Sustainability in Business: What It Is and Why It Matters

Sustainability in business has evolved from a buzzword to a necessity. As companies face increasing pressure from stakeholders, regulatory agencies, and consumer advocates, integrating sustainable practices has become crucial for long-term success. But what does sustainability truly mean in a business context, and why is it so important?

This blog post will explore the concept of sustainability in business by delving into its three main pillars—economic, environmental, and social sustainability. We’ll also discuss why these practices are essential for modern enterprises, showcasing how they create opportunities and drive successful business strategies. Whether you’re a budding entrepreneur, a seasoned executive, or an aspiring MBA student, understanding sustainability’s role in business can pave the way for a more resilient and prosperous future.

Sustainability in business refers to integrating economic, environmental, and social responsibilities into everyday operations and long-term strategies. This holistic approach ensures that a business can thrive while contributing positively to society and minimizing its environmental footprint.

At its core, sustainability encompasses three main pillars:

Economic sustainability involves practices that ensure a business can be profitable over the long term.¹ This doesn’t just mean focusing on short-term gains; it’s about creating a resilient economic model that can withstand market fluctuations and future uncertainties. Practices such as efficient resource management, cost-effective operations, and investment in innovation are key components. Moreover, economic sustainability also includes fair wages and equitable growth opportunities for employees, underscoring that a business cannot thrive if its people are left behind.

It’s important to note that economic sustainability should not overshadow the other two pillars. Profit over all else is not the focus of this pillar.¹

Environmental sustainability emphasizes minimizing the negative impact of business activities on the natural world. This includes reducing carbon emissions, conserving water, managing waste responsibly, and using renewable energy sources.¹ By adopting green practices, businesses not only help combat climate change but also often find cost savings in reduced energy consumption and waste-disposal expenses. Additionally, environmentally-minded companies are more likely to attract customers and employees who value green practices, further bolstering their market position.

Focusing on environmental sustainability also helps companies comply with related federal laws and regulations, like the Clean Air Act or the Clean Water Act.²

Social sustainability focuses on the well-being of people and communities affected by a business’s operations.¹ This pillar covers everything from employee rights and working conditions to community engagement and philanthropy. Companies committed to social sustainability often embed practices such as diversity and inclusion, health and safety regulations, and community development programs into their core operations. These efforts help foster a sense of trust and loyalty among employees and stakeholders, creating a robust social framework that supports the business.

Because many companies operate globally, business leaders must also be aware of social sustainability in the supply chain. For example, companies should ensure that child labor is not used and that workers are paid fair wages.¹

Sustainability is a critical component of a business strategy that ensures longevity and success. By adopting sustainable practices, companies can address ethical and environmental concerns and unlock numerous business advantages.

Sustainable practices often lead to improved efficiency and reduced costs, which can directly impact a company’s bottom line. For instance, implementing energy-efficient technologies can lower utility expenses, while sustainable supply chain practices can reduce waste and improve operational efficiencies. Furthermore, companies that prioritize sustainability are better positioned to navigate regulatory changes and market shifts, providing a competitive edge in an ever-evolving business landscape.

In the era of conscious consumerism, customers are increasingly favoring brands that demonstrate a commitment to sustainability. This shift offers businesses an opportunity to differentiate themselves by aligning with the values of their target audience. Patagonia is an example of a company that has built a strong brand around its sustainable practices, earning customer loyalty and enhancing its market position. The company is focused on activism and publicly shares the footprint of its practices on the planet and how it funds environmental organizations with a portion of its profits.

A commitment to sustainability can also make a company more attractive to potential employees. Today’s workforce places greater value on ethical business practices and corporate social responsibility. In fact, studies show that 60% of Millennial and Gen Z employees say they would take a pay cut to work for a company that prioritizes environmental sustainability.³ By promoting a culture of sustainability, companies can attract top talent and reduce turnover rates, as employees are more likely to remain with a company whose values resonate with their own.

Sustainable practices can also serve as a form of risk management. Companies that ignore environmental and social issues may face backlash from consumers, legal penalties, or supply chain disruptions. By proactively addressing these concerns, businesses can mitigate risks and build resilience against future uncertainties.³

Seattle and the Pacific Northwest are home to an impressive array of Fortune 500 companies. Many of these innovators have not only changed the landscape of their industry sectors but also embraced sustainability practices as part of their corporate mission and culture, integrating sustainability into their operations and products. Just two of many examples are:

• Amazon: The Seattle-based retail giant announced in June 2024 that it had removed 95% of the plastic air pillows from delivery packaging in North America, working toward complete removal by the end of the year. The company has wide-ranging ESG goals and reports progress on its corporate website⁵ 
• Costco: Another retail game changer, this Washington State company has aligned its sustainability efforts with the United Nations Sustainable Development Goals, focusing on seven issues related to the company's business⁶

Adopting sustainable practices isn’t just a moral obligation; it also opens doors to new markets and competitive advantages. Companies prioritizing sustainability can capitalize on emerging opportunities and set themselves apart in the marketplace.

The demand for sustainable products and services is rising as consumers become increasingly aware of their environmental footprint. Consumers are putting more pressure on businesses to make and follow through on commitments to sustainability. In a 2024 report from Bain & Company, it was found that 60% of consumers’ concerns about climate change have increased over the last two years.⁷ This has translated into consumers being willing to pay 10% more for products that minimally impact the environment.⁷ This trend provides a lucrative opportunity for businesses to innovate and offer products that meet these new demands. From eco-friendly packaging to energy-efficient appliances, businesses that invest in sustainable product development can tap into these emerging markets and enjoy a loyal customer base.

