In a world where new climate challenges are presented daily, corporations have started considering what that means for their operations. As a result of growing environmental concerns and changing consumer preferences, being a “good business” no longer solely equates to profit maximization. Economic growth is no longer the only metric of success in a world constantly facing new threats and an uncertain future.
When most people hear the term “sustainability,” their first thought is likely the environment. While the word is most commonly used to describe environmentally conscious actions and policy, it more directly refers to longevity, specifically what it takes to maintain a practice over time. To be sustainable is to think in these terms. This includes not just the environment, but all other factors contributing to a business’s ability to function. Sustainability is a contentious issue, and global progress in the field is far from uniform. This poses the question of whether true corporate sustainability is possible, and how businesses can strive for it.
Traditional business models center a company’s concerns around maximizing profit, leaving little room for other considerations. Recently, corporations have deviated from this and have begun entertaining corporate sustainability and corporate social responsibility (CSR) practices. These models emphasize being conscious of business practices. They encourage economic, social, governmental, and environmental sustainability. CSR refers to the degree to which corporations act as responsible corporate citizens. A core principle of the model is that there is more a business can offer society than money. This suggests that all of these areas must be able to endure and exist to benefit society, as well as the many aspects of the business itself. Numerous stakeholders influence a business’s efficiency and are directly affected by its practices. Corporate sustainability takes them all — from employees to customers to residents living near facilities to investors — into account. This model is about maintaining welfare across multiple sectors and for these stakeholders.
As mentioned, these models are subject to different interpretations and degrees of implementation. Sweden, for instance, is considered a leading force in corporate sustainability. Nearly 60% of the nation’s economic growth comes from renewable energy sources, and it has sat within the top ten of the Environmental Performance Index for over a decade. The country is striving towards several ambitious climate goals, including 100% renewable energy and a fossil-fuel-free system by 2045. Sweden’s corporate sustainability policies are based on what is known as the Swedish Green Model — Sweden’s plan for nationwide green growth, which integrates business and sustainability. The Swedish government strives for green growth and economic adaptation to continue societal growth and manage environmental impacts simultaneously.
The primary legislation tool used to accomplish these efforts has been the Swedish Environmental Code. This set of regulations aims to promote sustainable development at multiple levels throughout Sweden, from individual life to business practices. The Annual Swedish Accounts Act targets businesses and requires them to provide annual reports on their ESG policies and progress. Sweden has also extended the EU’s Corporate Sustainability Reporting Directive (CSRD) to all large companies and numerous additional listed corporations; these businesses must provide more specific ESG reports, including detailed accounts of environmental policies, treatment of employees, human rights, and anti-corruption.
Through these policies, companies in Sweden are required to integrate sustainability considerations into their business models. As a result, ESG has become a shared value for companies across the nation. A strong example is Ikea, a Swedish company committed to climate targets in line with the UNFCCC’s 1.5-degree goal for maximum global warming. All of Ikea’s facilities are powered by renewable energy, and 99.5% of the wood used for its products is either recycled or Forest Stewardship Council certified. This delivers a strong statement that demonstrates Sweden’s dedication to ESG.
China presents another case example of how corporate sustainability is playing out. In recent years, China has developed a wider range of sustainability requirements for its companies. Similarly to Sweden, China is a proponent of green economic growth and development. The Civil Code, implemented in 2022, outlines a series of behaviours and policies for systemic change concerning sustainability. In February of 2024, stock exchanges in China released new guidelines for sustainable development reporting.
Additionally, China’s markets have been increasingly opened to foreign investment, and corporations have begun reaping the benefits of voluntarily providing sustainability reports. Between 2009 and 2018, voluntary ESG disclosures increased from 45% to 85% among companies in the Shanghai-Shenzhen CSI 300 Index. These are among the tangible improvements in the nation’s ESG policy.
That being said, there is a lack of standardized metrics by which Chinese companies can measure their sustainability and a trend of nondisclosure when it comes to ESG-related practices. For example, the fast-fashion company Shien has faced continued scrutiny for human rights issues, environmental impacts, and lack of transparent supply chain management. Corporations have often prioritized economic growth over the environment, a value that has proven difficult to shift. This sheds light on a key problem area: accountability. Without these policies, corporations have little incentive to change their practices to account for future impacts. Conversely, Swedish companies strictly adhere to frameworks like that of the Global Reporting Initiative, which provides guidelines for “responsible” business operations; these frameworks are widely accepted.
These cases exemplify the differing interpretations of corporate sustainability worldwide. Whether truly sustainable corporate practices are achievable is subjective, as the concept is defined differently in different places. The issue is political and remains a subject of ongoing debate. There is certainly a path to sustainable business; reaching it is a matter of national standards and regulations.
This is an article written by a Staff Writer. Catalyst is a student-led platform that fosters engagement with global issues from a learning perspective. The opinions expressed above do not necessarily reflect the views of the publication.
Edited by Isaac Yong
