What does it all mean?
Faced with multiple accelerating environmental, social and economic crises, at this point most of us understand the case for change. And most of us want to act. But for business leaders, trying to make headway in this area can often feel like swimming upstream through acronyms, buzzwords, and other confusing jargon.
As this area of business has grown, the terms coined to talk about it have changed and multiplied: CSR was followed by ESG. The triple bottom line led to a boom in sustainable enterprise and sustainable development. Then the 2030 agenda burst onto the scene, with the SDGs and the UNGC. And now all the talk is about regenerative or net positive organisations. Plus, whereas there were three Ps and three bottom lines, we’ve now got five Ps and ten principles...
What do all of these terms mean? What are the differences between them? How can an organisation today cut through all this noise and create real, tangible value?
A sustainability glossary
First, let’s take a deeper look at some of this terminology:
Corporate social responsibility (CSR) – This approach was coined in the 1950s to encourage accountability and the understanding that an organisation has responsibilities beyond its shareholders.
Environmental, social and governance (ESG) – This widely-used term emerged in 2004 as the UN encouraged organisations to care more about their impact on issues like the environment, diversity and society.
Triple bottom line – Coined by John Elkington in the mid-nineties, this concept states that organisations should measure and work towards not only their bottom line of financial performance, but also of social and environmental impact. These are also known as the ‘three Ps’: people, planet, profit.
Conscious capitalism – This philosophy strives for a form of capitalism in which businesses pursue profit in an ethical way, conscious of not harming people or the environment.
Sustainability – Sustainability simply refers to the ability to maintain something over time. For business, this means operating in ways that do not negatively impact upon social and environmental systems. Popular sustainability initiatives include net zero, through which organisations neutralise their carbon output by reducing emissions and utilising offsetting schemes.
2030 Agenda – In 2015, all member states of the United Nations (UN) signed the 2030 agenda for sustainable development, which built on the millennium development goals. The agenda envisages ‘a world of universal respect for human rights and human dignity, the rule of law, justice, equality and non-discrimination’.
The Sustainable Development Goals (SDGs) – Also known as the Global Goals, the SDGs are a set of objectives for the 2030 agenda, which form a ‘blueprint to achieve a better and more sustainable future for all’. The 17 goals are interrelated but can be categorised by ‘five Ps’: people, planet, prosperity, peace, and partnership. Businesses can engage with the SDGs through the UN Global Compact (UNGC).
Regenerative business – Regenerative business practice means taking a step beyond sustainability, towards the regeneration and restoration of natural and social systems. Regenerative organisations seek profit while achieving positive transformation on a broader, systems-wide scale. Giles Hutchins and Laura Storm describe them as 'organisations [that] help rather than hinder the logic of life'.
Net positive – Coined by ex-Unilever Paul Polman and Andrew Winston, a net positive organisation creates profit by solving the world’s urgent social, economic and environmental problems instead of exacerbating them. Like regenerative business, this approach sees an organisation creating value for the wider world as well as its own shareholders and stakeholders.
So, all make sense? Clear about where to start?
No… we didn’t think so either.
The one thing that most of these terms have in common is the need for organisations to have a more positive impact on the world.
Business is one of the most powerful global forces for shaping, influencing and catalysing change. And the public want its leaders to act, with business now perceived to be the only competent and ethical institution .
At the root of these initiatives is the desire for business leaders to have:
- more awareness of their impact on different systems – beyond organisational boundaries
- the courage to make that impact more positive, delivering value for people, planet and profit
This offers us the opportunity to reimagine what business is for. Organisations that have a positive impact are highly purposeful – they provide their people with meaningful work because they deliver value not just for a few shareholders, but for multiple different stakeholders, including employees, customers, diverse communities, animal and plant life, and the planet.
What’s in it for business?
Investing time and resources on such initiatives can easily be perceived as a drain on hard-earned profit – a ‘nice to have’ rather than something critical or strategic.
So, where’s the business value? Can an organisation really provide benefits for society and the environment and still deliver on its actual targets?
The answer is yes. And increasingly, this will be the only way to do business. In fact, only 7% of Fortune 500 CEOs still believe their companies should mainly focus on profit and not be distracted by social goals .
The social and environmental problems we face present immense risk for organisations who aren’t willing to engage on them. But they also offer enormous economic opportunities. Resources allocated to this area are not costs; they're investments, with long-term returns.
Purposeful organisations that strive to profit whilst having a positive impact on the world reap multiple rewards:
- Innovation – Purpose-driven companies report 30% higher levels of innovation , with one survey showing that 63.4% of senior leaders believe that having a sense of purpose beyond their commercial mission made their company more innovative .
- Better talent engagement and retention – Increasingly, people want to work for authentic organisations that care about purpose and impact, and this is especially the case for Gen Zs and millennials, who are basing career choices on these values. Research found that 39% of Gen Zs and 34% of millennials have turned down employers that do not align with their values. And less than half of these populations currently believe business is having a positive impact on society .
- Reduced risk – We're on track to lose up to 18% of global GDP by 2050 if no action on climate change is taken . Further, 40% of Fortune 500 CEOs say their companies won't be viable in ten years’ time if they stick to their current path . Polman and Winston directly attribute Unilever's survival of the pandemic and the ensuing financial crisis to the resilience, agility and stakeholder trust it had built up by operating in a more purposeful way .
- Improved financial performance – Organisations that plan for the long term exhibit stronger financial performance, with one study showing averages of 47% higher revenues and 81% higher profits over a 13-year period . Examining and changing processes, operations and supply chains also directly correlate to reduced costs. For example, as of 2019, 3M is reported to have saved $2.2 billion since launching its 'pollution prevention pays' programme .
- Learning – High-purpose, positive impact organisations have thriving learning cultures, because they empower people at all levels to get involved in change and make decisions, which enables knowledge to be shared. Successful transformation initiatives are not restricted to one team or area of the business, but engaged with by everyone, encouraging a culture of curiosity and continuous learning across the whole organisation.
- Growth – Purposeful organisations achieve greater growth. One study found that brand value for high-purpose organisations grew by 175% between 2008 and 2020, compared to 70% for low-purpose organisations . Unilever reported in 2019 that their purpose-driven brands were growing 69% faster than their other brands .
Organisations are not islands. They can't thrive in unstable societies or volatile economies. They can't flourish on a dying planet.
Those organisations who have the courage, ambition and long-term thinking to transform themselves for positive impact will capitalise on the many benefits available, turning this work into a source of competitive advantage and becoming future-fit.
Having a positive impact on the world isn't a cost; it's an opportunity.
Impact will meet you wherever you are on your transformation journey, whether you’re already engaged in an initiative like those explored at the beginning of this article, or you’re not sure where to start – you just know that change is needed.
We help organisations to become sources of positive impact by liberating the human potential within them. We use our people-led approach, and our expertise in leadership development, change management, and high-performing teams, to support organisations in delivering value for people, planet and profit.
Read more about our work on positive impact and get in touch to start a conversation.
1. 2023 Edelman trust barometer, Edelman
2. 'Purpose: Shifting from why to how', Mckinsey & Company
3. 'Purpose is everything', Deloitte
5. 2023 Gen Z and Millennial Survey, Deloitte
8. Net Positive, Paul Polman and Andrew Winston, p. 5
9. Measuring the economic impact of short-termism, Mckinsey & Company
10. 'Five ways that ESG creates value', Mckinsey & Company
11.Purpose-led growth, Kantar
12. ‘Unilever’s purpose-led brands outperform’, Unilever