Sustainable Business Practices Quiz

Sustainable Business Management

• Only 25% of companies incorporated sustainability into their business model, even though 90% of executives recognized its importance.
• 24% of companies see sustainability as a competitive advantage, failing to understand that compliance should be the priority.
• A sustainable business must address the two critical gaps of "knowing but doing nothing" and "needing sustainability for competitive advantage."
• To stand out with sustainability, a business needs to understand the risks associated with these gaps.

Examples of Sustainable Business Practices

• Christy Dawn, an LA-based brand, uses deadstock fabrics to create dresses.
• Christy Dawn prioritizes sustainability by promoting limited edition pieces, reducing fabric usage, delivering products in wooden boxes, and advocating for minimalism.
• PepsiCo sets sustainability goals and publishes annual reports since 2005.
• PepsiCo focuses on three aspects of sustainability: human sustainability, talent sustainability, and environmental sustainability.

Natural Capital and Public Goods

• Public goods are essential for the nation's security and benefit all citizens.
• Many nations invest heavily in military spending, defense, and research through public taxation.
• In 2022, the Department of Defense (DOD) in the US spent 45.8% of its budget on military spending.
• Some countries utilize public funds for social services like healthcare and public education.
• Investments in public education have significantly increased in recent decades.
• Global literacy rates have risen from 56% in 1950 to over 86% in 2016.
• Supporters of public spending on public goods argue that economic and social benefits outweigh the costs.
• Critics of this argument claim that it burdens taxpayers and that the private sector can provide goods more efficiently.

Environmental Externalities

• An externality is a cost or benefit incurred by a producer but not financially accounted for by them.
• Externalities can be positive or negative and arise from the production or consumption of goods or services.
• Externalities are often environmental, affecting natural resources and public health.

Overcoming Externalities

• Solutions include taxes, subsidies, and regulations imposed by public and private sectors.
• Pigovian taxes are imposed on activities that cause negative externalities, aimed at reducing the market outcome of these externalities to an efficient level.
• Subsidies can be used to encourage the consumption of activities that produce positive externalities.
• Regulations are a prevalent method for addressing externalities, often implemented through legislation enacted by governments.

Sustainable Business Trends

• Environmental, Social, and Governance (ESG) is vital for continued business operations in the eyes of investors.
• Top 10 sustainability trends for 2022
  • All-electric infrastructure implementation
  • Penalty actions for lack of climate action
  • Greenwashing accountability
  • Increased investment in green technologies
  • Circular economy solutions
  • Net Zero targets
  • Sustainable finance and investment
  • Employee engagement in sustainability
  • Focus on supply chain transparency
  • Demand for sustainable products and services

Sustainable Business Pillars

• Human Pillar: Creating positive changes in production, provision, or consumption of goods and services.
  • Focusing on employee health, learning, and skill development.
• Economic Pillar: Balancing economic growth with other sustainability pillars.
  • Prioritizing monetary expansion that does not deplete natural, human, or social capital.
  • Creating business relationships that support mutually beneficial social and sustainable initiatives.
• Environmental Pillar: Focus on the impact of business operations on the environment, natural ecosystems, and social health systems.
  • Aiming to meet the needs of the current population without compromising future generations.
  • Reducing pollution, resource depletion, and environmental damage.