Sustainability: Environment, Society, Economy

• Sustainability creates long-term value benefiting society, the environment, and the economy
• It includes three main pillars referred to as the "triple bottom line"

Environmental Sustainability

• Focus is minimizing negative impacts on the planet
• Includes reducing greenhouse gas emissions, conserving water, promoting biodiversity, and adopting renewable energy sources

Social Sustainability

• Emphasizes social equity and community well-being
• Businesses should respect human rights, offer fair wages, support community development, and ensure safe working conditions

Economic Sustainability

• Encourages businesses to operate profitably long-term without relying on unsustainable resources
• Involves ethical business practices, fiscal responsibility, and investing in innovation
• Sustainability in business is about creating a resilient, profitable, and responsible model
• Companies adopt circular economy principles: products and materials are reused, refurbished, and recycled to reduce waste and environmental harm

Corporate Social Responsibility (CSR)

• Umbrella term covering a business's ethical obligations and efforts to positively impact society and the environment
• Ensuring that companies operate in ways that enhance society rather than causing harm
• Evolved from philanthropic to a strategic approach embedded in core business operations
• CSR can manifest in environmental initiatives, social initiatives, and ethical practices

Environmental Initiatives (CSR)

• Reducing carbon emissions
• Minimizing water use
• Adopting renewable energy sources

Social Initiatives (CSR)

• Supporting workplace diversity and inclusion
• Promoting fair trade practices
• Ensuring fair wages
• Contributing to community development

Ethical Practices (CSR)

• Adopting transparent governance
• Preventing corruption
• Ensuring supply chains are free from human rights violations
• Supporting anti-bribery measures
• Many companies use frameworks like the Global Reporting Initiative or Sustainable Development Goals to report and measure CSR efforts

Sustainability Reporting in the Philippines

• Businesses, regulators, and other stakeholders increasingly recognize the importance of measuring, disclosing, and addressing environmental, social, and governance impacts
• The Philippines is vulnerable to typhoons, flooding, and rising sea levels, making sustainability efforts and transparent reporting critical for resilience
• Sustainability reporting is shaped by local regulations and international standards
• Key frameworks and guidelines include the Philippine Securities and Exchange Commission (SEC) Guidelines

SEC Guidelines

• In 2019, the SEC released the Sustainability Reporting Guidelines for publicly listed companies, mandating the disclosure of material sustainability-related information in annual reports
• The guidelines align with global standards like the Global Reporting Initiative and Sustainable Development Goals, requiring companies to report on their environmental, social, and governance performance
• The SEC encourages the use of the Integrated Reporting framework, integrating financial and non-financial data for a holistic view of performance

Philippine Green Building Council (PHILGBC)

• While not mandatory, the PHILGBC's Building for Ecologically Responsive Design Excellence program encourages sustainable construction practices
• Many developers and property owners report sustainability efforts in alignment with PHILGBC's certifications

Bangko Sentral ng Pilipinas (BSP) Guidelines

• The BSP has taken steps to integrate sustainability into the financial sector by issuing guidelines encouraging banks and other financial institutions to adopt green finance and integrate ESG factors into decision-making
• The Sustainable Finance Framework developed by the BSP aims to foster investment in green and social projects, encouraging transparency in reporting related to climate risk and sustainability metrics

Philippine Development Plan (PDP)

• Outlines the Philippine government's commitment to sustainable development and aligns with the United Nations 2030 Agenda for Sustainable Development
• Guides public and private sector actions toward sustainable practices but does not mandate corporate reporting

Reporting Frameworks Used in the Philippines

• Filipino companies use internationally recognized sustainability reporting frameworks to guide disclosures

Global Reporting Initiative (GRI)

• Widely used sustainability reporting frameworks globally
• Many companies in the Philippines use GRI to disclose their sustainability efforts
• GRI offers a comprehensive set of guidelines for reporting on environmental, social, and governance issues

Integrated Reporting (<IR>)

• Combines financial and non-financial data in a single report, offering a more holistic view of a company's value creation over time
• Gained traction in the Philippines, especially among larger and multinational companies

Sustainability Accounting Standards Board (SASB)

• Offers industry-specific sustainability standards, though not as widely used as GRI
• Companies involved in sectors like energy, banking, or manufacturing may use SASB to disclose material sustainability topics relevant to their industry

Task Force on Climate-related Financial Disclosures (TCFD)

• Recommendations are increasingly adopted by companies globally for reporting climate-related financial risks
• Larger businesses and financial institutions in the Philippines may use these guidelines, especially as climate-related risks become more pertinent to business operations

Strategic Audit Defined

• A strategic Audit is a comprehensive evaluation process
• Used to assess an organization's strategy operations and performance
• Assessed in relation to its internal capabilities and external market conditions

