“‘Green’ promises without concrete action are a form of greenwashing”
What makes a business sustainable? Not by publishing extravagant and thought-provoking marketing materials, or by announcing that it aims to reach net zero greenhouse gas emissions by the year 2050. ‘Green’ promises without concrete action are a form of greenwashing — a deceptive marketing tactic that portrays a company or product as more sustainable than it actually is.
A business also cannot be considered sustainable by highlighting its environment-related projects in corporate social responsibility (CSR) programs. While good-intentioned, these projects are generally one-off and short-term, and are often initiated to enhance or preserve corporate reputation.
A sustainable business, at its core, refers to one that is able to sustain its operations for a long time without causing significant harm to society and the environment. Sustainable businesses are businesses that integrate employee well-being, environmental protection, and good governance throughout their operations. While profit remains a main goal, sustainable businesses aim to balance this by not making profit at the expense of people and the planet. In short, for sustainability, there should be checks and balances when it comes to profitability.
The challenge is that sustainability continues to be misunderstood as a business practice. Generally, its function is being siloed within CSR and sustainability departments, when in reality it must be a core business principle, similar with financial management, strategy, and the company’s mission and vision, among others. It is not enough to hire a handful of individuals to lead an entire company’s sustainability initiatives. Sustainability is a company- or groupwide effort that requires the upskilling and continuing education of all kinds of employees.
In terms of high-level and strategic decision-making, sustainability is also usually treated as an afterthought in board meetings, and as supporting information during annual shareholder meetings. While company boards are starting to recognize its value through the integration of sustainability performance with executive compensation, these companies are currently a minority. On the other hand, while certain sustainability information can be found in annual reports, sustainability reports, or integrated reports, this is only half the story. It pays to read through these disclosures with a grain of salt.
One of the reasons why sustainability is widely misunderstood is that it does not lead to short-term profit gains unlike current financial models. If a company were to significantly shift its strategy into a sustainable one, this means they are in it for the long haul and are willing to sacrifice several years of profit maximization. However, not many companies would be willing to do this, because the current system we operate in does not necessarily incentivize sustainable practices.
At the current rate, being a truly sustainable business seems like a sacrifice that only a minority of companies can afford to make. However, hope is never lost. Governments like in the Netherlands, Germany, Denmark, and Singapore incentivize sustainable business practices through tax credits, grants, and loans, focusing on a variety of initiatives such as decarbonization, renewable energy, and circular economy, among others. In these countries, being sustainable is being rewarded rather than treated as a sacrifice.
Essentially, we cannot rely on the private sector alone. While this may sound like a cliche, the ‘missing link’ in sustainable business is the proactive and holistic involvement of the public sector. In the Philippines, while we have already adopted the guidelines of the International Sustainability Standards Board or ISSB, we still have a long way to go before green initiatives truly get the support they need.
In the European Union, sustainability regulations are moving fast, and such provisions have a direct impact on the day-to-day activities of both European companies and Europe-based foreign companies. There is something that our own government can learn from this.
In the meantime, we must remain hopeful, because that is the whole point of sustainability. Losing hope is not an option, because sustainability is important not just to ourselves, but also to our children’s children and beyond.
Ian Benedict R. Mia is a part-time lecturer at the Department of Management and Organization of De La Salle University (DLSU). He works full-time as a Sustainability Researcher at one of the top Sustainability Ratings firms globally, specializing in the industries of Marine Transportation, Industrial Support Services, Commercial Support Services, and Trading Companies and Distributors. He can be reached at [email protected].
