The Sustainable Development Goals and Paris Climate Change Conference in 2015 increased the external pressure on businesses to step up to their social and environmental responsibilities. Inside businesses, millions of employees are demanding purpose and meaningful work. Mix in the increased transparency forced on business by the internet and you have all the ingredients for rapid and permanent change in the relationship between business and society.
But you also have the perfect breeding ground for confusion. For every business exploring its own impacts and opportunities, there are a hundred experts and consultants offering to advise them on responsibility and purpose, sustainability and mission. And just as the academic literature on Corporate Social Responsibility is starting to grow with university departments putting teaching and research resource behind it, so many businesses are running away from CSR as a term. Does confusion over terminology risk stalling progress, or create opportunities for less scrupulous businesses to escape their obligations?
This is a new, developing area so it’s not surprising that much of the language is still falling into place. But the most important thing with language is that people on each side of the conversation understand what the other means. So this is the first in a series of definitions that we find useful for businesses and that hopefully helps clear some of the confusion rather than add to it. As always, we welcome challenge and debate and the opportunity to make things better.
The external benefit a business brings that society would miss if it didn’t exist.
This differs from a company’s purpose (why it exists and what people would truly miss if it didn’t) to the extent that it includes an external benefit to society. As a rule of thumb, the validity of this benefit to society can be judged by asking whether representatives of civil society would mourn the business disappearing.
The ability to last within the limits of the planet and societal expectation.
Sustainability was traditionally taken to refer solely to environmental considerations – was a company’s use of natural resources sustainable in the sense that it didn’t deplete them without replacing them and didn’t take now at the expense of future generations. The circular economy fits within this definition. But sustainability as a term has now expanded to include social considerations too – does a company take into account social impacts across its whole value chain? Does it take due account of the working conditions of its suppliers, for example? This is a question of assessing the extent to which its impacts are judged by society to extend beyond direct responsibilities within its own business, and whether it is meeting those expectations. In both cases, environmental and social, items previously considered externalities (from the planet’s natural resources to human rights in the supply chain) are becoming internalities for which the company is expected to take responsibility. And increasingly for companies investing in social and environmental programmes, the definition of sustainability now includes a budgetary consideration too – how can they be made commercially sustainable?