The Sustainability Puzzle
__
<p style="text-align: justify;"><span data-contrast="none">“If it can’t be reduced, reused, repaired, rebuilt, refurbished, refinished, resold, recycled, or composted, then it should be restricted, designed or removed from production.”</span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"><span data-contrast="none">– </span><strong><span data-contrast="none">Pete Seeger, Folk Singer & Social Activist</span></strong><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"> </p><p style="text-align: justify;"><span data-contrast="none">I am a great believer of all things natural. I believe anything that is artificial is not sustainable. That is the reason I try the natural way of healing and living. And if we mess with nature, nature will strike back. We are already seeing these signs with these erratic climate changes. And suddenly, everyone seems to speak about Sustainability and ESG (Environment, Social, and Governance).</span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"><span data-contrast="none">In fact, there has been a 10x increase in the number of <a href="https://climate-laws.org/" target="_blank" rel="noopener">climate laws and policies</a> passed over the last three decades</span><span data-contrast="none">. According to a recent survey by <a href="https://www.deloitte.com/global/en/services/risk-advisory/research/managing-reputation-and-risk-for-resilient-organizations.html" target="_blank" rel="noopener">Deloitte</a>, 65% of consumers expect CEOs to make more progress on reducing carbon emissions and improving their responsible business supply chains</span><span data-contrast="none">. </span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"><span data-contrast="none">While we may talk about all these things now, the fact remains that this is not something new. It needed climate change to remind us that we have done too much damage and are on the path of mindless consumerism.</span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"><span data-contrast="none">In 1987, the United Nations Brundtland Commission defined sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” And today, many people interchangeably use sustainability and ESG, which is not true. </span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"><span data-contrast="none">Sustainability is a broad vision and a way of life. ESG is a means of measuring sustainability and dealing with metrics. ESG metrics are about performance measures or indicators of a company's performance on Environmental (E), Social (S), and Governance (G) issues. And there is a misconception that ESG is a dashboard. While there are multiple ways of depicting a thing, the dashboard being one of them, if we do not address the sustainability issues around people, the planet, and profit, we are only reporting for the sake of reporting.</span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"> </p><h2 style="text-align: justify;"><span style="font-size: 14pt;">Cost Impact of Sustainability </span></h2><p style="text-align: justify;"><span data-contrast="none">Of late, there is a debate around the cost impact of sustainability, which the consumer is unwilling to pay for. Factoring in all the hidden costs makes sustainable products more costly than plastic or non-biodegradable alternatives. According to a recent survey by Deloitte, consumers want to do more, but many want brands to take the lead, with 64% wanting brands to reduce packaging, 50% wanting information on how to recycle, and 46% needing clarity on sourcing products. </span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"><span data-contrast="none">While it may be expensive to do it in the short term, the cost of not doing it will be catastrophic in the long run, given the plethora of regulations in vogue. A step in that direction is the concept of carbon tax, whereby a sustainable product becomes cheaper than a non-sustainable alternative. Evidence is growing that <a href="https://www.hbs.edu/faculty/Pages/item.aspx?num=47307" target="_blank" rel="noopener">companies that adopt environmental and social policies</a> early on outperform their peers in the long term</span><span data-contrast="none">. </span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"> </p><h2 style="text-align: justify;"><span style="font-size: 14pt;" data-contrast="none">Is Sustainability a Circular Economy?</span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></h2><p style="text-align: justify;"><span data-contrast="none">Additionally, there is a misconception that sustainability is a circular economy. The circular economy is a sustainable model, process, or economic system focused on reuse and waste elimination, while sustainability is an approach that tries to make sense of the interconnectedness between environmental, social, and economic factors. And it is worthwhile to know that sustainability does not necessarily enable circularity, and a circular business model does not promise the improvement of social, environmental, and economic factors that a company must take into consideration.</span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"><span data-contrast="none">As we march on our journey towards a more sustainable planet, we need to remember that sustainability is not just about the environment. Entangled in most definitions of sustainability, we also find broad mention of social equity and economic development.</span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"> </p><p style="text-align: justify;"> </p><p style="text-align: justify;"> </p><p style="text-align: justify;"><span style="font-size: 10pt;"><em>This article was contributed by our expert <a href="https://www.linkedin.com/in/sandeep-chatterjee-4302271/" target="_blank" rel="noopener">Sandeep Chatterjee</a></em></span></p><p style="text-align: justify;"> </p><h3 style="text-align: justify;"><span style="font-size: 18pt;">Frequently Asked Questions Answered by Sandeep Chatterjee</span></h3><h3 style="text-align: justify;"> </h3><h2 style="text-align: justify;"><span style="font-size: 12pt;">1. What is sustainability, and how is it different from ESG?