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Sustainability is concerned with problems created through the impact of human activity on the world for example, damage to biodiversity, climate change, water shortages etc. These are all issues linked to the idea of sustainability. The Brundtland definition of sustainability (Development that meets the needs of the present world without compromising the ability of future generations to meet their own needs) is a key definition of sustainability or sustainable development and should represent what every responsible business wants to achieve. You may come across variations to this definition, but most will highlight the same ideas that businesses need to adopt strategies and activities which meet current stakeholder needs but also consider wider implications as well. 2. Corporate social responsibility is a term sometimes used interchangeably with sustainability they are complementary terms as corporate social responsibility allows an organisation to define their responsibilities and identify how they can integrate sustainability issues into their ongoing strategies and operations. It emphasises how companies can behave ethically and therefore contribute to the social, environmental and financial wellbeing of itself and its stakeholders. Whilst the buzzwords of sustainability and corporate responsibility are commonly used nowadays, when you really look at the sustainability concept and consider how financial success has been edged out as the only measure of a companys success, it is really quite a controversial concept. 3.
There are a variety of reasons why sustainable development has become a high priority of organisations. Greenwashing Greenwashing is the process whereby companies undertake collection of sustainability data and report this data as a means to promote concern for the environmental and social aspects of business rather than as a genuine concern for sustainable development. They are trying to make it appear as though the company, its operations and products are green. This is often a misrepresentation and is regarded as spin. Sometimes these companies undertake a cost cutting program and try and pass it off as sustainable practice: for example, charging customers for packaging materials. Mimicry Mimicry is where industry pressure is important in driving sustainable development. The idea that each company within an industry has to keep up with the competition is important in explaining why management start to take an interest in sustainability issues and it provides motivation to companies to engage in sustainability debate. Mimicry is a way by which new accounting ideas about sustainability can be introduced. However, as each industry member feels they have to follow the leader, it tends to be an uncritical process and problems in sustainability strategies are not always identified and fixed. Pressure Over the past decade, there has been a big increase in the volume of sustainability legislation and guidelines that organisations have to follow. Pressure on companies to keep

up to date and comply with all this legislations is another reason why the sustainability agenda has been given additional priority. Stakeholders are any individual or group who have an interest in an organisations actions. They can be shareholders (interested in financial performance), employees (concerned with job security), creditors (interested in companys ability to meet obligations), NGOs (like Greenpeace, who are specifically concerned with the environmental impact of organisations) or the local community who may be interested in the companys impact on the social, economic and environmental wellbeing of the surrounding area. In addition to the legislati e press re on organisations stakeholders ha e also pressed for certain standards legislative pressure organisations, have to be met or processes to be adapted to conform with the sustainability agenda they are concerned with. It is felt that these two pressures give the company a licence to operate in that they are following the rules set by society in the form of legislation and the social expectation of its stakeholders. Selfregulation Self regulation refers to the voluntary adoption of certain actions by a company or industry group. This could entail the development of certain sustainable practices or the restraint of any actions which are detrimental to the environment or social wellbeing of certain groups. The motivation behind this self regulation is often to either increase performance or reputation through this voluntary activity the company is acting in a manner which exceeds the legislative expectation. On an industry level, self regulation is sometimes introduced in order to preempt government intervention into regulation of the industry or sector. This means the industry maintains a degree of control over the sustainability agenda and also manages the social expectation of the stakeholders and their resulting reputation. Ethical Some organisations have genuine ethical reasons for integrating a sustainable agenda into their strategies. They feel a sense of corporate responsibility and want to meet the needs of the stakeholders in terms of the information they provide and the strategy they adopt as the company moves forward. The provision of information is vital for ethical companies they need the information to determine where the problems lie. If they dont know about a problem, they cant take action to repair any damage and prevent similar problems in the future. This means that if managers genuinely want to adopt a sustainability agenda, they need to ensure their data gathering capability is good enough. Business case The final reason that companies would have for adopting Sustainable development is to manage the business case for sustainability. Organisations need to identify the economic potential for voluntary social and environmental activities. They need to be able to demonstrate where there are genuine cost savings and opportunities to increase revenue with green product development. Conclusion All of these reasons are concerned with corporate benefit or at least avoiding a detrimental impact on the company. Is this a problem? Surely companies are in the business of enhancing the value of the company and any agenda, sustainable or otherwise, should not have a detrimental effect on the organisation. An important point to note however, is that value added is not always measurable in financial terms. There can be qualitative gains for a company that embraces the sustainability ethos.

