Companies are under great pressure to make sustainability a part of their core purpose because of climate change. According to the UN IPCC report, decisive bold steps are required to be taken in the coming decade in order to avoid the catastrophic consequences of runaway climate change. In fact, the World Economic Forum’s report has highlighted that the world will suffer from social instability and environmental risks such as extreme weather events, biodiversity loss and ecosystem collapse in absence of decisive actions against climate change.
In order to deliver a better future to the coming generations, the global challenges that need to be addressed are summarised in the UN’s Sustainable Development Goals. Such challenges will significantly reshape the economy and society and ultimately determine the viability of a business.
In order to address these challenges, coordinated, systemic response across civil society and both the public and private sectors is required. However, the lack of adequate global legislation and standards to provide clear rules of the game for a viable global economy along with growing nationalist and populist politics stands in the way of smooth global coordination. And while capital markets are waking up to these global challenges, lack of coordination causes them to operate in largely short-sighted and dysfunctional ways. The misallocation of capital results from a failure to properly integrate environmental and social costs into companies’ profit and loss statements.
In such a crisis situation, businesses can no longer leave it to markets, governments or a relatively weak civil society to respond to these challenges. It’s in businesses’ interests to take an urgent and proactive role in delivering the transformational change required. In order to ensure the sustenance of a business for a long term basis, it is important for them to adapt to a viable future. The businesses need to demonstrate that they are a force for good.
Most companies feel compelled to keep profit as the primary goal, based on the assumption that this is compatible with continued access to the talent, capital, customers and trust they need. However, they are increasingly expected to recover the mindset that puts people and society at the heart of business success – and reflect this in the core of the business.
For companies to thrive for the long term, purpose and sustainability must go hand in hand. Because that is the only way a company will be able to make a profit, without making it its core purpose.
Article Credit: thecsrjournal