Corporate sustainability refers to a management model that differs from the "traditional" as it is driven not only from the economic dimension but puts sustainability at the forefront. Corporate sustainability seeks to produce long-term stakeholder value by implementing a company plan that emphasizes the ethical, social, environmental, cultural, and economic aspects of conducting business.
To remain competitive in increasingly volatile markets, a company must be able to evolve over time, responding to consumer and workforce needs and offering products and services in line with market paradigms.
The increasing attention given to sustainability issues by regulators, investors, consumers, and many other stakeholders has transformed a company’s ESG performance into a strategic lever for its competitiveness. The benefits of measuring and improving one's ESG performance encompass many aspects: from increased financial stability, to improved brand reputation, to access funding opportunities and projects reserved only for companies that show good ESG performance. Benefits that are as relevant to large companies as they are to SMEs. Despite this, when it comes to ESG performance, companies still encounter several problems concerning metrics and governance.
When it comes to sustainable transition, one of the first areas that companies need to analyse is their business model. Indeed, the sustainability of the business model is the foundation on which not only the success of the organization's sustainability strategies depends, but also its competitiveness and, before that, its very viability over time. In reference to the business model, in fact, sustainability indicates not only the impact of the company and its operations - and those that occur upstream and downstream its supply chain - on the environment or communities where the company is located, but also the economic sustainability of the model over time. This analysis, as well as the work to streamline and improve the critical issues detected, must consider all aspects that impact the company's business model, as well as all areas impacted by the company. In this journey, ESG plays a primary role, as it helps companies to identify those issues and areas where they need to focus on to monitor current performance and develop strategies for improvement.
There is no sustainability strategy that can avoid considering what happens along a company's supply chain. In fact, we know that about 90% of a company's carbon emissions are generated along the supply chain. Despite this, while the number of companies measuring the direct impacts of their operations is increasing, there are still few that measure the impacts associated with everything that happens along the supply chain. This situation is often generated by an undefined and unstructured approach to measuring ESG performance, including unclear governance and accountability, as well as the failure to monitor relevant KPIs. However, failure to monitor supply chain sustainability often comes from the scale of the project. Large companies, for example, are often characterized by long and complex supply chains, which make assessing suppliers’ ESG performance a huge challenge. That is why when it comes to a sustainable supply chain, it is important to rely on the right partners who can help the company deal with all these complexities.
A sustainable supply chain requires an integrated approach that involves all aspects of the supply chain, from sourcing to delivery. Every large company’s sustainability effort is tied to their ability to partner and support improvements in small and medium-sized enterprises (SMEs) along the entirety of their supply chain. On their side, SMEs can take the lead and embrace specific initiatives to promote sustainability in their supply chain, seizing a unique opportunity to stand out along the value chain.
In recent years, properly measuring and communicating one's ESG performance has become a competitive lever for companies. However, while the adoption of sustainability-related practices is becoming more common among companies, measurement and governance issues still pose major challenges for many organizations, especially SMEs.
Small and medium-sized enterprises (SMEs) play a vital role in the global economy, contributing to job creation and economic growth. SMEs account for 90% of businesses worldwide and more than 50% of global employment. In Europe, such statistics are even more impacting as SMEs represent 99.8% of private companies and more than 60% of employment.
Climate change poses significant risks to businesses around the world. Extreme weather events, such as floods, droughts, and hurricanes, can disrupt supply chains and cause widespread damage to infrastructure. Rising sea levels can threaten coastal properties and infrastructure, while increasing temperatures can impact worker health and productivity. Failure to address these risks by companies leads them to lose market share and profits, as consumers and investors demand more environmentally responsible practices.
The banking sector has a transformative role to play as a catalyst and enabler of a systemic acceleration towards a more sustainable economy, with the challenging mission of rapidly inducing change in consumer, lender and investor behaviour, and perhaps more importantly, in the broader society as a whole. The Horizon 2020 Energy Efficient Mortgages Initiative (EEMI) Bauhaus model is intended to support this process and build a new methodological approach to propose a strategic harmonic roadmap to accelerate the green and social transition.