There are ample examples that show the many ways businesses can cause considerable harm to people and planet. In turn, these issues, which could manifest as extreme weather events or supply chain vulnerability, can directly or indirectly affect businesses. In other words, companies need to prioritise sustainability because business interests are at stake, says Craig Smith, the INSEAD Chair in Ethics and Social Responsibility, in this INSEAD Explains Sustainability video. 

Beyond this, businesses must consider their environmental and social impact on moral grounds. Smith discusses moral philosophy and justice theory, and quotes management guru Peter Drucker: “One is responsible for one’s impacts, whether they are intended or not.”

There is no doubt about management’s responsibility for the social and environmental impacts of its organisation – be it poor working conditions, abuse of human rights in the supply chains or resource exploitation by overmining. 

Going beyond “cleaning up their own mess”, Smith says companies should address broader social and environmental problems, because they are often well-placed to do so. Some companies have stepped up by reducing greenhouse gas emissions in their operations and putting in place measures to ensure farmers supplying raw materials like coffee or cocoa are fairly paid. 

Some have even played a leading role by developing new technologies to replace less sustainable products or practices in their sectors. Because business-as-usual won’t be enough, businesses must take actions that make a fundamental difference in addressing sustainability challenges the world faces today. This is what he calls corporate social sustainability.

Apart from the strong business case for sustainability, having sustainable operations is simply the right thing to do.