Sustainability is an approach to planning and development that attempts to balance environmental, social and economic needs and impacts.
Sustainability is a framework for business success that balances economic growth with social well-being and environmental stewardship. When done right, adopting sustainable business practices can lead to gains for your community, the planet and your bottom line.
What is sustainability?
In 1987, the United Nations-sponsored World Commission on Environment and Development (since renamed the Brundtland Commission) defined sustainable development as development that meets the needs of the present without compromising the ability of future generations to meet their needs.
Sustainability, in the business sense, has been propelled by leaders who want to do the right thing for society and the planet, and don’t want to be left behind by environmentally and socially conscious consumers, investors and employees.
Today it's recognized that embracing sustainability can lead to higher profits, more engaged staff, happier customers and lower costs.
For a company, taking a sustainability approach is a way to manage risk, meet your customers’ needs, and contribute to the communities in which you operate. When measuring how well you are doing on an economic, social and environmental level, it’s important to look at how much value you’ve created, not just how much harm you’ve reduced.
While value creation may seem like a lofty or even unreachable goal, chances are that many small and medium-sized enterprises (SMEs) are already on track to create a more valuable product or service thanks to efforts at improving their sustainability.
“Sustainability is probably something you’re already doing without thinking about it,” notes Sandra Odendahl, Senior Vice President and Head, Sustainability, Diversity & Partnerships at BDC. That’s why she leaves the technical terms behind when she first meets with entrepreneurs.
“You’ll see that many regular, run-of-the-mill things you do are impactful and create positive, beneficial value for others.”
Many entrepreneurs think they don’t have enough time, money or knowledge to take on sustainability. What you don’t realize is that it’s already embedded in the decisions you make on how, for example, to create profits, treat your staff, and minimize waste.
From installing a couple of EV charging stations for customers or staff to eliminating most of your paper usage to reassessing your supply chain, you may already be adopting sustainability and creating value for your business and for society.
Why is sustainability important?
A successful business needs motivated staff, keen clients, and a community and environment that offer the right ingredients for prosperity. Essentially, a business that thinks about sustainability is a business with a clear-eyed view of its role in the economy.
“More and more consumers expect businesses to help make a positive impact on pressing social and environmental issues,” Odendahl says. “This may be putting pressure on your business to change but you can turn that pressure into a business advantage, eventually improving your bottom line, community impact and ability to attract and retain talent.
Businesses that adopt sustainable practices reap benefits. They are more likely to unlock new opportunities, recruit and retain employees easily, and improve their access to financing and investment. These results take place while the business is fostering an environment of healthy and fulfilling opportunities for its people staff, clients and community.
What are the three main pillars of sustainability?
Does your company pay workers fairly and offer opportunities for growth? Does it create jobs and source materials and services locally? Do you pay taxes that support municipal, provincial and national government programs?
SMEs in Canada make a huge contribution to economic sustainability, by creating local jobs and paying fair wages. Jobs that pay well help grow the local economy and give employees a sense of pride.
Sustainability implies that your business is adding value to your community. It could mean volunteering with your staff at the local food bank from time to time, donating a portion of profits to a local charity or sponsoring a youth sports association.
The social pillar of sustainability is also grounded in how you treat the individuals who drive your company.
“If you provide good-quality jobs to people from different backgrounds, treat them well and pay them fairly, you’re adding social value, which is an important contribution to sustainability,” Odendahl says.
The way that you treat clients is not only a determinant of your company’s financial success but also another indicator of how well you are doing at the social pillar of sustainability. For example, if you make your storefront wheelchair accessible or offer free delivery to elderly people who can’t easily come to your small business. Remember there’s no one size fits all—the right social impact to focus on depends on the business you are in, and what your community, employees and clients expect.
“If you reduce waste, conserve water or use less energy in your business, that’s environmental responsibility, and it’s also a key part of sustainability,” Odendahl says.
If you want to build a business that contributes to a clean, low-carbon, circular economy, you’ll probably need to make some changes. Examples would be reducing your carbon footprint, managing waste, avoiding harmful chemicals and choosing suppliers who also demonstrate they care about their own environmental performance.
Environmental sustainability also means future-proofing your supply chains and business practices in the face of a more unpredictable climate. That would mean preparing for natural disasters like floods, droughts, violent storms and wildfires.
What’s a good example of sustainability in business?
