Sustainability in Business: More Than Just the Latest Trend

Nowadays, people care more about how businesses impact the planet, and it’s changing the game for investors, customers and employees alike.

By embracing sustainability in business, companies are doing their part to lower their carbon footprint and preserve natural resources while reaping the benefits of a growing demand for eco-friendly and socially responsible products and services. It’s not just good for business – it’s good for the planet too.

As a result, companies of all shapes and sizes are keen to bring in people with knowledge and experience in ESG, which can be developed through completing qualifications like an MBA. Keen to learn more and boost your employability? Read on.

ESG is the sustainability triple-threat every business needs to know about

So, what is sustainability in business? Usually, when people mention this concept, they’re talking about ESG. ESG is a set of principles encompassing three main points:

• E stands for ‘environmental’. It covers things like reducing waste, electricity usage and carbon emissions.
• S stands for ‘social’. It covers things like working conditions, diversity and inclusion.
• G stands for ‘governance’. It’s all about leadership, data security, privacy and legal compliance.

The concept of ESG has been around for a while now, and it has evolved over the years.

The term was first coined in 2006 in the United Nations’ Principles for Responsible Investment (PRI) report. It was a set of criteria used to help companies on their journey towards more sustainable investments. Since then, the focus on ESG has grown, with more businesses taking steps to prioritise sustainability.

Why is sustainability in business important? While it’s focused on doing what’s right for the people and the planet, there’s an additional benefit.

From a corporate perspective, companies that prioritise ESG practices are more attractive to investors. Stakeholders perceive these companies as forward-thinking, setting themselves up for long-term success and demonstrating greater value.

CSR vs ESG: What’s the difference and why does it matter?

Another term that gets thrown into the mix when discussing sustainability in business is CSR. Let’s break down this acronym and explore what sets it apart.

CSR definition

CSR stands for ‘corporate social responsibility’. It’s a framework that companies use internally to guide their sustainability efforts. It’s a way to ensure they’re doing their part to minimise their negative impact on the world. It can include reducing waste, implementing sustainable business practices and investing in community programs.

ESG definition

ESG is used to assess a company’s sustainability practices by external stakeholders like investors. ESG factors are becoming increasingly important for investors who want to ensure they’re investing in companies that positively impact the planet.

So, what’s the difference?

If you think the two sound similar, you’d be right about that.

Both are key elements of business ethics and are used as tools to measure sustainable practices. The key difference is that CSR measures sustainability efforts internally, whereas external stakeholders use ESG to assess a company from the outside.

While ESG is a relatively new concept, it’s rapidly gaining popularity and might even overtake CSR to measure sustainability. But why is ESG so popular? It comes down to a few key reasons.

Benefits of becoming a sustainable business include:

• Being seen as a responsible corporate citizen
• Better stakeholder relationships
• More investment opportunities
• Attracting highly qualified and motivated employees
• Long-term success
• Developing a loyal base of customers
• Utilising innovative practices

ESG is the power tool for building trust in modern business

In today’s corporate landscape, trust is everything. Without trust, there are no customers and investors, and businesses inevitably fail.

If you want to build trust with your customers and stakeholders, ESG needs to be top of mind. Just ask Jon Michail, founder and group CEO of Image Group International, who has worked with over 500 businesses and government organisations. He coaches them on how to build trust and become more ethical companies.

“ESG principles were essentials before they became trendy,” Jon says. “If you’re not thinking about the environment, social issues and governance risks in everything you do, then what are you doing? It’s important to have a good ESG policy that aligns with your values to become trusted in the marketplace.”

But let’s be real. Building trust isn’t easy. It’s not enough to simply talk the talk about sustainability in business — you’ve got to walk the walk.

“It’s essential to live your values,” Jon continues. “ESG covers so many different areas, so to get it perfect requires decent resourcing and investment.”

Companies that are investing in ESG policy are seeing the benefits. Take BHP, for example. This large mining company was once seen as anti-environment, but today they’re considered leaders in the field. A big part of this has been their investment in ESG initiatives.

Finding the harmony between financial gains and ESG priorities

Making money while prioritising ESG might seem like opposing goals, but the two can go hand in hand. With good leadership and a shift in mindset, companies can achieve both financial success and sustainability in business.

“There are a few challenges organisations face when considering ESG,” says Jon. “A lot of people still carry the ‘she’ll be right, mate’ attitude. It’s an easy mindset to have when you’re trying to make money for stakeholders and shareholders.”

According to Jon, a shift towards ESG and sustainability requires real leadership, conviction and a willingness to prioritise values over purely financial goals.

“It’s not easy when you’re trying to make money for shareholders and stakeholders,” he says. “It takes a powerful leader to say, ‘You know what? These are our values. We believe in this long-term.’”

Jon also notes that a full ESG policy is more achievable for medium to large organisations.

“Smaller companies might have a hard time because they haven’t always got the resources,” he explains. “You need a lot of qualified people to sustain it, like people with an MBA specialising in ESG. But those people are more likely to work for medium and large companies.”

While it might be hard for small companies to develop a fully-fledged ESG policy, Jon emphasises that thinking about sustainability in business is important for everyone.

“Companies should focus on creating value beyond the financial returns. If we keep working in ways that destroy our environment and society, eventually, we’re all going to pay for it.”

An MBA can help you become a great ESG leader

It takes great leadership, collaboration and innovation in business to make waves in ESG.

“The companies that do ESG well have strong leaders at the top that believe in sustainability,” says Jon. “They’re willing to put themselves on the line for something they believe in while simultaneously having the knowledge to know when something’s a good business decision.”

Jon explains that completing a business sustainability course or MBA means you’re one step closer to becoming a great ESG leader.

“If you’ve got qualifications in ESG then it’s definitely a tick next to your corporate box. Studying ESG as part of your MBA is excellent for your personal branding.”

Consider studying an MBA that includes a unit on sustainability

Many universities in Australia include a sustainability unit in their MBA courses to create business leaders who are socially and environmentally conscious.

For example, the online Master of Business Administration Sustainable Leadership course from Charles Darwin University contains the Global Market and Sustainability Strategy unit. This unit covers essential concepts, principles and models that contribute to creating customer value through sustainable products and services in a global context. You can also learn how to develop marketing plans for organisations using sustainability-focused marketing models and theories.

Griffith University's MBA offers the Sustainability and Systems Thinking unit, which aims to develop your critical thinking and problem-solving skills to find new methods to utilise natural resources effectively to support sustainability.

You can find more MBA programs with sustainability-focused units below.

Accelerate your path to ESG leadership with an MBA

Sustainability in business should be part of every company’s long-term strategy. As we’ve learnt, this is only possible with the right leadership.

But why study an MBA? An MBA teaches you how to become a forward-thinking leader with advanced skills in management, strategy, communication and more. This combination makes MBA graduates excellent candidates for ESG-focused roles. If you think this is the right path for you, then take the first step and explore various MBA courses available in Australia.