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The signs are clear: Sustainability is a key corporate priority. Nearly 9,700 companies have committed to the United Nations Global Compact, more than 90% of the world’s largest companies issue sustainability reports, and survey after survey shows businesses want to play a leading role in advancing sustainability.
However, most companies have not yet come to terms with what it means to be truly sustainable or the systemic change this requires. It is well-established, for example, that sustainable companies must prioritize material issues, explore business model innovation, and engage stakeholders. These sensible actions lay the foundation for sustainability. What is not yet established, however, is identifying when companies have become sustainable.
To determine whether they are sustainable, companies must change how they view sustainability. Most companies currently focus on reducing environmentally destructive or unethical behavior. These are good goals, but they are not the same thing as being sustainable.
Two Views of Corporate Sustainability
Corporate sustainability is often framed using the triple bottom line (TBL) of economic, environmental, and social performance. The TBL is based on an integrated view of sustainability — the three dimensions are viewed as interrelated and equally important. In applying the TBL, companies often look for areas where the dimensions overlap and are mutually reinforcing.
But the TBL does not connect company performance to the economic, environmental, and social resources on which they rely. Performance is assessed relative to the company itself or its peers, rather than against thresholds linked to those resources. This makes it impossible to assess true sustainability.
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The embedded view makes explicit connections between a company’s performance and its place in the wider world. It sees companies as existing within the broader society, which itself exists within the natural environment. This perspective provides a basis for defining true sustainability: A sustainable company must operate within economic, environmental, and social thresholds.
Thresholds can represent upper or lower limits, such as for water consumption or living wages, respectively. Work is under way to translate potential reference thresholds, such as the “planetary boundaries” and the Sustainable Development Goals (SDGs), to companies, but it is just beginning. Individual companies must also identify specific thresholds to pursue.