach to organizational management that seeks to reduce the environmental
impact of business operations while improving business efficiency and profitability. The focus of green
management is on sustainability, and it involves making decisions and taking actions that are
environmentally responsible, socially beneficial, and economically viable.
Benefits of Green Management
The benefits of green management can be significant and wide-ranging. Some of the key benefits include:
1. Cost Savings: Green management practices can help organizations reduce costs by conserving
energy and natural resources, reducing waste, and improving operational efficiency.
2. Enhanced Brand Reputation: Organizations that adopt green management practices are often
perceived as socially responsible and environmentally conscious, which can enhance their brand
reputation and appeal to customers.
3. Increased Customer Loyalty: Customers are increasingly aware of the environmental impact of the
products and services they consume. Organizations that can demonstrate a commitment to
sustainability are more likely to retain loyal customers.
4. Improved Employee Morale: Green management can help create a more engaged and motivated
workforce by demonstrating a commitment to environmental responsibility and sustainability.
5. Regulatory Compliance: Organizations that adopt green management practices are more likely to
comply with environmental regulations, reducing the risk of fines, legal action, and reputational
damage.
Challenges of Green Management
While there are many benefits to green management, there are also several challenges that organizations
may face when implementing these practices. Some of the key challenges include:
1. Initial Costs: Implementing green management practices may require upfront investments in new
technology, infrastructure, and training. These costs can be a significant barrier for some
organizations.
2. Resistance to Change: Some employees or stakeholders may resist changes in operations or culture
that are required to adopt green management practices. Organizations must be prepared to address
this resistance and provide training and support to employees as needed.
3. Lack of Expertise: Implementing green management practices may require specialized expertise in
areas such as energy efficiency, waste reduction, or sustainable design. Organizations may need to
hire outside experts or provide training to employees to develop this expertise.
4. Complexity: Implementing green management practices can be complex and require changes in
multiple areas of an organization’s operations. Coordination and communication are essential to
ensure that all stakeholders are aligned and working together effectively.

Triple Bottom Line (TBL)

The triple bottom line (TBL) approach is the belief that companies should focus on social and environmental
concerns as much as they do on profit. The term triple bottom line was coined in 1994 by corporate
responsibility strategist John Elkington.
Shifting firm’s purpose from serving Shareholders to Stakeholders
The concept of TBL demands that a company's responsibility lies with stakeholders rather than shareholders.
Shareholders are the people who invest money in a company and expect financial returns through dividends
or an increase in share price. Traditionally, companies focused mainly on maximizing profits for them.
Stakeholders, however, are all the groups affected by a company’s activities—such as employees,
customers, suppliers, creditors, local communities, government, and even the natural environment.
TBL explains that true success is achieved by balancing three aspects— Profit, People, and Planet.
This means companies should not only look at financial gains but also care for worker well-being, fair
treatment in supply chains, product safety, and the protection of the environment by reducing waste,
emissions, and harmful practices.
By considering stakeholders, setting social and environmental goals, and tracking them along with
financial results, businesses build trust, reduce risks, and ensure long-term growth. In simple terms, TBL
shifts the focus from earning quick profits for shareholders alone to creating sustainable value for all
stakeholders, with shareholder benefits being a natural result of this broader responsibility.
Dimension (sets) of TBL / Triple P of Sustainability
Planet - the environmental bottom line measures the impact on resources, such as air, water, ground
and emissions to determine the environment impact and ecological footprints.
 People - the social equity bottom line relates to corporate governance, motivation, incentives, health
and safety, human capital development, human rights and ethical behaviour.
Profit - the economic bottom line refers to measures maintaining or improving the company’s
success in term of adding value to shareholders.

The Triple E of Sustainability

The Triple E of Sustainability - Environment, Economy, and Equity — provides a holistic framework for
sustainable development, and it directly connects with the Triple Bottom Line (TBL) — Planet, Profit, and
People.
Environment corresponds to Planet, focusing on protecting natural resources, reducing emissions,
managing waste, and preserving biodiversity for future generations.
Economy corresponds to Profit, highlighting the need for long-term financial growth, innovation,
and efficiency without exploiting people or damaging the environment.
Equity corresponds to People, emphasizing fairness, equal opportunities, ethical practices, and
improving the quality of life for employees, customers, and society at large.
By linking these two frameworks, we see that true sustainability requires a balance between ecological
responsibility, economic performance, and social justice. Companies that integrate the Triple E with the
TBL not only secure profitability but also build trust, reduce risks, and ensure long-term value for all
stakeholders.