What is Corporate Sustainability in Business?

You’ve probably heard the terms “corporate sustainability,” “corporate responsibility,” and “ESG” a lot over the past several years. Nearly two decades after responsible investing’s initial boom, these concepts have evolved so much that we use them interchangeably.

But they’re not the same — and knowing the differences is essential.

We put together this guide to help you make sense of the corporate sustainability terms you hear regularly:

• Helpful definitions
• Real-world examples
• A look at the future of ESG
• The technologies helping businesses better manage their sustainability efforts

What is Corporate Sustainability?

Corporate sustainability is an approach to business that prioritizes environmentally sustainable practices while supporting economic growth. It helps companies to create long-term value for everyone, from employees and shareholders to customers and global citizens.  

Often, corporate sustainability manifests in activities like:

• Carbon emissions and energy consumption monitoring
• Tracking the company’s effect on climate change 
• Promoting sustainable practices throughout offices
• Investing in renewable energy 
• Developing marketing for customer and partner involvement in green initiatives
• Joining the larger sustainability conversation with other companies

Corporate sustainability does not stand alone. It’s part of more extensive environmental, social, and governmental (ESG) standards.

The Three Pillars of Sustainability

Before broadening the scope of values-based business, corporate sustainability satisfied the “E” (environmental) in ESG. Corporate responsibility (a term some now consider outdated) represented the “S” (social). Compliance-related functions comprised the “G” (governance). Businesses compartmentalized these concepts, separating earth-friendly initiatives from people-friendly ones. 

But can corporate sustainability goals be achieved without considering their broader effect? Can a factory’s emissions be regulated without consideration for the people who live nearby? Can a company continue to grow while disregarding its employees' and customers' well-being and values? 

Many companies often focus too much on one pillar of sustainability, losing sight of their interdependency. The sustainability pillar on which they put the most weight is often driven by marketplace buzz. But companies should determine what’s most important for their organization by assessing three dimensions of their business:

• Their industry
• Their geography
• Their size

Instead of facing pressure from outside influences (leading to things like greenwashing), these three characteristics help companies determine what areas are most important to focus on. From there, they can identify the initiatives and sustainability goals they’ll allocate resources towards. 

Goal assessment also prompts company leaders to think about double materiality or their impact on people and the planet and vice versa. It obliges organizations to think beyond financial reporting and evaluate their societal and environmental impact, promoting more sustainable business practices.f 

Around the globe, entities require double materiality assessment and more rigorous reporting than ever. The Corporate Sustainability Reporting Directive (CSRD), established in 2021, now requires companies in the European Union to report their corporate sustainability and complete a double materiality assessment to identify how a company’s actions affect its financial value and the world at large. 

How Corporate Sustainability Impacts the Rest of the Business

Corporate sustainability is not only an executive-level issue. Each employee's job — from facilities to finance — is to work toward the company’s sustainability goals collectively. Finance and accounting are responsible for budgeting. Governance, risk, and compliance teams control overspending. Supply chain teams ensure the company’s sustainability initiatives reach every partner and provider. 

This means sustainability strategy doesn’t reside solely in the c-suite. It must be integrated across the business, with senior leaders overseeing the initiative and reporting to the board. Any company taking its corporate sustainability initiative seriously takes on something transformative that requires change throughout the business.

Real-World Examples of Corporate Sustainability Reporting Done Right (and Wrong)

The companies following sustainable business practices prioritize transparency and action over their corporate gains or perceived virtue. These companies abide by recognized standards (like the CSRD or IFRS) instead of their own. They set SMART goals (specific, measurable, attainable, realistic, and time-bound) that drive tangible impact instead of touting fancy yet meaningless marketing campaigns. Companies like Cognizant or Novo Nordisk in Denmark are examples of ESG champions, especially in terms of effective reporting. Check out Cognizant's ESG case study to learn more.

Which companies are going about corporate sustainability reporting the wrong way? Put plainly, companies that make up their own accounting standards. When organizations play by their own rules, they diminish trust between themselves and their customers, partners, and the larger world. Third-party assurance objectively verifies a company’s good standing and provides an objective measure by which to compare other entities. 

Check it out: See Workiva’s verification statement. 

ESG: The Future of Corporate Sustainability Reporting

ESG has its challenges. The term has become politicized in recent years, garnering debates from investors and politicians alike, especially regarding climate action. But regardless of the buzz in the market, the core issues that ESG addresses will remain. They won’t go away just because a company develops a new initiative or slaps a new name on the same idea. Regardless of what we call it, these issues will remain core to how companies survive in the market — and even attract top talent.  

Corporate sustainability programs (or lack thereof) have been shown to affect a company’s ability to attract new hires. Today, 83% of workers believe their employer doesn’t do enough to be a more sustainable business and tackle climate change. Further, 65% say they’d rather work for a company with robust environmental policies.

Technology’s Role in Sustainability Reporting

As ESG matures, so does the technology surrounding it. Companies must develop their ESG tech stack based on industry and company-specific needs. Oil and gas companies, for example, may require health and safety technology in the field, while consumer goods look to supply chain management software. 

However, as companies accumulate these purpose-built systems, their data will increasingly disperse, making it more difficult to accurately and compliantly report. 

That’s where Workiva shines. Workiva brings all the data from the ESG tech stack into one view so it’s controlled, auditable, and accessible by key stakeholders. It also makes sustainability reporting more straightforward than ever, with the ability to disclose environmental stewardship, social responsibility, and corporate governance in an accurate and executive or investor-ready format. Investors then use the reports to assess the best places to invest with less financial risk. 

There’s no telling how sustainability in business will evolve next. Regardless, companies that can address the core challenges that corporate sustainability and social responsibility initiatives address — while maintaining transparency and compliance — will thrive. 

Try Workiva yourself! Request a demo to see how Workiva makes corporate sustainability easier with transparent ESG and CSRD-compliant reporting.