Lesson 7: Recycling is not Sustainability

What is the purpose of a company? To make a profit. Whether you agree with that statement does not make it any less true. It is likely the first question posed in any undergraduate business course, the first question in any postgraduate business course, and a question that often gets dug up by news outlets every few years to shake a finger at CEOs with inflated salaries. The answer, though, is completely true. In a way.

To say that a company exists solely to make a profit is akin to saying humans exist to eat, breathe, sleep, and multiply. Sure, at the core of our purpose as a species, these things must occur for the species to survive. A for-profit company (an important consideration, not to be forgotten) must also make a profit to survive. But when considering the hierarchy of needs a human being has, surely if we were to base our lives on simply “surviving”, we would still exist at the same level of being as our primate ancestors. So, as we have evolved higher needs, should we not also consider what the higher needs of our companies should be? What comes AFTER profit?

With the risk of triggering you, dear reader, my candidate for this position is sustainability. Simple, yet often misunderstood. Hence today’s lesson: recycling is NOT sustainability.

Sustainability requires a holistic approach

For too long we have associated the concept of sustainability with what is but a singular aspect of it: environmental sustainability. We hear sustainability and think “forever bags”, “reusable cups”, “paper straws”, and so on. But this concept is much broader than just tactics to reduce our carbon footprint. At its core, it is a concept referring to “long term”. It is a conglomerate of activities, ideas, tactics, and functions that can prolong the existence of a whole. So yes, recycling is part of sustainability as it can help prolong our resources and materials. But it is not the only thing. Indeed, the most important aspects of sustainability (and what would fall under the general term of Corporate Sustainability) are:

1. Economic sustainability: Making sure our companies are financially viable for the long term
2. Social sustainability: Making sure people and communities working in and affected by our companies are supported to thrive for the long term
3. Environmental sustainability: Making sure that our planet and its resources are not only available for our company today, but for all humans and future generations for the long term

I will do my best to provide some examples for each of these in this article but highly recommend that, if this sparks any interest on your end, you reach out to my colleague Dominik Naab , an expert in Corporate Sustainability.

Economic sustainability – A commitment towards achieving your strategic goals

Let us start by addressing an instrument designed for this exact purpose: Environmental, Social, and Governance investments, or ESG investments for short. These are non-financial markers used to assess the possible outcomes (returns, risks, etc.) of financial opportunities. This can include aspects such as carbon footprint, supporting local trade and economies, clean energy, and much more. Numerous institutions, such as the Sustainability Accounting Standards Board (SASB), the Global Reporting Initiative (GRI), and the Task Force on Climate-related Financial Disclosures (TCFD) have put together standards to make ESG easier to incorporate into the investment process. The GRI Standards have also recently been leveraged as the basis for European Sustainability Reporting Standards, which are already mandatory for very large companies (to be expanded in 2025 to large companies as well).

As these standards become the norm for all companies, not just immense multinationals, what business leaders can do in preparation for them is consider these factors as part of their strategic goals. For a reminder on how to best set these, refer to Lesson 2 of this series. Attaching non-financial goals that aim towards ensuring your company is long-term economically sustainable act as promises to upholding your company vision and solidify them as part of your culture. Stating within your goals that you aim for aspects such as equitable remuneration policies, financial maturity, social responsibility, economic vigilance, and strict governance toward the achievement of your targets is, in short, an open promise made to potential customers, communities, and investors that your company upholds its values and is actively pursuing its vision.

Importantly, putting together a robust governance process to monitor and report on these metrics will help you track against them transparently while also providing an honest (and nowadays mandatory, in many cases) view of your company’s progress, being open about shortcomings and humble about your achievements, allowing external expertise when needed to help you grow further in the future and achieve your ambitions. That is a commitment that puts you on the right path toward being economically sustainable.