Purpose of a Strategic Audit

• To ensure a company is on track to meet its objectives
• Identify areas that the company can then improve on

SWOT Analysis (Component of Strategic Audit)

• Aids the company in analyzing its:
• Strengths: What a company is good at
• Weaknesses: Where are the gaps?
• Opportunities: What external trends can be capitalized on
• Threats: What external factors pose risks

Competitive Analysis (Component of Strategic Audit)

• Looks at competitors to understand how the company compares:
• Market Share
• Innovation
• Financial Health
• Includes identifying direct and indirect competitors
• Aids in understanding competitor strengths and weaknesses

Market and Industry Analysis (Component of Strategic Audit)

• Studying:
• Market trends
• Consumer behavior
• Potential growth areas
• Goal is to understand the dynamics in the industry and how the company can adapt to or shape those trends
• The audit also considers regulatory factors and global market forces

Financial Performance Review (Component of Strategic Audit)

• Key part of the audit that assesses:
• Financial health
• Profitability
• Cash flow
• Return on investment (ROI)
• Helps understand whether the company is utilizing its resources effectively and efficiently

Implementation and Execution (Component of Strategic Audit)

• Reviews how effectively the company implements its strategy by means of:
• Assessing operational efficiency
• Internal communication
• Decision-making processes
• Employee alignment with company goals
• The outcome of a strategic audit typically results in actionable insights, which might lead to adjustments in the business strategy or changes in organizational processes, ensuring alignment with long-term goals

The Role of Sustainability in Business Strategy

• Sustainability: Not just a trend but a necessity
• Incorporating sustainability into a company's business strategy should be about creating value that goes beyond profits, taking into account environmental and social impacts while remaining competitive and resilient

Long-Term Value Creation

• Helps businesses look beyond short-term gains and focus on long-term growth
• Companies that prioritize sustainable practices are more likely to attract loyal customers who value ethical practices and environmental responsibility
• Preparing for future challenges such as resource shortages, climate change, and shifting consumer expectations

Brand Example: Patagonia

• Has built its brand based on its commitment to environmental sustainability
• Offers high-quality products made with sustainable materials
• Promotes repair and reuse to extend product life promoting a strong, loyal customer base

Risk Management

• Incorporating sustainability into business strategy, companies can mitigate a variety of risks

Types of risks that can be mitigated

• Environmental: climate change, such as extreme weather events, can disrupt business operations
• Sustainable practices like energy efficiency and waste reduction can help businesses prepare for such risks
• Social: Public opinion on social justice and workers' rights is evolving rapidly
• Companies that fail to meet ethical labor standards or contribute to social well-being may face reputational damage, legal penalties, or loss of consumer trust
• Regulatory: around environmental impact (e.g., carbon emissions), fair labor practices, and corporate transparency
• Companies that proactively align with these regulations can avoid penalties and maintain good relations with regulators

Competitive Advantage

• Consumers, especially millennials and Gen Z, increasingly care about where and how products are made and are more likely to support businesses that demonstrate responsibility toward environmental and social causes
• Brand Example: Unilever is a prime example of how sustainability can be integrated into business strategy for competitive advantage
• The company's Sustainable Living Plan focuses on improving health and well-being, reducing environmental impact, and enhancing livelihoods. This strategy has helped Unilever enhance its brand reputation and appeal to sustainability-conscious consumers

Innovation

• Sustainability often drives innovation as companies search for ways to reduce environmental impacts or create products that meet the evolving needs of consumers
• Innovations in renewable energy, waste reduction, and sustainable sourcing practices not only help the planet but can lead to new market opportunities Brand Example: Tesla revolutionized the electric vehicle market by developing high-performance, eco-friendly vehicles that appeal to environmentally conscious consumers

Stakeholder Engagement and Reporting

• Sustainability efforts improve a company's relationship with its stakeholders such as customers, investors, employees, and the broader community
• For instance, investors are increasingly interested in ESG factors when making investment decisions
• Demonstrating strong ESG performance can lead to better access to capital and lower financing costs

Sustainability Frameworks

• Many businesses also participate in sustainability reporting, using frameworks like the and to measure, report, and communicate their sustainability efforts
• Transparency can build trust with stakeholders and attract responsible investors

Triple Bottom Line (TBL)

• The Three Pillars of sustainability include People Planet Profit.
• Concept that states that a business should commit to measuring the following:
• Social Impact
• Environmental Impact
• Financial Performance
• all measured in addition to their financial performance
• Can also be broken down into "three P's": profit, people, and the planet
• Firms can use these categories to conceptualize their environmental responsibility and determine any negative social impacts to which they might be contributing

Integration

• Companies can integrate sustainable practices into every facet of their business operations
• Integrate areas such as:
• Supply chains
• Business partners
• Renewable energy usage
• Integration allows positively impacting society and the environment and turning a profit

The Organization's Goals

• Generate a financial return for shareholders
• Commit to positively impacting society
• positively impact the environment

Why is the TBL Important?

