The past several years have witnessed a fundamental shift in how many people view sustainability worldwide. Moving forward, understanding—and centering—the three pillars of sustainability may be crucial to thriving as a business.
While there are other factors at hand, it seems the Covid-19 pandemic provided an inflection point for many individuals. A 2021 study spanning 24 countries found 58% of adults are more mindful of their environmental impact than ever before as a direct result of the pandemic. Furthermore, 85% are willing to change their personal lives to combat the planet’s environmental, economic, and social challenges.
These three pillars of sustainability may present an opportunity for small businesses that want to boost customer loyalty and adopt eco-friendly practices. Let’s unpack why centering these three pillars of sustainability might be important when running your small- to mid-sized business in 2024—and into the years to come.
What Are the Three Pillars of Sustainability?
Focusing on three pillars of sustainability can help reduce—and, with enough concerted effort, perhaps even reverse—human impacts on the planet. These include environmental, economic, and social elements that go beyond individual actions.
Environmental sustainability involves reducing a company’s environmental impact by minimizing pollution, conserving resources, and leveraging renewable energy.
Meanwhile, economic sustainability traditionally focuses on a company’s financial performance over time. It helps ensure the company remains profitable, has a stable cash flow, and can invest in new opportunities.
Finally, social sustainability focuses on how the company interacts with its employees, customers, suppliers, and other stakeholders. This includes creating an ethical workplace culture and promoting diversity. Social sustainability also encompasses how a company contributes to society through philanthropy and community engagement.
Planet: The Environmental Pillar of Sustainability
Of the three pillars of sustainability, the environmental pillar is perhaps the most immediately understood. Its primary concern is protecting, conserving, and managing the natural environment.
The environmental pillar seeks to reduce degradation through sustainable waste management, pollution control, energy efficiency, and conservation. It promotes the use of renewable resources and encourages recycling and reuse to reduce resource consumption.
The environmental pillar also promotes eco-friendly transportation solutions such as public transport, cycling, and walking. It encourages using clean energy sources such as solar, wind, and geothermal power for electricity generation.
The goal is to reduce emissions from fossil fuels that contribute to global warming, climate change, and other environmental issues. But sometimes, we don’t notice the environmental impact our processes have unless they’re right under our noses.
Focusing on environmental sustainability means being mindful of your business’ impact up and down your supply chain. This might entail a conscious effort to reduce your carbon footprint, packaging waste, and water usage by benchmarking your resource consumption against set standards. This can help you better understand where you’re meeting your sustainability goals and where you could make improvements.
These improvements can, in turn, open plenty of new doors for partnerships down the line. You may even learn it’s time to part ways with an unsustainable supplier and seek better, more sustainable business practices. Your customers care and will appreciate your dedication—often, even if it means a higher price point.
Profit: The Economic Pillar of Sustainability
The three pillars of sustainability may sound daunting, but the economic pillar should be in your wheelhouse as a business owner.
Here, you’ll look beyond short-term profits, focusing on long-term business health. This might include investing in renewable energy sources, creating a circular economy, and reducing costs through increased efficiency.
The goal is for businesses to become more resilient and adaptive to changing conditions while maintaining profitability. Investing in research, development, and innovation can help them create profitable products or services—while positively impacting society. One might further focus on creating value for all stakeholders by providing fair wages, safe working conditions, and equitable opportunities.
Ultimately, the economic pillar of sustainability calls for businesses to think differently about how they make money. It’s not just meeting financial targets; it’s about creating a system where everyone benefits.
By taking a holistic approach to sustainability, companies can help ensure they remain profitable while contributing to society.
People: The Social Pillar of Sustainability
The social pillar of sustainability focuses on the human aspect. It’s about creating an equitable workplace and treating employees fairly and respectfully. This pillar also looks at how companies interact with their communities and stakeholders in ways that create a positive impact.
However, a commitment to social sustainability stretches beyond the workplace. Consider investing in local public projects that will benefit the community, such as building parks or providing access to clean water.
Companies may also consider offering resources to help vulnerable populations access necessities like food and shelter. Those prioritizing sustainability in their supply chains can also reduce the risk of disruption due to supplier issues, such as labor disputes or a vendor’s inability to meet environmental regulations.
Why Sustainability Can Matter for Your Small Business
According to a recent McKinsey Global Survey, 83% of CEOs and investors think Environmental, Social, and Governance (ESG) programs will generate more shareholder value in five years than they are now.
Similarly, research from Accenture on responsible leadership found companies with excellent ESG ratings had operating margins more than three times higher than those with lower ratings. Shareholders of these companies also saw more significant returns on their investments each year compared to companies with lower ESG scores.
Small- and medium-sized entities (SMEs) might think sustainability efforts are reserved for big companies.
Small- to mid-sized businesses are essential to the global economy: McKinsey finds that these businesses make up 99% of all businesses and 70% of all jobs in OECD countries, and contribute more than 50% of GDP in high-income countries worldwide. Thus, small- to mid-sized businesses may be under immense pressure to measure and manage their environmental impact.
Invest in Sustainability With a Trusted Financial Partner
Understanding and embracing the three pillars of sustainability can be essential for growing your small- to mid-sized business. Your customers and suppliers pay close attention to your operation and its impact on the environment, the economy, and social issues. Embracing more sustainable practices may help you avoid losing profits to the competition.
Of course, these new practices don’t come without investment. Reach out to start a conversation with the team at Arizona Bank & Trust, a division of HTLF Bank today. Together, you can discuss your financial options and pave the way for a more sustainable future.
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