The ethical implications of lacking sustainable business practices

Blog Post image with text reading The ethical implications of lacking sustainable business practices

Global, Nov 15, 2023

Written by Charissa Jaganath, Head of Responsible Business

Ethics considers how individuals live and operate within acceptable parameters without causing harm to others or depleting the environment around us, and over the years, this has evolved to include corporate organisations.  A sustainable society is one that lives within the carrying capacity of its natural and social systems, but as the impact of businesses on the environment has increased dramatically, that balance for a sustainable society has tipped. 

As sustainability is swiftly becoming a business-critical issue, it is also starting to enter into the business ethics equation. Reports have found that just 100 companies are responsible for a staggering 71% of the world’s greenhouse gas emissions. The actions of a single business or individual may seem small in a vacuum, but cumulative positive impact can be achieved as business leaders increasingly prioritise environmental sustainability. Trends indicate that customers continue to seek out organisations that prioritise a sustainable approach, which begs the question: what will happen to organisations that decide to wait rather than act now? 

Sustainability is a growing area of concern for consumers, in particular for younger generations. 82% of Gen Z have expressed concern about the state of the planet, with 72% already changing behaviours to reduce their impact on the environment. As this generation enter and rise through the workforce, they are specifically looking for organisations whose values align to their own. According to research from IBM, 56% of Gen Zs believe that business should take responsibility for environmental issues and 72% believe that companies should be held accountable for their environmental impact. Those organisations that do not have a well-established, considered sustainable approach will risk issues with employee retention and attraction in the future. 

Customers are equally aware of their own carbon emissions and are looking for suppliers that are taking a similar stance when it comes to reduction, a factor that industries are already starting to recognise. Our recent CIO Report, which surveyed 1000 CIOs across the globe shows that the biggest motivators for driving sustainability were cited at: 

  • Market competition (55%)
  • Customer attraction (52%)
  • Employee expectations (45%)
  • Customer retention (45%)

The importance of having a strong sustainable business practice is clear. Over the last 10 years a range of meta-studies have empirically validated that a strong ESG performance has a direct correlation on financial performance. Organisations that don’t engage with sustainable business practices now not only risk loss of employees and an inability to attract new talent, they also risk losing customers. 

From an ethical standpoint, ignoring the climate crisis is foolish. Without a socially and ecologically functioning planet, businesses will not be able to survive. Seeing sustainability purely as a transaction-based initiative fails to recognise that environmental investment will deliver long-term value, and is not designed for short-term gain. 

Businesses that fail to act now will find it far more difficult to do so in the future, with the combined effects of flailing employee retention, customer pressure and regulatory impacts causing businesses to suffer. Businesses have a moral obligation to consider their business practices and the sustainability thereof; and while sustainable business practices may not deliver immediate bottom-line benefits, those that take an ethical, holistic approach will create more resilient and successful businesses in the long term as a result. 

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