</span></h2><p style="text-align: justify;"><span data-contrast="none">In 1987, the United Nations Brundtland Commission defined sustainability as “</span>meeting the needs of the present without compromising the ability of future generations to meet their own needs<span data-contrast="none">.” And today, many people interchangeably use Sustainability and ESG, which is not true. Sustainability is a broad vision and a way of life. </span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"><span data-contrast="none">ESG is a means of measuring sustainability and dealing with metrics. ESG metrics are about performance measures or indicators of a company's performance on environmental (E), social (S), and governance (G) issues.</span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"><span data-contrast="none">Sustainability deals with People, Profit, Planet, and Purpose. The Profit and Purpose pillar is missing in the ESG framework.</span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"> </p><h2 style="text-align: justify;"><span style="font-size: 12pt;" data-contrast="none">2. How did the concept of sustainability come about?</span></h2><p style="text-align: justify;"><span data-contrast="none">It seems incredible that the 'sustainability' concept as we know it today dates to under 30 years ago: it appeared for the first time in 1987 in the famous Brundtland Report (also entitled 'Our Common Future') produced by several countries for the UN.</span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"><span data-contrast="none">The report, produced by a commission led by Doctor Gro Harlem Brundtland, uses the term sustainable development as we understand it today for the first time. It came about due to the overriding need to study and identify human activity's impact on the environment, something completely necessary and which dates to some years earlier.</span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"><span data-contrast="none">In 1798, Thomas Malthus published his ' An Essay on the Principle of Population', where he set out his famous 'theory of population'. This theory states that the population tends to grow quicker than resources. This is true today in an overpopulated world where resources are exploited ever further. </span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"><span data-contrast="none">The planet has no time to regenerate!</span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"> </p><h2 style="text-align: justify;"><span style="font-size: 12pt;">3. What are ESG metrics, and why are they important? </span></h2><p style="text-align: justify;"><span data-contrast="none">ESG metrics are a set of various performance indicators, primarily non-financial, that help assess companies about sustainable and responsible practices. These metrics provide valuable insights into things like environmental impact, social impact, and the internal governance structure. </span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"><span data-contrast="none">By tracking and analyzing them, companies can monitor their progress toward improved business sustainability, ethical business practices, and, ultimately, their contributions to long-term value creation and societal well-being. </span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"><span data-contrast="none">Investors also often use ESG metrics to evaluate companies, and organizations that score poorly might find it harder to raise capital or attract new investments.</span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"> </p><h2 style="text-align: justify;"><span style="font-size: 12pt;">4. What is the difference between sustainability and a circular economy? </span></h2><p style="text-align: justify;"><span data-contrast="none">Additionally, there is a misconception that sustainability is a circular economy. The circular economy is a sustainable model, process, or economic system focused on reuse and waste elimination, while sustainability is an approach that tries to make sense of the interconnectedness between environmental, social, and economic factors.</span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"><span data-contrast="none">And it is worthwhile to know that sustainability does not necessarily enable circularity, and a circular business model does not promise the improvement of social, environmental, and economic factors that a company must take into consideration.</span><span data-ccp-props="{"134233117":false,"134233118":false,"201341983":0,"335551550":0,"335551620":0,"335559738":0,"335559739":0,"335559740":259}"> </span></p><p style="text-align: justify;"> </p><p style="text-align: justify;"> </p><p style="text-align: justify;"> </p><p style="text-align: justify;"> </p><p style="text-align: justify;"> </p><p style="text-align: justify;"> </p>
KR Expert - Sandeep Chatterjee
Core Services
Human insights are irreplaceable in business decision making. Businesses rely on Knowledge Ridge to access valuable insights from custom-vetted experts across diverse specialties and industries globally.
Phone Interviews
Our flagship service, phone consultations, enables you to get access to first-hand, grass-root level information from our global expert network to form or validate your hypothesis.
Targeted Custom Surveys
Have a customized questionnaire for a pre-sampled population to understand customer preferences imperative to your product portfolio.
Term Engagements
Our expert, or a group of experts, guides you to validate a critical project or an assignment.
Executive/Board Placements
Concentrate your efforts on the core competencies of your business while we identify the next precise fit for your team.
Premium Insights
Stay ahead of the competition with our refined and customized Premium Insights. Unlock exclusive knowledge and expertise!
500+