CSR AND SUSTAINABILITY
Pursuit of common goals
Ronald C. Perera
Sustainability is becoming a sine qua non in the corporate world; and as Ronald C. Perera asserts, “a sustainable organisation requires an understanding of the triple bottom line – i.e. people, planet and profit. Economic advancement alone is not enough, and environmental protection and social stability must also be considered.”
He continues: “In line with this thinking, business models are changing. The responsibility of achieving Sustainable Development Goals (SDGs) is not limited to the UN or governments but includes businesses as well. Considering the very real threat of climate change in the global context, it’s also the responsibility of every citizen.”
Perera believes that sustainability needs to be incorporated into an organisation’s strategy to meet evolving investor and consumer expectations, and regulatory requirements.
“Most companies try to align their business models to the environment, social and governance (ESG) framework. Aligned with this, any activity targeting the wellbeing of society and the environment demonstrates a commitment on the part of corporates and the management,” he adds.
Meanwhile, CSR initiatives enable corporates to engage and build relationships with customers, employees and other stakeholders, and strengthen their reputation and brand value.
Perera points out that on the one hand, customers are becoming more environmentally conscious while on the other, companies are becoming more cognisant of the challenges they will face locally and internationally if their products do not adopt environmentally-friendly processes.
Adding to this, the vision to achieve sustainability changed during the pandemic.
“The pandemic made us rethink how we live and work,” Perera notes, elaborating: “It was a blessing in disguise as it led to calls for climate action and environmental conservation. Businesses also began limiting their spending since revenues and cash flows were restricted. All this made sustainability take centre stage in business models.”
And the digital transformation process played a major role during the pandemic, pushing corporates to be innovative, and save paper, reduce transaction costs associated with supply chains and curtail fuel consumption – and shift to digital transactions.
With sustainability visibly gaining ground, regulators in many industries are introducing relevant guidelines. For example, the Central Bank of Sri Lanka issued a sustainable finance taxonomy for banks, which sets out a detailed plan. Stock market regulators are also expected to issue guidelines for listed corporates.
As for CSR, many competitions organised by business chambers are encouraging companies to engage in such projects.
Reporting on sustainability measures and corporate social responsibility is considered important, and disclosures demonstrate to what extent corporates have committed – financially and otherwise – to the environment and social wellbeing.
Furthermore, Perera observes that volunteer groups are being formed between industry partners to drive sustainability, which is encouraging since there shouldn’t be competition in this area; instead, there should be greater collaboration to achieve a common goal.
He shares the leading sustainability trends: “ESG is thriving because climate change and environmental degradation pose a direct risk to businesses, with the potential to deteriorate portfolios and disrupt business.”
“The environmental risk is increasing exponentially and therefore, mitigation and adaptation should be pursued. Carbon credits and offsetting also deserve attention. Most businesses are making net zero emissions their goal,” he adds.
Perera emphasises that when an organisation truly embraces sustainability, operational expenses are reduced – for instance, switching energy sources might be costly today but in the long run, this will draw incremental revenues, counter the rise in traditional energy costs and contribute to profitability.
He sums up: “There should be a paradigm shift in the corporate sector to move towards sustainability. And given how things are progressing in the country and the world, we can be confident that this will be achieved soon.”
