Defining a sustainable business is not a straightforward process. There are many organizations and ambitious linguists that have tried to summarize the qualities of a sustainable business into a concise terminology. In attempt to establish a unified definition, let’s look at a few of these examples.
The 10 Principles of the United Nations Global Compact
The UN has made major efforts to classify and promote sustainability on a global scale. One way in which they do this is through their 10 principles. We use the principles as the basis in which a business can be considered sustainable. Each of these principles has been derived from declarations on environmentalism, human rights, fundamental work rights, and the fight against corrupt business practices. The principles set the tone for strong, environmental practices, and you might find they highlight well-known areas to look for when scoping out green businesses.
- International human rights must be upheld and protected by sustainable businesses.
- Human rights should never be abused, and the company should not be complacent in the case of a violation.
- Freedom of association and collective bargaining should be upheld within the company.
- Labor should never be coerced or forced.
- Child labor must be abolished and denounced.
- Discrimination in the work force must be eliminated.
- Environmental difficulties should be approached with precautions, through risk assessment and science.
- A company must actively promote and take responsibility for its effects on the environment.
- Advocate for and encourage the use of environmentally-friendly and greener technology.
- The company should denounce all corruption, especially that of extortion and bribery.
Environmental, Social, and Corporate Governance (ESG)
A common measurement of a company’s sustainability levels is through the use of the Environmental, Social, and Corporate Governance (ESG). While we don’t exclusively follow a set rule book when it comes to the kinds of businesses we support here at Greenprojectusa, we think it useful to navigate the world of sustainable businesses by using this common terminology as a starting point.
The ESG looks at three aspects of a company to determine its environmental impact. Each of these aspects serves as a great foundation for establishing what it means to be a well-rounded, sustainable company.
Environmental Impact
The environmental element of the ESG looks at a company’s use of resources, treatment of animals, greenhouse gas emissions, and water, energy, and waste management to assess its carbon footprint (PSI ESG). When learning about a potential green company, we often ask related questions to evaluate its environmental impact. Does the company practice animal testing or possess animal factories that negatively affect livestock? Are toxic byproducts or environmental degradation due to its practices? The findings from these questions quite reliably indicate whether or not companies are invested in the protection of the planet.
Social Impact
This area looks at how a company behaves socially to determine its sustainability. Is the company inclusive of all ages, colors, nationalities, and abilities? Are its employees protected with basic rights such as insurance, benefits, maternity/paternity leave, paid sick days/holidays, ability to form a union, etc.? What measures are in place to prevent child labor, human trafficking, forced resettlement, and abuse in the workforce? These are some questions we ask as we investigate the numerous companies that pledge sustainability but are really wolves in sheep’s clothing when it comes to social impact.
Corporate Governance Impact
In the third component, companies are evaluated based on their procurement practices. This can include how they invest in the stock markets, lobbying, intended target audience, and more. A company may seem sustainable in its practices but is also simultaneously investing in companies or supporting groups that are unsustainable or have ideologies that don’t promote the well-being of the environment. This is a sneaky element of a company’s public relations that isn’t always apparent, but we do our best to find and support reputable companies.
Sustainable Qualities We Look For
There are many variables that we use to determine whether or not a company is sustainable. The ESG is a broad example of qualities to keep in mind when searching for sustainable businesses. Below, we have included a more specific list of the common criteria we look for in labeling a company as sustainable. The more qualities a company has, the more likely we are to support the company.
- Sources from as many close-by locations as possible
- Uses recycled, plant-based, or other biodegradable packaging
- Zero-waste initiative
- Low or negative carbon footprint
- Greener or renewable energy practices
- Implements waste and pollution reduction practices
- Gives back to environmental nonprofits
- Community-based organizations that share information, support, and resources
- Minimal partnerships and stocks with unsustainable, monopolizing businesses
- Products free of pesticides, phthalates, parabens, palm oil, artificial dyes and ingredients
- Organically or ethically grown and sourced ingredients
- Fair Trade certified if sourced from outside of the States
- Well-made, high quality products
- No testing on animals
- Vegan and cruelty-free
References
“A legal framework for the integration of environmental, social and governance issues into institutional investment.” UNEP Finance Initiative, Asset Management Working Group, Oct. 2005. pp 14-35, https://www.unepfi.org/fileadmin/documents/freshfields_legal_resp_20051123.pdf. Accessed 16 Aug. 2020.
“Managing Environmental, Social and Governance Risks in Non-life Insurance Business.”UNEP Finance Initiative, Ed. 1.0, Principles for Sustainable Insurance, June 2020. pp 19-27, www.unepfi.org/wordpress/wp-content/uploads/2020/06/PSI-ESG-guide-for-non-life-insurance.pdf. Accessed 16 Aug. 2020.
“The Ten Principles of the UN Global Compact.” United Nations Global Compact, https://www.unglobalcompact.org/what-is-gc/mission/principles. Accessed 16 Aug. 2020.