24 October 2024 12:02 am Views - 70
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Colombo Stock Exchange Research and Strategy Division Senior Vice President Nishantha Hewavithana
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Colombo Stock Exchange (CSE) Research and Strategy Division Senior Vice President Nishantha Hewavithana provides a brief overview of the evolving landscape of sustainability, its interconnected dimensions and the pivotal role corporations can play in building a sustainable future.
What is sustainability? Is it achievable?
Sustainability, defined by the UN in 1987, is “meeting the needs of the present without compromising the future”. It’s about ensuring environmental balance, social well-being and economic stability. Environmental sustainability ensures that natural resources are consumed at a rate they can be replenished, preserving clean air, water and biodiversity. Social sustainability focuses on safeguarding fundamental human rights, ensuring communities are healthy and secure. Economic sustainability aims for long-term development without negatively impacting the other pillars.
These three pillars—environmental, social and economic—are interconnected, meaning actions in one area affect the others and must be balanced for sustainability to be truly achievable. For example, a factory creating jobs can uplift a community but if it pollutes a local river, it harms health and food security, showcasing the importance of a balanced approach. Achieving sustainability requires coordinated global efforts, including businesses, governments and communities, with the Sustainable Development Goals (SDGs) guiding these actions.
In 2015, the United Nations adopted 17 SDGs to address the world’s most urgent environmental, social and economic challenges. These goals target issues like poverty, inequality, climate change and peace, with the aim of creating a sustainable future by 2030.
The SDGs serve as a global framework for governments, businesses and individuals to collaborate in improving lives and protecting the planet. By aligning with these goals, stakeholders can work together to foster sustainable development and ensure a better future for all.
What role can a company play in building a sustainable future?
In the corporate world, sustainability is expanded to include a fourth pillar: corporate governance, which is key to determining a company’s sustainability. This concept, known as ESG (environmental, social and governance), reflects how businesses operate responsibly while creating wealth. Companies can play a key role in building a sustainable future by integrating ESG principles into their operations and strategies. This promotes long-term value creation, responsible growth and positive social and environmental outcomes.
Companies can drive sustainability by adopting strategic actions that reduce environmental impact and foster ethical practices. Key steps include minimising waste, utilising renewable resources and embracing circular economy principles. Setting carbon reduction targets, transitioning to clean energy and supporting biodiversity are also critical. Promoting corporate social responsibility through fair labour practices, community engagement and prioritising health and safety enhances social impact. Innovating eco-friendly products and investing in green technologies address environmental challenges while meeting consumer demand.
Embedding ESG principles into governance, aligning with UN SDGs, fostering sustainable supply chains and collaborating with stakeholders to leverage diverse perspectives, resources and expertise solidifies a company’s commitment to sustainability. These efforts not only create long-term value but also promote financial stability and growth.
What is the role of the CSE in promoting sustainability among the listed companies?
The CSE promotes sustainability among listed companies through four key initiatives. First, it supports capacity building for companies to produce high-quality sustainability reports, enhancing ESG disclosures. Second, it offers products that enable companies to raise capital for eco-friendly projects and attracts investors focused on sustainability. Third, the CSE sets standards with its voluntary guidelines, ‘Six Recommendations to Report Corporate Sustainability, V3’. Finally, it aims to boost the visibility of companies with strong ESG practices by developing an ESG index, showcasing leaders in sustainability.