Corporate sustainability can be defined as the ability of companies to integrate financial and non-financial decisions into their operations based on interactions with stakeholders. The underlying premise of corporate sustainability is to view the holistic nature of serving the evolving needs of stakeholders.
In the past, sustainability was viewed primarily related to the natural environment, but both society and firms have changed over time, which has resulted in firms viewing sustainability as an integral part of a corporate ecosystem where all relationships are interrelated between firms and stakeholders.
It is critical for business leaders to understand that society demands and expects accountability and transparency from firms. The value of a firm being fully committed to sustainability is threefold. First, a very positive engagement with their stakeholders creates a positive image and reputation for the firm. By embracing the concepts related to sustainability, such as social, environmental, supplier, community and employee focused programs, a firm is rewarded with a positive reputational halo where their stakeholders have a very positive impression on the firm.
The second benefit is that the firms are able to attract and retain highly motivated and committed employees. In the time of the Great Resignation, firms are realizing that employees will not tolerate a toxic culture and will seek refuge in firms that embrace a positive, supportive culture.
A third factor can enhance the firm’s competitive advantage. The ability to address the needs and expectations of its stakeholders from a sustainable perspective gives the firm the opportunity to strengthen its level of differentiation from its critical competitors.
This competitive separation is based on three factors: more effectively serving the needs of its stakeholders as compared with its competitors; having a strong positive reputation which enhances the desire of customers to buy products from the firm; and the attraction of highly creative employees, which results in the development of innovative strategies that are superior to the strategies of its competitors. A strong positive reputation also enables firms to establish strong brand recognition and brand loyalty. This positive corporate reputation makes it easier for firms to expand their market presence into new markets, new industries and new countries.
Sustainability is an all-encompassing concept for an all-encompassing world. Auburn students need to understand that addressing sustainability in all of its forms is imperative for firms and society to thrive in the future.
This is the fundamental reason why I discuss sustainability, at length, in both my undergraduate and graduate level classes. Our fundamental belief that sustainability should be taught in other organizations of higher learning is why my co-author, Sarah Stanwick, and I have written a textbook on corporate sustainability titled “Corporate Sustainability Leadership.”
Peter Stanwick
Associate Professor
Department of Management
