The Shifting Landscape of Sustainability Legislation

It’s undeniable: the need for sustainability has reached new levels of urgency. Sustainable business practices offer organisations and society a solution to some of our most significant modern challenges and the key to a resilient future for all.

As we continue to come to grips with the consequences of our industrialised lifestyle, governments and global organisations are grappling with the drastic changes needed to avoid an imminent climate change tipping point.¹ At the same time, social inequality continues to be a pressing issue, restricting access to equitable living conditions for billions worldwide.²

The question of how to combat these twin ills while maintaining economic development and well-being on a large scale is one that governments, businesses, and global organisations are confronting through various policies, agreements, and laws.

Operating a business in this environment means navigating the shifting waters of sustainability legislation – a challenging but necessary step. For many organisations, environmental and sustainability legislation is the catalyst they need to move from intention to implementation.

Is it perhaps time to brush up on the relevant legislation to drive sustainability in your organisation? Then read on.

Understanding sustainability and sustainable development

Let’s start by distinguishing between sustainability and sustainable development. The first term, sustainability, is generally considered a long-term goal or ideal (a future in which environmental, societal, and economic considerations are in balance). Sustainable development, in turn, comprises all the processes and routes taken to achieve this end goal (e.g. sustainable agriculture and forestry, sustainable production and consumption, good government, research and technology transfer, education and training).³

Humankind has been concerned with the environment for much of our shared history. However, sustainability, as we know it today, is a recent phenomenon, with its current meaning only recently established. The Oxford English Dictionary described it as the “avoidance of the depletion of natural resources in order to maintain an ecological balance.”⁴

Consciously driving sustainability means understanding the benefits of adopting the broader environmental, social, and (corporate) governance (ESG) criteria. These criteria are focused on doing business in a responsible way and include corporations’ attempts to mitigate the effects of climate change. The videos shared below cover the essential aspects of climate resilience and highlight the myriad opportunities available to businesses navigating the fight against climate change:

As a future-focused professional, it’s important to understand sustainability’s benefits. It’s well-documented that sustainable initiatives improve companies’ financial performance, optimise innovation, and achieve major cost savings. An increasing number of customers and prospective employees also choose to support and work for organisations that prioritise sustainability.⁵

Several key agreements and goals in pursuit of sustainable development are in place, the most important of which is the SDGs. These global goals were set by the United Nations General Assembly in 2015 and function as a shared blueprint for long-term, sustainable prosperity. Along with an explicit desire to preserve the environment, the SDGs aim to end poverty, reduce inequality, and promote responsible consumption and production.⁶

These goals serve to encourage the adoption of policies by governments worldwide with the aim to combat the twin challenges of protecting the environment while ensuring human prosperity. These pursuits are complementary and form part of what’s referred to as sustainability legislation – a host of laws and measures that drive sustainability.

The role of governments in sustainable development

What role, exactly, should governments play in sustainable development? Sustainability legislation must necessarily constrain certain business operations, for example setting limits on the amount of carbon produced by certain industries. However, the legislation doesn’t mean that businesses are at a disadvantage. Indeed, forward-thinking organisations can gain a significant competitive edge through the sincere application of sustainability measures that go above and beyond those enforced by governments.

Better business through sustainability

Businesses worldwide are embracing sustainability, even in cases where legislation measures are absent.⁷ But why would businesses traditionally wary of over-regulation by governments embrace the move towards sustainability legislation? Clearly, organisations worldwide see the value in embracing sustainability goals.

In the U.S., for example, businesses are choosing to invest heavily in renewable energy, with renewables becoming the second-most prevalent electricity source in 2020.⁸ This isn’t entirely because those at the head of business feel altruistic: the cost of renewable energy is much cheaper than it once was, and research shows that investing in this type of energy now will save money in the long run.⁹

Cost savings aren’t the only advantage. A new generation of consumers are willing to pay more for sustainable products.¹⁰ In addition, sustainable businesses can look forward to:¹¹

• Reduced costs
• Innovation
• Improved employee retention
• Enhanced brand reputation and an increased competitive advantage
• Increased productivity
• Improved financial and investment opportunities
• Minimised carbon risk and improved energy efficiency
• A positive contribution to a sustainable future

Sustainability isn’t synonymous with environmentalism

While environmentalism certainly is part of it, the concept of sustainability is much broader. As legislated by government policy and enacted in business, sustainability is made up of three prongs:¹²

1. The first, economic performance, is represented by the primary goal of all businesses throughout history: the pursuit of profit.
2. Environmental performance is the second, and refers to the goal of preserving the planet. It’s the part of sustainability that’s most spoken about.
3. By contrast, the third, social performance, refers to the pursuit of equitable and fair working conditions for all employees, as well as everyone who interacts with an organisation. This last prong is often talked about generally but tends to be overlooked in discussions of sustainability in business.

What does a profitable, sustainable business look like?

Here are four illuminating examples of businesses that profit from being sustainable:

1. Global conglomerate Siemens places sustainability at the core of its business practices.¹³ In the 2021 financial year, the company generated revenue of €62.3 billion and a net profit of €6.7 billion.¹⁴
2. DuPont, a U.S.-based conglomerate, has seen similar success. The company is committed to its 2030 sustainability goals, helping shape its innovation and processes.¹⁵ In spite of the COVID-19 pandemic, in 2020, the company was still able to deliver results ahead of expectations.¹⁶
3. Clothing company Patagonia is taking radical steps to reduce its impact on the climate. Take a look at what the company has achieved: 100 percent of its U.S. electricity supply is powered through renewables; 94 percent of its product line uses recycled materials, and 64,000 workers are supported by the company’s participation in the Free-Trade Agreement.¹⁷
4. Triodos Bank believes in ethical banking and uses customers’ money to invest in companies that are sustainable or working to create a better world.¹⁸

This effect can similarly apply to entire industries. For instance, the food industry as a whole is pursuing sustainable practices in response to a growing concern about the moral and environmental impact of food production. Food companies now meet the demand for sustainability in four primary areas: sourcing, packaging, producing more plant-forward products, and reducing food waste in their supply chains.¹⁹

From the above examples, it’s clear that sustainability can have a positive impact on business, regardless of the legislative environment. Note, however, that a sustainable business strategy isn’t something that can be cobbled together. Organisations need to approach this strategy with care, as a misstep can come across as tone-deaf at best and damaging to the brand’s reputation at worst. In the clothing industry, for example, many companies are guilty of ‘greenwashing’, claiming their products and processes are environmentally friendly with little or no proof to support these claims.²⁰

The future of business and sustainability legislation

As businesses and governments grapple with the three elements of sustainable development, it’s becoming increasingly clear that there are conditions attached to achieving success. Implementing sustainable practices on a wide scale while maintaining profitability is best done in concert.²¹

Sustainability legislation allows for the setting of goals on an even playing field, empowering businesses to pursue sustainable practices while still maintaining strong economic growth.

Businesses like Siemens not only adhere to the relevant laws and regulations but actively engage with governments and international organisations on issues of sustainability. It’s these businesses that will likely gain a competitive edge.

As legislation changes to accommodate new sustainability goals, entire fields of industry are finding new investment and invigoration. This certainly is the case in the renewable energy sector, which is experiencing a boom that can be directly linked to the need for more sustainable energy production.²²

When considering sustainability legislation and business, it may be tempting to see them as two opposing forces. The reality, however, is far different: within the landscape of sustainability legislation and policy lies a wealth of opportunity for businesses willing to invest in the appropriate measures. And by doing so, these companies help to ensure our collective future.

This online course on business sustainability management will guide your business to success, from intention to implementation.