What’s the difference between sustainable and ethical business practices? (2024)

For organisations aiming to do better, having ethical and sustainable core values is key to showing your employees – and the world – that, as a business, your purpose and impact goes beyond profits.

The phrase ‘triple bottom line’ was first coined in 1994 by John Elkington, the founder of a British consultancy SustainAbility – essentially: profit, people and planet. The idea being that only by measuring financial, social and environmental performance can a company take into account the full cost of its business.

The basics of sustainable practice

Sustainability is a company’s strategy to reduce the negative impact of their operations on the environment. An eco-friendly business functions in the best interest of its local and global environment.

“Any company committed to evaluating its own impact has to be paying attention to its environmental impact – the urgency of the climate crisis makes it impossible to ignore,” says Matt Paver, COO of Carbon Responsible.

“Companies need to be setting ambitious but realistic sustainability strategies, which include targets to reach net zero before 2050, and shorter-term emissions reduction targets in the interim.

But organisations setting unachievable targets (to win PR points in the short-term) run a very high risk of falling foul of regulatory agencies that are upping their scrutiny, he says. “The most crucial and urgent factor for companies to make sustainability progress is that they focus on first measuring, and then reducing carbon emissions, as opposed to offsetting them.

“All companies can reduce their carbon footprint by implementing low-carbon policies and practices across business travel and employee commuting, energy suppliers, office space, meals and food provided, technological equipment and even pension providers.”

Some companies are trying to move towards what’s known as a circular business model – one which “aims to recover and reuse material within a company’s supply chain, or facilitate the reuse and recycling of ‘waste’ produced in the process of creating a product or service”.

Although a truly circular business model is very hard to achieve (particularly for service-focused organisations), Paver says working towards this can help reduce a company’s carbon footprint, by using and producing less materials and energy.

How does sustainability relate to ethics?

If sustainability relates to the planet, ethics concerns people – namely the human cost and impact of your business.

Miranda Hill, executive global sustainability leader at Avanade, says: “Beyond compliance and legal requirements, a robust ethics framework reflecting the organisation’s values and purpose is required.”

It’s a system of policies and practices that uphold a corporation’s moral responsibilities – at a core level, they determine what is ‘right and wrong’ for a company and its employees – and the impact on society more widely.

Indeed, being environmentally sustainable may even come under the ethical umbrella.

“While sustainability doesn’t necessarily include other ethical issues – like diversity and inclusion and social injustices – the reality is that many of these issues are interlinked,” says Paver. “Not only is it the case that the communities most affected by climate change are those experiencing other social and economic disadvantages, but it’s also the case that sustainable solutions often have other positive impacts beyond environmental.”

How can businesses be more ethical?

Avanade research released in 2022 shows less than half of executives are confident they’ll hit their ESG targets on time, and as many as 45% are distracted by other business priorities.

No organisation exists in a vacuum, says Hill. “In a world challenged by climate change, war, an unstable economy and the lingering after effects of a global pandemic, it’s not enough to do good for your clients – you have to do good for your community, too.

“Many employees are passionate about societal challenges and strive to find ways to address them in work and personal life,” Hill points out – so get your employees across all levels involved.

“To support that, there are ways to engage employees to be changemakers for the organisation, helping progress environmental, societal and governance (ESG) objectives.

“Part of making a genuine human impact means fostering the next generation of leaders, providing new opportunities to the youth who will shape the future of business,” says Hill. Avanade, for example, have a STEM Scholarship Program which funds scholarships for young women across the world, and have partnerships with entrepreneurial education programmes.

“We work with partner organisations to create new opportunities for entrepreneurs from under-represented communities, and regularly deploy our specialists to offer support to the social sector on a voluntary basis.

“ESG targets are important for keeping organisations focused and committed,” she says. “And as economic times get harder, organisations need to maintain their commitment to ethical business, otherwise they will be perceived both internally and externally as being inconsistent, which is potentially more reputation damaging than not focusing on these areas at all.”

---

In ESG news this week:

• The Government is supporting more than 100 new licences being granted for oil and gas extraction in the North Sea, with Rishi Sunak insisting that the decision is “entirely consistent” with the UK’s net zero commitments.
• Allison Kirkby is named the new boss of BT as the telecoms giant’s first female chief executive in its 170-year history.
• A new consumer duty has set a higher bar for financial firms and gives customers more certainty around the products they buy.
• Sadiq Khan hails ‘landmark decision’ as councils lose High Court Ulez challenge.
• Earth needs a world climate crisis organisation, says eminent scientist.

---

PA Mediapoint connects the PR and communications industry with influential journalists, content creators and distribution solutions, to ensure unparalleled support from its editorial expertise to achieve impact across the news ecosystem.