So what are the main reasons for integrating sustainability into strategy? Business Survival Many people believe that the primary purpose of business is to serve the shareholders by increasing profits. But businesses which dont make strategic changes in favour of sustainability, are risking failure which is not in the best interest of the shareholders. Where does the risk of failing come in? 1. Consumer tastes are changing and criteria such as reputation and environmental impact are becoming important in consumer choice and decision making. 2. Energy costs are increasing so any measures taken to reduce energy consumption will benefit the environment and also the financial position of the company. 3. Regulation surrounding energy usage and carbon reduction is increasing. Companies have to be aware of all their responsibilities and ensure they are meeting the standards set for their industry. 4. Companies Act 2006 has a requirement that organisations address sustainability issues. Companies are therefore obliged to ensure that they follow the regulations in order to avoid any penalties or bad publicity. This all means that change is needed either through a genuine desire to achieve sustainability or in response to regulatory, consumer or societal demands. Opportunity Sustainability can act as a driver for performance and value creation. As well as being a oral obligation to promote environmental and social wellbeing, it can also be a source of value creation. There are opportunities for organisations to integrate the sustainability agenda into product development. Profits can be enhanced if new products are designed to meet the needs of new green markets. It can also be in a companys best interest to adopt new clean technology or processes and this can allow entry into new markets or increase market share as consumers are receptive to these sustainable changes. It is likely to provide a competitive advantage if an organisation tries to embed sustainability into their strategy now,
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rather than waiting for changes in regulations which will force change. Investors Influence Sustainable or ethical investment is gaining greater focus amongst investors. Not all investors are focused on returns they want the growth to be gained through ethically sound practices. There are specific stock exchange indices which companies can be listed in which highlights their sustainable credentials. For example the Dow Jones Sustainability Index (USA) and the FTSE4Good Index in the UK. In order to be listed in these indices, the companies have to demonstrate that they have met certain strict criteria. Sustainability is gaining support in the business community and as we have seen, the integration of sustainability into corporate strategy is not a drain on companys resources, but can in fact provide real, competitive opportunity and advantage. 5. Mary McAleese, president of the Institute of Chartered Accountants in Ireland,

talked about the involvement of accountancy in sustainability in terms of active citizenship. She suggests that those who embrace sustainability through this motivation (individuals or corporations) often do it on a voluntary basis and ensure that their work exceeds any regulatory requirements regulation is not the driver in active citizenship. The rewards which emerge from the process may not be tangible financial gain but something immeasurable such as satisfaction at contributing to a healthier and more sustainable society.

6. Following on from this, if a company fails to follow the financial legislation or standards, there are strict penalties that they will face. This is not the case with sustainability reporting where definitions are more fluid and the process is open to a higher degree of interpretation. In addition, the benefits of green initiatives are often difficult to measure the benefits are not necessarily financial. There is a qualitative rather than a quantitative benefit to the business. This again, makes comparability between companies difficult. However, finance departments can make the most of the opportunities afforded by sustainability by allowing existing staff to develop their skills and expertise into new areas. This can be a good motivator for staff as it provides opportunity for project management and the scope to use their own initiative for the benefit of the company. Sustainability projects allow the finance department a valuable opportunity to engage with the wider business environment in areas outside their usual concern. Development of new skills such as whole life costing techniques can bring benefit to other areas of the business as well as improving the understanding of the areas where development is needed in terms of sustainability.

7. Compared to the 1970s, the acceptance by business and the expectation of the public for CSR reports is unbelievable! For many of the larger companies, it has become as important as the rest of the annual accounts and has led to benefits for these companies in terms of more awareness of the sideeffects of their business and cost savings as we discussed earlier.