Do you know what sustainability means? (Hint: It's not just about being green)

June 6, 2011

Sustainability is one of the corporate world’s emerging priorities. Often it connotes “green” initiatives or environmentally friendly practices. But how should CMOs, brand managers and public affairs executives inside large corporations think about sustainability in the context of brand and reputation?

To us, sustainability is a term that represents the totality of an organization’s environmental, social and governance (ESG) commitments. Sustainability and ESG are rapidly becoming synonymous in common parlance, the first being the broad definition and the second being its “mutually exclusive, collectively exhaustive" components. Related concepts such as corporate social responsibility (CSR) and corporate citizenship have similar intentions, but in practice are often limited to a few areas.

A great example are CSRs. We often see them encompassing an organization’s societal and philanthropic commitments, and occasionally its environmental activities. Governance issues, such as board composition and executive compensation policy, are often not part of these definitions. Some institutional investors view CSR as a vague, hard-to-measure catch-all for initiatives that have little measurable impact on business performance.

ESG frameworks, with valuable key performance indicators, are rapidly becoming one of the main decision variables investors are using to select investments. Through the admirable work of the Global Reporting Initiative, ESG factors are now being measured in a consistent way in hundreds of organizations worldwide.

The GRI framework helps corporate leaders create auditable information around ESG factors, giving investors and other key stakeholders a clearer, more quantifiable view of opportunity and risk. (Full disclosure: Brandlogic is a GRI organizational stakeholder and helps clients implement the GRI framework.)

Looking ahead, we believe sustainability will become the default comprehensive term to describe these non-financial performance metrics. As investors and other key stakeholders continue to demand more transparency from institutions who have an impact on society at large, they will look to ESG factors as a reliable set of metrics from which to evaluate overall corporate performance.

What sustainability initiatives do you have in place? Leave us a comment and let us know.

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