The Unscented Company’s flagship products—scent-free soaps, detergents and shampoos—are mostly made from materials sourced within a day’s drive of downtown Montreal, where they’re packaged in reusable containers by employees who live in the neighbourhood. Those same bottles can be refilled at bulk stores across the city.
The company, which operates in an industry awash in plastic, finds ways to keep waste out of landfills and sewage systems. The practice helps employees feel like they’re contributing to their community and motivates customers to adopt eco-friendly practices.
From sourcing to selling, The Unscented Company has adopted socially, economically and environmentally sustainable practices.
The business case for sustainability
Sustainability comes with a strong business case because it encourages companies to look out for the needs of all stakeholders: employees, customers, suppliers, partners, and investors—not to mention everyone on the planet.
According to a 2023 BDC study on ESG, the proportion of major buying organizations that require their suppliers to disclose ESG information is expected to reach 92% in 2024. It’s expected that by 2028, these organizations will have increased the number of ESG criteria suppliers will be required to report on.
In addition, 75% of these large organizations plan to increase by that same year the number of ESG criteria requirements, such as reduced energy consumption, the hiring of managers from diverse backgrounds and procedures to manage environmental risks.
Consumer demands have been convincing businesses to integrate sustainability into their business model. Recent consumer trends show that both Millennials and Gen Zs are asking for more accountability from the businesses on which they rely.
According to a 2023 BDC study on top consumer trends, Millennials are willing to pay more for products and services that are local (61%), eco-friendly (41%), sold by a company that aligns with their values (37%) or that is socially responsible (33%).
As for Gen Zs, seven out of 10 (70%) agree that companies need to place more emphasis on the environment and sustainability, and more than half (56%) think that companies should reduce their environmental impact, even if it means charging more. Also, as proponents of diversity, more than half (53%) want proof that companies are acting on diversity, equity and inclusion.
Creating a sustainable business strategy
“If you’re just getting started along the path to sustainability, you’ll want to focus your actions on just a handful of the most relevant issues,” Odendahl says. “So, take a look at the three main pillars of sustainability and think about which issues in each pillar apply to the business you are in, and matter to the customers and employees you want to attract.”
If you want to know where you stand on sustainability, a good first step is to take a free B Impact Assessment. The assessment asks you 200 questions, measuring five areas of impact:
- How you run your company
- How you treat your workers
- How you interact with your community
- How you manage your environmental impact
- Whether or not what you sell has an inherent positive benefit
Measuring what you already do helps you prioritize areas for improvement, informs comparisons with similar companies and offers metrics you can use to track your progress. Odendahl suggests starting with the assessment questions you had trouble answering—those represent opportunities for improvement.
“Plucking ideas from the B Impact Assessment is the best way for entrepreneurs who care about their impact to develop specific plans to improve,” Odendahl says.
Why Sustainability matters to your business
- Economically: As a local business, you’re contributing to job creation, economic growth and a vibrant Main Street.
- Socially: As a business that cares about employees, customers and community, you are more likely to be seen as an attractive place to shop and work.
- Environmentally: As a business that considers the long-term impacts of your company’s products and services on the environment, you’re appealing to clients who are also committed to a clean, low-carbon, circular economy.
The differences between CSR, ESG and sustainability
Although CSR, ESG and sustainability may overlap in their outcomes (for example, they all emphasize social benefit and environmental protection), they differ in their primary purpose and areas of impact.
Odendahl frames it like this: “CSR nudges me to contribute to my community; ESG satisfies investors that environmental, social or governance issues won’t blindside them; and sustainability is what I embed into my core business strategy and decision-making processes.”
|To allow a company to contribute to the community and enhance its reputation beyond its core business operations.
|Originally designed for investors to make sure they were considering the important non-financial issues that could have a financial impact in the long term.
|A business approach that balances the economic, social and environmental needs of the present without compromising the ability of future generations to meet their own needs.
|Enhance your company’s reputation among its community, customers and employees.
|Assure investors and clients that your company is actively mitigating risks and prepared to adapt to a changing world and business climate.
|Demonstrate to all stakeholders that your business strategy incorporates environmental, social and economic factors.
All three can help mitigate risk, but sustainability deliberately aims to also create positive value in the world outside the company—for now and for the future.
Discover how the B Corp assessment can help you examine your current practices and equip you with a more sustainable business.