Sustainability is durable well-being, both financial and societal.
An issue of corporate governance and strategy, sustainability incites focus on long-term risks and opportunities to create financial and social value.
Sustainability is a fiduciary concern. While corporate actions that reduce long-term macroeconomic prosperity can generate handsome profits, fiduciary-friendly sustainability improves financial returns.
Fiduciary duty is a stronger sustainability motivator than is social responsibility.
For companies and investors, focusing on generating profit by creating social value is more effective at creating that social value than simply focusing on social good divorced from financial value creation. Companies and institutional investors are built for financial management; their efficient execution around that can be extremely effective at delivering social results, but only if sustainability initiatives respect native values and processes. Aligning sustainability initiatives with financial interests maximizes results for both investors and society.
Sustainability vs. Social Responsibility
The terms Corporate (Social) Responsibility – CSR or CR – and (Socially) Responsible Investing – SRI or RI – emphasize responsibilities to external parties while “sustainability” invokes long-termism regarding both private and societal welfare. Sustainability is therefore a broader and more accurate term for efforts that consider financial performance in addition to social impact.
It’s all corporate governance: social issues are governance issues
Company-related social issues, including environmental issues, impact financial risk and return and are therefore both economic and corporate governance issues.
Sustainability, social, governance, and economic issues are one and the same. All sustainability issues are social issues, governance issues, and economic issues. Economic issues are social and governance issues, and governance issues are social and economic issues.
Sustainability addresses the comprehensive range of social/governance/economic issues, including environmental, employee, and leadership issues.
Environmental issues are social issues, governance issues, and economic issues. They are a subset of social/governance/economic issues, not a parallel category.
Sara Schoen is an organizational change agent who helps executives utilize sustainability to create business value. She founded Schoen Sustainability to help investors and companies integrate long-termism into strategy and process and focus on performance instead of the many distractions typical of the sustainability industry. Sara is passionate about the power of long-term opportunity/risk focus to advance organizational and societal health and prosperity. She can be reached at sara@schoensustain.com.