Sustainability can serve as a powerful differentiator in a crowded market. Companies that clearly communicate their commitment to sustainable practices can attract discerning customers who prioritize ethical consumption. The Bain study found that brands and companies played a significant role in consumer journeys toward sustainability. Of consumers surveyed, 20% said a company awareness campaign moved them toward buying more sustainable products.⁸ Sustainable differentiation can help businesses stand out, garner positive media coverage, and foster customer loyalty. Brands like Seventh Generation and Beyond Meat have successfully leveraged their sustainable practices to differentiate themselves from competitors and build strong, loyal followings.⁹

Sustainability often drives innovation. Companies that focus on sustainable practices are more likely to explore new materials, processes, and technologies that can lead to greater efficiency and cost savings.¹⁰ For instance, using renewable energy can reduce waste and resource dependency, ultimately enhancing the overall efficiency of business operations.

The regulatory landscape is increasingly favoring sustainable business practices. By proactively adopting sustainable measures, companies can ensure compliance with current and future regulations, avoiding fines and penalties. This preparedness not only enhances corporate resilience but also positions businesses favorably in the eyes of regulators and policymakers.

The journey toward sustainability begins at the top. Effective leadership is crucial in creating a vision, fostering a culture, and implementing strategies that align with sustainable business practices.¹¹ Leaders who prioritize sustainability can transform their organizations and drive impactful change.

Leadership plays a pivotal role in setting a clear and compelling vision for sustainability. This vision should outline the company’s commitment to environmental stewardship, social responsibility, and long-term economic health. By articulating a strong vision, leaders can inspire and mobilize their teams, stakeholders, and even the broader community to support sustainable objectives.

To embed sustainability deeply into the organization, leaders must cultivate a culture that values and supports sustainable practices. This involves setting the tone from the top and ensuring that sustainability is woven into the company’s mission, values, and daily operations. Programs such as employee training, recognition for sustainable achievements, and encouraging innovation in sustainability can help foster this culture.

Google leaders like Kate Brandt, the chief sustainability officer, are responsible for following through on the company’s sustainability agenda. Brandt is focused on collaboration as a key piece of working toward net zero goals.¹¹

Leaders must empower employees and stakeholders to take ownership of sustainability initiatives. This can be achieved by establishing cross-functional sustainability teams, providing resources and training, and setting clear sustainability goals and metrics. When employees feel included and responsible for sustainable outcomes, they are more likely to contribute innovative ideas and solutions.

Effective leadership also involves holding the organization accountable for its sustainability goals. This means regularly tracking progress, reporting on sustainability metrics, and adjusting strategies as needed.

Workvia is an example of a company focused on reporting ESG information with as much clarity and stringency as financial reporting. The company supports 75% of the largest 500 companies in the U.S. in reporting financial information to the SEC, and they now offer their customers the ability to accurately report on ESG metrics.¹¹ Transparent communication with stakeholders about the company’s sustainability efforts and challenges is essential to building trust and credibility.

To ensure that sustainability initiatives are effective and impactful, businesses need to rigorously evaluate their performance and transparently communicate their progress. This process involves establishing key sustainability metrics, tracking them consistently, and reporting the outcomes to stakeholders.

Key Performance Indicators (KPIs) are essential for measuring the success of sustainability initiatives. Common KPIs include:^{12, 13}

• Carbon Footprint: Measuring greenhouse gas emissions to monitor efforts to reduce carbon output
• Energy Consumption: Tracking the amount of energy used and the proportion sourced from renewable resources
• Water Usage and Waste Management: Assessing efficient water use and waste reduction efforts
• Supply Chain Sustainability: Evaluating the environmental and social practices of suppliers and partners
• Employee Well-being: Metrics such as employee satisfaction, retention rates, and diversity and inclusion measures
• Community Impact: Assessing the company’s contribution to local communities through initiatives like philanthropy and volunteer programs

Establishing clear, measurable goals in these areas allows businesses to monitor progress and make data-driven decisions.

Transparency in reporting sustainability performance is key to building trust with stakeholders, including customers, employees, investors, and regulators. Annual sustainability reports should detail the company’s goals, the steps taken to achieve them, the challenges faced, and the progress made. These reports can be published as standalone sustainability reports or integrated into annual financial reports.

Besides traditional reporting, companies can utilize digital platforms and social media to share real-time updates on their sustainability efforts.¹⁴ This ongoing communication helps maintain stakeholder engagement and reinforces the company’s commitment to its sustainability goals.

Obtaining third-party certifications such as LEED (Leadership in Energy and Environmental Design), ISO 14001 (Environmental Management Systems), and Energy Star Certification can add credibility to a company’s sustainability claims.¹⁵ Adhering to recognized standards and frameworks like the Global Reporting Initiative (GRI)¹⁶ or the United Nations Sustainable Development Goals (SDGs)¹⁷ provides a structured approach to sustainability reporting and helps stakeholders benchmark the company’s performance against global best practices.

The importance of sustainability in business cannot be overstated. Integrating sustainable practices into your operations not only contributes to the well-being of society and the environment but also drives economic performance, innovation, and customer loyalty. As the business landscape continues to evolve, companies that prioritize sustainability will be better equipped to navigate challenges and seize new opportunities.

If you’re ready to take your career to the next level, an Online MBA from Seattle University can equip you with the skills you’ll need to lead today’s complex businesses. The values-centered program will help you understand, integrate, and apply business principles to business challenges in as few as two and a half years of studying part-time.

The challenging curriculum covers strategic thinking, leadership, problem-solving, communication, and collaboration. You’ll learn from expert faculty how to identify challenges and opportunities and work with your classmates to apply your learning in scenarios based on today's business realities. Seattle U Albers MBA graduates work for top companies in all industries. Reach out to an admissions outreach advisor today to find out how Seattle U can help you become the leader you want to be.