Chapter 2 Flashcards
Sustainability
humanity meeting its current needs without over-burdening the natural environment and its resources
Environment Sustainability
maintaining ecological integrity, preserving bio-diversity and maintaining balance of natural systems (natural resources are consumed by humans at a rate < than that at which they can be replenished)
Social Sustainability
Minimum standard of basic necessities and human rights is affordable to all people
Economic Sustainability
Having economic system that are accessible to everyone and that help spread and generate prosperity globally
Gov, Corp, Investors and FI practice S
Gov: practice and encourage S by agreeing on international S goals, through UN (SDG)
Corp: practice S through S policies and strategies and by adhering to ESG norms
Investors and FI: practice S through ESG ranking for firms they will invest in
Agenda 21
1992 Earth Summit, Rio - plan for global partnership on S development
- introduced by UNFCCC and adopted by 178 countries
2000 Millenium development goals (MDG), UN
-8 MDG to be accomplished by 2015
-helpful as benchmarks but fell short (too broad, and didn’t engage private sector)
2015 : 2030 agenda for S Development, UN
-builds on MDGS
-broad, all-encompassing, details
-17 SDGs, 169 targets (broad scope of SDGs has enabled a wide range of stakeholders to find strong agreement about at least one of the goals) : env goals; nature goals; social goals; economic goals
Eco-system services
Businesses, govs and communities rely on eco-system services for profits, health, safety and stability
- Supporting services
- provisioning services
- regulating services
- cultural servicesS
Supporting services
fundamental conditions that enable existence of all other services
ex: species habitat; genetic diversity; soil formation; nutrient cycling
Provisioning services
generate resources for society that can be traded in markets
ex: fresh water; food; wood; fiber
Regulating services
system that enables upkeep and management of natural sources
ex: water purification; flood regulation; climate regulation (mangrove forests help lessen impact of hurricanes)
Cultural services
Non-material benefits and enjoyment humans derive from eco-system
ex: recreational (beach); educational; spiritual
How to assess eco-system services
org and gov can assess risks and opportunities related to eco-system services by examining their impacts and dependencies
Natural Capital
value of world’s natural assets (including geology and minerals) are biotic and Abiotic resources (non-living resources) [and can even include ff]
==> stock of abiotic and biotic assets
Eco-system services: (primarily biotic) flow of assets that derive from natural capital
ex:
-natural capital: forest
-eco-syst service: timber from forest
Applying SDGs in private sector
SDGs have a benchmark against which companies and investors measure outcomes (firms are integrating SDGs in their operations - occurs through development of KPIs)
SDG alignment also enables FI to analyze corporate performance:
1. screens companies
2. analyzes entire investment portfolios
3. allows easy way to present outcomes and priorities to investors in a way that is cross-comparable between F firms
==> comes with risk of greenwashing (CSR has become widely known as creating many opportunities for greenwashing)
Greenwashing
- Decoupling
- Attentional deflection
Decoupling
When organization claims to fulfill stakeholder’s expectations for action on S, without actually making any changes in what they do in practice
ex: firms joining voluntary S initiatives establish by NGOs to gain credibility by association; making false claims and statements; promotion of empty green claims and policies when commitments are unable to be implemented
Attention deflection
When org hide unsustainable practices from stakeholder attention, prepare selective and inaccurate disclosures, make incomplete comparisons with other products and services and use vague and irrelevant statements. Can also include the deployment of misleading texts/imagery and can undertake falsifications to gain accreditations
Green Wishing
well-intended efforts to tackle S challenges, which:
1. may not make enough of a difference
2. encourage superficial changes when more structural ones are required
ex: buy electric vehicle when the grid used to power the car comes from coal fired power stations
how to address green wishing
enhance consumer and company understanding of what actually will make a difference
potential risk: people and companies feel disempowered to overcome S challenges and become disengages
Life cycle assessment
companies will conduct LCAs to S green substantiate marketing claims: an LCA should examine every stage of a product’s life cycle
- Goal and scope definition
- inventory analysis
- impact assessment
- Interpretation
Goal and scope definition
-Why is LCA necessary
-who are results relevant to?
-identify product and its functions
-define product’s system boundary by identifying processes that contribute most to product’s env impact
Inventory Analysis
gather data on inputs, outputs and E use of product
Impact Assessment
characterize and categorize product impacts
Interpretation
evaluate completeness of LCA and develop conclusions and recommendations
Why are LCA’s useful?
help determine an organizations:
-water use
-land use
-E use
-C footprint
and can help orgs identify efficiency improvements, enhance supply chain purchase decisions and compare env impact of similar products within a company and with competitors
-full LCAs are both expensive and time consuming and are thus typically conducted for a few key products - more so focus on env impact and don’t incorporate social nor governance issues
- are a building block of developing a more circular economy (in which economy growth is de-linked from consumption of finite resources)
Circular economy
- waste and pollution reduced and eliminated by design from products and economies
-can advance SGs (SDG 12: ensure S consumption and production patterns)
Principles for Responsible Investment (PRI)
World Business Council for S (WBCSD)
research on corporate social responsibility and share best practices (PRI does this but for investors)
reason why these initiatives and frameworks are impactful is because it helps STANDARDIZE how S related risks are:
1. accounted for
2. disclosed
3. reported
SASB
S accounting standards board provides cross-comparable S metrics
Framework uses 5 main dimensions of S:
1. social capital
2. human capital
3. governance
4. business model
5. environmental
Global Reporting Initiative (GRI)
provides global standards for S reporting