• Some may see it as idealistic in a world that emphasizes profit of purpose
• Innovative companies have shown that it's possible to do well by doing good

Financial Benefits

• The triple bottom line doesn't inherently value societal and environmental impact at the expense of financial profitability
• Many firms have reaped financial benefits by committing to sustainable business practices

Global Reporting Initiative (GRI)

• International independent standards organization that helps businesses, governments, and other organizations understand communicate their impacts on issues such as:
• Climate change
• Human rights
• Corruption

Sustainability Reporting

• GRI's voluntary sustainability reporting framework has been adopted by:
• Multinational organizations
• Governments
• Small and medium-sized enterprises (SMEs)
• NGOs
• Industry groups
• All of which allows for effective sustainability reporting

GRI Standards Support

• Supporting the reporting process, the GRI Standards have a modular structure, making them easier to update and adapt
• Support of the Standards for reporting includes:
• Universal Standards: Apply to all organizations and cover core sustainability issues related to a company's impact on the economy, society, and the environment
• Sector Standards: Apply to specific sectors, like ones with the highest environmental impact, such as fossil fuels
• Topic Standards: Disclosures relevant to a particular topic area [10][3][9][11]

Environmental Management (ISO 14001)

• International standard for It gives the organizations a framework to:
• Safeguard the environment
• Adapt to shifting environmental conditions
• Incorporate environmental management into their commercial operations as it is their main goa

ISO 14001 Principles

• Policy demonstrates the organization's dedication to protection and adherence
• Objectives and plan action through compliance
• Process manages the important environmental aspect

Effectiveness of ISO 140001.

• Tactical advantages promote:
• Effectiveness
• Creativity
• Adaptability

Group 2; Strategic Management and Sustainability Integration

• Integrate sustainability into business strategy and operations

The role of strategy in sustainable business includes

• Framework for operational planning
• Clarity in direction of activities
• Organizational effectiveness
• Personnel Satisfaction

Frameworks Provide

• Strategies provide the framework for plans by channeling:
• Operating decisions and decisions
• Also provides a consistent framework for operational planning

Resource Deployment

• Consistency exists and applied, deployment of organizational resources exists in areas and functions such as:
• Customers
• Geography

Clear Strategies

• Focus on the direction of activities
• Defines objectives as:
• Earning a profit(Business)
• Defines social objective(Non business)

Vague Definition

• To broad for putting them into operation
• Strategies focus on operation objectives with practical means for implementation
• Provide a clear direction to a responsible person who has the responsibility of following a determined course of action

Organizational Effectiveness

• Strategies ensure effectiveness in multiple ways
• Must have the ability to achieve objectives and deploy resources effectively

Human satisfaction

• People are more satisfied by the prescription of their prescribed role
• Reduces role ambiguity
• Reduces role conflict
• All workers know how to proceed and add to organizational effectiveness, creating clarity through which a value add can be prescribed

Competitive Advantage thru Sustainability

• Creates a unique identity
• Creates value in the eyes of stakeholders and consumers

Sustainability in Business Creates

• Proactive ways of socially addressing environmental issues
• Environmental consciousness with customers and investors
• Enhanced employer satisfaction
• Improved brand image
• Increased sales from new markets

Sustainability Users of Note

• Tesla: Electric cars that lower the carbon footprint
• Patagonia: Recycled materials in product avoid carbon footwear prints
• IKEA: Circular production commitment. for following years

Sustainable Business Models

• Organization or structures that create or capture the delivery value are known as a business model

Assists business by

• Assisting in sustainability whilst making money
• Allows for beneficial environment impact
• Works towards fighting ecological and social challenges

Elements of sustainable profit

• Must be profitable
• Must be sustainable for years or more to come
• Must use long term, stable resources
• Gives back to the community

Successful Example Brands

• Tesla with electric vehicles and a focus on renwables and sustainability
• IKEA with sustainable products and responsible wood sourcing
• Patagonia with a durable and strong commitment to social responsibility

Sustainability Implementation Steps

• Sustainability mission, what is the purpose of an organasation
• Long-term vision of the organization
• Strategies through staking and a positive relationship from consumers
• Implementation by engaging consumers for a maximum impact
• How to measure

Triple Bottom Line

• The triple layered business model canvass (TLBMC) by Joyce and Paquin
• Created to investigate sustainable innovattions
• Incorporating social and environmental into the company's businnes model canvas

Sustainability creates long-term value for society, the environment, and the economy. It includes three pillars: Environmental Sustainability, Social Sustainability, and Economic Sustainability. Companies should adopt circular economy principles by which products and materials are reused, refurbished, and recycled.