We are currently being inundated with various sustainability initiatives. Many focus on how we can reduce our carbon footprint, which is necessary to meet the EU's goal of climate neutrality target by 2050. But sustainability is about more than climate and ecology.
It's also about how we treat to our fellow human beings and how we deal with economic issues. We therefore need to consider the three dimensions of sustainability – environmental, social and economic – and how they interact.
The environmental dimension is about the footprint we leave on the planet and how we impact the ecosystem. The social dimension is about human rights, gender equality and equity, and people´s quality of life and health. The economic dimension is about ensuring that the economic system and growth do not stand in the way of environmental and social sustainability, and about finding new, fair and resource-efficient business models. The economic dimension is also about managing financial, market and business risks and establishing sound finances. Sound finances help the owner to develop the business, as well as the employees and society, in having a secure and stable employer.
In other words, there are several aspects of sustainability that need to be considered in order to be truly sustainable.
In other words, there are multiple aspects of sustainability that need to be addressed in order to be truly sustainable.
Over the years, we have seen many companies focus on climate and environmental issues in their sustainability work and not on the social and economic aspects. We believe that there is great value in focusing on multiple dimensions. To broaden the view of what sustainability means, an organization's entire value chain must to be mapped.
This should be followed by a materiality analysis to determine which sustainability issues the organization can influence or be influenced by. The analysis reveals which sustainability issues are important. However, it is not only your own operations that need to be examined, but also the views of your stakeholders. This is best done through a stakeholder analysis and stakeholder dialogue.
When we map value chains, we quickly see that the different dimensions influence each other. Let's say a company has chosen a business model based on selling low-cost, short-lived products to consumers. The pursuit of low prices is a good reason to look at the working conditions of the suppliers, such as the conditions in the factory where they work, whether the employees are paid fair and just wages, and the hours they work. We also need to look at how the products are made and what raw materials are used. In other words we need to understand how the chosen business model affects the relevant value chains.
If instead we look at a company that manufactures and sells products with advanced electronics, our value chains will look different. Since electrical components contain materials that are extracted through mining, we need to look at the working conditions of the suppliers, but also at the type of metals used and where in the world they are extracted. It is also important to find out what happens to the product when the consumer no longer uses it. Perhaps it can be returned to the manufacturer for reuse of components, or there is a secondary market where the retailer can resell it. The business model becomes more circular rather than of the traditional linear one.
By examining the impact of a business model on the relevant value chains, we can identify which paths lead to more circular business models. This creates new business opportunities and supports the work in all dimensions of sustainability.
