From "green" to "sustainable": What does sustainability mean for companies?

In recent years, sustainability has become a buzzword that is becoming increasingly important in many areas of our lives and especially in the business world. Last but not least, compliance with ESG criteria is already mandatory for many companies. But what does sustainability actually mean and why is it so important for companies to engage with this concept?

In our blog post, we shed light on the principle of sustainability, explain the term, and provide examples. We also explain what a company's sustainability agenda should include and what benefits it brings.

The term "sustainability" originally comes from forestry and was first used by Hans Carl von Carlowitz in the 18th century. He used it to describe a form of forest management in which only as much wood is felled as can grow back in order to preserve the resource in the long term. Nowadays, however, the term has developed far beyond forestry: it refers to the broad principle that human activities should be designed to meet the needs of the present generation without compromising the same opportunity for future generations.

Sustainability is based on the idea that ecological, social, and economic systems are interconnected and must be kept in balance to ensure long-term well-being. In general, it encompasses the following principles:

Environmental protection:

·       Protection of natural resources

·       Reduction of environmental pollution

·       Conservation of biodiversity

·       Long-term health of ecosystems

Social justice:

·       Equitable distribution of resources and opportunities for all people, regardless of gender, age, origin or social background and including access to education, healthcare, clean water, and other basic needs

Economic stability:

·       Long-term stable economy that is not based on excessive resource consumption or labor exploitation

·       Profitable companies that do not harm the environment or exacerbate social inequalities

What does "green" mean?

If you ask yourself "What does sustainability mean?", the next step is to ask yourself "And what does green mean?", because these terms are usually used interchangeably. The term "green" is often used in the context of environmental and sustainability issues and refers to practices, products or initiatives that aim to reduce environmental impact or conserve natural resources. Here are some meanings of the term:

·       Environmental friendliness: "Green" can mean that something is environmentally friendly, meaning it has a smaller environmental footprint compared to alternative products or practices. For example, "green" buildings can be energy efficient and use renewable energy sources to reduce their energy consumption.

·       Sustainability: The term "green" is often used synonymously with sustainability. A "green" product or initiative can aim to create long-term environmental, social, and economic benefits without depleting resources for future generations.

·       Environmental awareness: The term "green" can also refer to a mindset or way of life that revolves around environmental protection and sustainability. People who live "green" make an effort to minimize their personal ecological footprint, for example by using public transport, recycling or eating vegetarian or vegan food.

Note: The term "greenwashing" means that organizations present themselves to the outside world as sustainable without actually implementing corresponding measures. The European Parliament has passed a directive that makes greenwashing more difficult. In concrete terms, this means that you are not allowed to describe yourself or a product as environmentally friendly in advertising if this cannot be proven.

Back to Business: What does sustainability mean for companies?

For companies, sustainability means far more than just a few environmentally friendly practices or complying with regulations. Rather, it is about a holistic "lived" approach that takes into account environmental, social, and economic aspects. These are the key ESG factors (environmental, social, governance) by which companies are evaluated today, including by customers and investors, and which influence their future viability and competitiveness.

It is therefore the task of companies to define clear and measurable sustainability goals, to pursue them and to review them regularly. The topic of sustainability is therefore not something that companies can simply handle on the side, but should be implemented in the overarching corporate strategy.

Areas for corporate sustainability goals

Environmental protection and resource conservation: A sustainable company actively strives to protect the environment and tries to reduce its ecological footprint through measures.  This can mean, for example:

·       Reducing emissions

·       Using renewable energies, e.g. photovoltaics

·       Optimizing or reduce resource consumption

·       Avoiding waste

·       Promoting sustainable resource management

Social responsibility: Sustainable companies not only pay attention to the environment, but also to their impact on society. Specifically, this includes the following points, among others:

·       Creating fair working conditions (pay etc.)

·       Complying with labor rights and standards

·       Respecting human rights in the supply chain

·       Promoting diversity and inclusion (training, etc.)

·       Supporting social projects in communities

Economic stability: Companies strive for long-term profitability and competitiveness, but should not neglect the needs of future generations and should always ask themselves the question "What does sustainability mean for my company and its future?". The following options are available to ensure this balance:

·       Developing sustainable business models

·       Investing in the development of innovative and sustainable solutions, such as the development of digital software to increase efficiency

·       Maintaining long-term partnerships and relationships 

Supplier management and procurement: Companies should try to ensure that their suppliers adhere to sustainable practices and comply with ethical standards in terms of working conditions, human rights, and environmental protection. They can achieve this through audits, certifications, and partnerships with sustainable suppliers.

Transparent communication and reporting: Companies should communicate openly about their sustainability efforts and report regularly on their progress and challenges, for example via regular ESG reports. This creates trust among stakeholders and enables the company to receive feedback and continuously improve. 

What advantages does a sustainability agenda offer companies?

By using resources more efficiently and diversifying their supply chains, sustainable companies can gain long-term competitive advantages, among other things. This is because consumers, investors, and customers are becoming increasingly aware of the sustainability practices of companies and often prefer those that are committed to environmental protection and social responsibility. This can open up new markets and customer segments. The same applies to future employees, for whom the environment is becoming increasingly important: Sustainable companies are more attractive on the job market. Environmental commitment therefore strengthens a company's image and increases its brand value.

Conclusion

So what does sustainability mean? This concept is crucial for companies, not only for ethical but also for economic reasons. A comprehensive approach that takes into account environmental, social, and economic aspects brings long-term success and competitive advantage. By aligning their activities and business models with the principles of sustainability, companies not only help to protect our environment and society, but also create a sustainable future for themselves and future generations.