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Home > Corporate Governance Checklists > Creating a Sustainable Development Policy

Corporate Governance Checklists

Creating a Sustainable Development Policy


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Checklist Description

This checklist is about creating a sustainable development policy.

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Definition

The Brundtland Commission coined what has become the most often quoted definition of sustainable development as being development that “meets the needs of the present without compromising the ability of future generations to meet their own needs.”

A sustainable development policy is a model of resource use that aims to meet human requirements while preserving the environment, so that these needs can be met not only in the present but also for the indefinite future. It is a means of trying to resolve the conflict between various competing goals, and it involves the simultaneous pursuit of economic prosperity, environmental quality, and social equity.

Businesses are becoming increasingly interested in sustainable development, and many companies are taking steps to ensure that they conduct themselves in a socially responsible manner. Some are even introducing codes of conduct for their suppliers, to ensure that other companies’ policies or practices do not tarnish their own reputation.

The positive outcomes that can arise when businesses adopt a policy of social responsibility include:

  • enhanced brand image and increased sales and customer loyalty;

  • greater productivity and quality;

  • improved ability to attract and retain employees;

  • possible improved financial performance, with lower operating costs;

  • reduced regulatory oversight;

  • access to capital;

  • product safety and reduced liability.

The payback to the community and the general public includes:

  • improved charitable contributions;

  • more employee volunteer programs;

  • business involvement in community welfare, education, and employment programs;

  • product safety and quality;

  • greater material recycling;

  • better product durability and functionality;

  • greater use of renewable resources.

Whereas traditional business models were all about profit, sustainable development recognizes that without happy, healthy people to staff a business and the natural environment able to sustain those people, the supply of resources for the business is simply unsustainable over the long term. Therefore, environmental management tools—including life-cycle assessment and costing, environmental management standards, and eco-labeling—are now commonly integrated with business plans in enterprises worldwide.

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Advantages

  • “At the most fundamental level, the sustainability of human societies is a function of the relationship between ecosystem energy production, human energy expropriation and the ecosystem transformations that result from human withdrawals of energy and matter and additions of waste and pollution.” (Freese, 1997).

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Disadvantages

  • Although it is possible to replace some natural resources, it is unlikely that it will ever be possible to replace ecosystem benefits, such as the protection provided by the ozone layer.

  • The evolutionary loss of some biodiversity is irreversible.

  • The use of fossil fuels, for example, is not sustainable. But how does society plan to eliminate the use of petroleum products?

  • Under sustainable development, all resources must be regulated and controlled in order to meet the needs of the present generation as well as those of all future generations. How do you plan to regulate and control the use of resources by all individuals, families, and businesses?

  • Sustainable development is for rich nations. When you don’t have enough to eat, you don’t worry about sustainability.

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Action Checklist

  • If you are considering integrating environmental projects with business plans, carefully study the potential business risks and obtain as much information from as many sources as you can before committing to an expensive process.

  • Encourage an environment of openness about the kinds of risk facing the business from sustainable development policies. Some risks are obvious, but managers of individual business units may sometimes know more about hidden risks.

  • Involve key business stakeholders in the evaluation of sustainable development and the alternative solutions.

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Dos and Don’ts

Do

Don’t

  • Don’t make the mistake of being attracted to sustainable development policies without being sure that the conversion process has been thoroughly understood.

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Further reading

Books:

  • Mawhinney, Mark. Sustainable Development: Understanding the Green Debates. Oxford: Blackwell Publishing, 2002.
  • Organisation for Economic Co-operation and Development (OECD). Sustainable Development: Critical Issues. Paris: OECD, 2001.
  • Schmandt, Jurgen, and C. H. Ward. Sustainable Development: The Challenge of Transition. Cambridge, UK: Cambridge University Press, 2000.

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