Social sustainability – A commitment to treating people with compassion, care, and respect

No company can achieve its goals, be they ESG or otherwise, without people. And this does not just include the people working for the company, its employees. Our businesses function within complex networks of communities, audiences, and groups both in the natural world and in the digital realm. Being socially sustainable starts with economic goals, such as the aforementioned remuneration policies, but goes beyond those to encompass a more complex ideal: equity.

Equity is not equality. It is more than that. Equality refers to people being treated the same, regardless of their circumstances. Equity refers to people being treated as they deserve, because of their circumstances. It is the difference between offering men and women the same benefits and offering women additional healthcare benefits that cover post-natal care. It is understanding how equality benefits all genders and ethnicities, while also being aware of how these benefits differ for each group and must be considered independently with care and compassion. For short: you can put whatever pronouns you want in your recruitment poster. As long as you are not considering flexible career paths, you’re falling short of the mark.

It is ensuring proportionate representation at the leadership level according to your employee circumstances. It is being aware of the intersectionality between these circumstances, local cultures, ethnic diversities, gender identities, and other aspects of human life and citizenship that will inevitably be a part of daily life in your offices. For short: you don’t need a token DEI (Diversity, Equity, and Inclusion) Executive, you need every executive to be trained in DEI and champion it in their organization.

Importantly, social sustainability does not mean you should focus solely on how to promote your pregnant black female employees. That is simply reductive. Social sustainability is about promoting a culture of diversity, compassion, and respect in your organization and outside it (yes, this includes your entire value chain, not just your employees). It is a holistic view of a community, not stereotyping and not positive discrimination.

Pay suppliers what they’re due. Invest in communities from which you source your materials. Provide employees with benefits befitting their circumstances. Train your leaders to be better mentors to people from diverse backgrounds and with diverse futures. Champion a culture of openness, curiosity, and kindness. Ask questions instead of casting judgment. Provide advice instead of dolling out punishment. Ask and do not assume.

In short, the people that make up and surround your company, from interns to executives, from suppliers to customers, are the lifeblood of your company. If not offered the importance they deserve, your company will bleed out.

Environmental sustainability – A commitment to our common future

Environmental sustainability starts (maybe) quite simply: what do we reduce, what do we reuse, what do we recycle? But these questions are indeed exceedingly difficult to answer because of one key factor: externalities. These are side effects (both positive and negative) that are related to the execution of an action.

Take business travel as an example. Since the pandemic, working from home has become more prominent. This has led to lower emissions from commuting and from business-related air travel (a direct positive effect). But this also has led to office buildings remaining empty, stuck in long-running lease agreements (an economic negative) or being demolished to make space for other construction projects (an environmental negative) and reducing the level of interaction between teams, which has knock-on effects on company culture, promotion timelines, and other aspects of human interaction (a social negative). So that initial change – less travel for work – has had immense impacts on fields widely removed from it. From the structure of our cities to the friends we keep. This accounts in part for why it is so difficult to define policies at the individual company level that are environmentally sustainable.

Here's my take then on what a potential answer could be, and it comes in the form of business reform.

Far-reaching business reform – changing the rules of the game towards sustainable practices

Same as how nobody wants to be the company paying extra for sourcing materials sustainably and losing out to competitors with no such concerns if left unregulated, markets will continue to find ways to skirt environmental sustainability targets in search of a competitive edge. The change must be wide-reaching, it needs to affect the rules of the game for all. This should not be simply seen only as “companies will be forced to act sustainably or face penalties”. Yes, penalties are executive methods to ensure that standards are upheld and that the game is played by the rules. But beyond this, the message to business leaders should be that “companies will be granted the conditions to employ environmentally sustainable practices in line with their values, without fear of bad actors or free riders”.

We have seen this attempted in the past, but no agreement to this day has had the level of exigence and scrutiny needed to ensure these business practices are withheld, which is why we face problems like “greenwashing”. But to combat this, we cannot expect companies to step in and sacrifice themselves in the face of mounting competitive forces. Our institutions should provide an environment that permits a positive change in business practices.

Because the bottom line will always remain that companies are there to make profits. HOW those profits are made though is something we all may very well have a say in.