IRM ERM M2U8.2 - The evolution of sustainability

Question 1

Evolution of sustainability

Answer 1

Sustainability has evolved since the 1987 UN report “Our Common Future”.

Initially, it was framed around three pillars: Social, Environment, and Economics.

In 1992, Agenda 21 was adopted by over 178 countries during the Earth Summit, focusing on global partnership for sustainable development.

John Elkington introduced the ‘Three P’s’: People, Planet, Profit (or Prosperity), a variation of the three pillars, gaining traction in financial circles.

The UN launched the Millennium Development Goals (MDGs) in 2000, aiming to reduce extreme poverty by 2015.

The 2012 Rio+20 conference laid the groundwork for the Sustainable Development Goals (SDGs) through “The Future we Want” document.

2015 saw significant agreements including the launch of SDGs, the Sendai Framework for Disaster Risk Reduction, Addis Ababa Action Agenda on Financing for Development, and the Paris Agreement on Climate Change.

Since 2015, focus has shifted towards achieving the SDGs, with emphasis on Environment, Social, and Governance (ESG) criteria.
Annual COP conferences have led to progress, with COP26 seeing the finance sector taking a leading role in addressing climate change risks.

Question 2

Sustainable Development Goals

Answer 2

the United Nations Sustainable Development Goals (SDGs) were launched in 2015. They are fully integrated with one another and aim to balance what were considered to be the three dimensions of sustainable development in 2015: Environmental, Social and Economic.

The SDGs comprise of 17 goals and 169 targets,

Question 3

The triple bottom line: People, Planet and Profit / Prosperity - 3Ps, TBL or 3BL

Answer 3

The triple bottom line concept, attributed to John Elkington, emerged in 1994-1995, emphasizing win-win-win scenarios.

It introduced the three Ps: People, Planet, Profit.

People: Focuses on an organization’s impact on stakeholders like employees, customers, and communities.

Planet: Concerns an organization’s environmental impact, including reducing carbon footprint and resource usage.

Profit: Addresses an organization’s economic impact, including employment generation and innovation.

However, “Profit” is often misinterpreted as mere financial gains rather than wealth distribution as intended by the Bruntland report.

A shift towards using “Prosperity” instead of “Profit” has been advocated, highlighting a broader view of economic impact.

The 2015 OECD forum promoted this shift with the theme “Investing in the future: people, planet, prosperity.”

Question 4

Corporate Social Responsibility (CSR)

Answer 4

Corporate Social Responsibility (CSR) refers to the actions, impact and culture created by an organisation to ensure that it has positive social impact. CSR is not formally regulated, however reporting on the status of CSR within and created by an organisation is the norm in many sectors and geographies.

Question 5

3 areas of CSR

Answer 5

Companies express this citizenship:

(1) through their waste and pollution reduction processes,

(2) by contributing educational and social programmes, and

(3) by earning adequate returns on the employed resources.”

Note the similarities between the structure of the three areas of CSR and the original pillars of sustainable development, three P’s and ESG.

Question 6

Environment, Social and Governance (ESG)

Answer 6

Standing for Environment, Social and Governance, ESG may be considered as just the latest version of Environment, Social, Economics (1987 Bruntland Commission) and People, Planet, Profit / Prosperity (Elkington’s 3Ps or triple line). The difference between ESG and the earlier iterations is the role of Governance.