Sustainability 101: What is it?
As a current pro-bono writer and sustainability consultant who is speaking to a wide variety of stakeholders, I have come to a realization about my field. We have a LOT of jargon. This is serving as a barrier to inclusion for participating in conversations around sustainable development. I am therefore taking a break from writing to the in-crowd about higher level sustainability topics and will focus my time on laying a Sustainability 101 groundwork for my future conversations to include everyone.
What are we talking about?
To be candid, “Sustainability” is a term that can have different definitions from company to company. I have worked with groups where “Sustainability” covered everything within environment, social, and financial topics. I’ve also worked with groups where “Sustainability” only meant environment, and “Corporate Social Responsibility” only meant social subjects. Don’t even get me started on organizations where one department uses “Sustainability,” and others use “ESG” or “CSR.”
How can we expect to have inclusive conversations when our own groups at times can be confused by the terms we’re using?
Fortunately there now seems to be a general consensus among sustainability professionals regarding universally used terms. The confusion comes from other practices with pre-conceived ideas about what these words mean and how the entire sustainable development environment works. Once again, this is a great argument for outward-facing education.
Sustainability
Most organizations, sustainability professionals, and educators will tell you that sustainability consists of the three P’s: People, Planet, and Profit. Sustainable business pros may refer to this as the “triple bottom line” – including social and environmental value along with the traditional single bottom line of finance. Any way you slice it, Sustainability is no longer just about recycling and turning the lights off. To be a system, government, or business that can be productive and prosperous long-term it is essential that all three of these concerns carry equal weight.
You will frequently see this Venn diagram to describe what sustainability is. I even have a simple version of it on my personal networking cards. The below version, from Medium, includes helpful examples in each segment.
ESG
Financial or investor groups might refer to the concept of non-financial economic concerns as “ESG,” which stands for Environmental, Social, and Governance. Traditionally the people who use this term are financial professionals, concerned with economic development and profit – think investors, economic analysts, or finance managers. They already have the “Profit” part of People/Planet/Profit in their wheelhouse. ESG is therefore an additional concept that is being folded in to their practice.
The Environmental and Social aspect of ESG is familiar based on our explanation of Sustainability, but what is “Governance”?
Governance describes a system of documented checks and balances that covers the ethics of running the business. It often includes rules and reporting around executive compensation, bribery and corruption policies, government relations like lobbying and political contributions, whistle-blower schemes, and the composition of the Board of Directors.
ESG is beginning to be common in public reporting and investor relations. Big financial institutions like BlackRock are actively communicating with CEOs and Boards of Directors to say that they expect a certain level of concern for ESG with any company they invest in. This is because topics covered by ESG pose very real financial risks. For example:
Environmental risks such as damage from storms, droughts, or fires
Social risks such as human rights violations, or unethical working conditions
Governance risks such as unethical financial practices or political scandals
CSR and CR
These stand for "Corporate Social Responsibility" and "Corporate Responsibility." In my experience, they do not have a standard definition accepted by the community but are used by organizations as labels for varying focuses of Sustainability.
CSR can mean the entire spectrum of Sustainability: People, Planet, and Profit. Depending on the organization, it could also refer to only People and Planet, or solely People. Context matters when using this term.
Similarly, CR can mean various things to various organizations. In my experience, it tends to be more broad than CSR and in some cases could include all of Sustainability and ESG . Again, context matters to figure out what exactly CR means for the organization you are looking at.
How do Sustainability and ESG fit together?
Ultimately both Sustainability and ESG refer to the same set of ideas, just with different audiences. The entire system can be thought of as a three-legged stool. The seat of the stool is the business, government, or community. This is held up by the three pillars of Society, Environment, and Economy (People, Planet, Profit), which is all bound in place and supported by Governance (the rules and regulations to ensure transparency and ethics). If any one part of the supporting structure is removed, the long-term usefulness of the “seat” is questionable.
Here’s my crude sketch of my model for this explanation:
Please do not judge me based on my artistic skills. I don't claim to be a great artist, but hopefully I have painted a clear picture of what Sustainability is!
Thank you for joining me for this Sustainability 101 explanation. There is a lot of ground to cover in this series, so please join me for upcoming articles on subjects like climate change and science-based targets, the UN’s Sustainable Development Goals, and solutions like RECs, carbon offsets, and carbon taxes.