People, Planet and Profit – No need to Prioritise one over the Other
People, Planet and Profit – No need to Prioritise one over the Other
Who would have thought that generating profits and saving the planet were not mutually exclusive!
In some articles on sustainable development, business operations and generating profits are seen as being negative, whereas they are essential elements to the world achieving the UN Sustainable Development Goals in relation to the economy, environment and human rights.
The world needs people with big ideas, new innovations, and those who are prepared to risk their own and other’s capital to build enterprises. Businesses need people, and employment at all levels enables individuals to start to meet personal goals for themselves and their families. Manufacturing needs production equipment, raw materials, packaging etc, and so a supply chain is created. All businesses need consumers to enable their output to be purchased and consumed, and so the cycle is repeated.
Where a business is profitable, it can reinvest and grow over time, for the benefit of all stakeholders involved, including the communities in which they operate.
The challenge that existing businesses currently face is making their systems and processes sustainable, as for the vast majority, this was not a requirement when the business was originally established, and the systems may not have improved sufficiently over time.
While the company’s Board should lead and encourage this process, no single person in the organization is responsible for recommending and implementing sustainability changes, as all internal and external stakeholders should contribute to this.
Implementing change may impact the profitability of the business in the short term, and may also impact individual stakeholders, but all changes must be implemented for the dual purpose of improved sustainability and the business’ ability to generate profits over the long term.
For example, if human rights are one of the business’s material topics, while increasing payments to workers in your value chain may immediately decrease business profits, the individuals and local communities will benefit from the additional funds circulating in their immediate economy, resulting in a stable workforce. The flow on effect for the business is reduced recruitment costs, less production delays and related supply chain disruptions the business could otherwise have faced.
Charity and Not for Profit organisations are not exempt from reviewing their sustainability practices, eventhough they may not have a profit motive. Even with the best of intentions we can cause harm, so no venture is exempt – sustainability goals impact all.
Where to start? With a conversation to all stakeholders, internal and external, to advise that the business is taking sustainability seriously, and call for suggestions to identify impacts and solutions. A multi-stakeholder Sustainability Committee may be the next step to commence the change process.
Reviewing processes and systems an organization currently has which impacts their external environment, and making changes to our internal environment to reduce this impact, is part of the perpetual sustainability journey.
The sooner you start, the sooner you benefit, and for many Australian businesses, starting in no longer a strategic choice, or competitive advantage.
Sustainability Reporting is now Mandatory for Large Entities
Since this article was originally written, a legislative shift has occurred. The Australian Sustainability Reporting Standards have issued S1 General Requirements for Disclosure of Sustainability-related Financial Information (voluntary standard) and S2 Climate-related Disclosures (mandatory standard) with the aim of improving the quality, comparability and consistency of sustainability reporting.
Effective 1 January 2025, sustainability reporting is now mandatory for some larger businesses, based on the size of the business entity (corporate size, emissions total or asset threshold), with the phase in for other businesses as follows:
Group 1 Large Entities - financial years ended on or after 1 January 2025 These are generally companies already lodging annual reports with ASIC
Group 2 Mid-tier Entities - financial years ended on or after 1 July 2026
Group 3 Smaller In-scope Entities - financial years ended on or after 1 July 2027
Note, while small and medium businesses may not meet the Group 3 threshold tests, they may still be required to undertake their own sustainability measurement and reporting processes to enable their emissions to be reported by their larger customers and suppliers under 'Scope 3' emissions.
While global political sentiment is shifting away from prioritising the planet, it is more important than ever that business continue with the innovation that has come from it's focus on balancing current profitability with future prosperity. While the world may struggle to meet the Sustainable Development Goals by 2030, business and individuals still have a significant role in making a differency to the earth's climate trajectory.
