Sustainability is becoming a buzzword, the hype around ESG, SRI, and SDG is growing. What stays behind them? Sustainability became a global focal point. Firstly, because of the growing awareness of climate, social and economic changes. Secondly, because of the flow of capital and the UN agenda.
Is sustainability broader than Environmental, Social, Governance?
Sustainability is broader than we used to think. The most common definition of sustainable development comes from Gro Harlem Brundtland, a former Norwegian prime minister who served as a Chairman of the World Commission on Environment and Development. In the Report “Our Common Future,” published in 1987, he outlined sustainable development as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.”
Yet, the Report of the World Commission on Environment and Development addressed primarily environmental issues. The link between sustainability and the environment is so strong that the ESG notion came up to bring out the whole spectrum of topics that sustainability covers: environment, social, and governance.
“When we speak about sustainability, we think of the convergence of the economic, environmental and social aspects” – Francesco Matteucci, the program manager at the European Innovation Council and SMEs executive agency, stressed during the Digital Roads to Sustainability. – “So, where these three things merged, that is the sustainability.”
Sustainable development goals
In 2015, the United Nations adopted the 17 Sustainable Development Goals. The document aims to make universal the concern about the well-being of people, planet, society, and economy and create a blueprint to achieve a better and more sustainable future.
The 15-years time horizon has been assumed. In fact, this global development framework is widely known as Agenda 2030.
The list of Sustainable Development Goals targets and indicators for each of 17 SDGs was published in UN resolution on 6 July 2017. It allows to build operative actions plans and measure the progress and results. ESG, SRI, and SDGs remain only buzzwords if it is impossible to determine the compliance rate.
From SRI to ESG
The growing awareness of the impact businesses have on the entire ecosystem leads to considering it in terms of responsibility.
In 1970 Milton Friedman started his famous article for the New York Times with these words: “When I hear businessmen speak eloquently about the ‘social responsibilities of business in a free‐enterprise system,’ I am reminded of the wonderful line about the Frenchman who discovered at, the age of 70 that he had been speaking prose all his life”.
Milton claimed that the responsibility of every business is to maximize its profit ‘within the rules of the game.’
Today, 50 years later, his approach remains valid, but there is a growing call to integrate it with measurable indicators of responsible and ethical behaviors.