MODULE 1: DEMYSTIFYING THE MOST PROMINENT GLOBAL ISSUES OF OUR TIME

- SUSTAINABILITY
- Sustainability is a concept and approach that focuses on meeting the needs of
the present without compromising the ability of future generations to meet their
own needs. It encompasses various aspects of human and environmental
well-being and seeks to balance economic, social, and environmental concerns to
create a more equitable and resilient world.
- Higher profit has been the most important factor for businesses to be successful
which enables them to be more competitive and leads them to disregard
ecological balance, social responsibility and governance. The traditional way of
business thinking is profit maximization
- But now, businesses are now aware of the concept of sustainability and are
taking actions in order to address global issues. Profit is not the only driving force
in managing a sustainable business
- Consumers are starting to become increasingly conscious of the
environment and social impacts of the products and services they
purchase
- TRIPLE BOTTOM LINE (John Elkington)
- To evaluate the performance in a broader perspective to create greater business
value
- It was developed to encourage businesses and organizations to evaluate their
overall impact on society and the planet, not just their financial profitability.
- The Triple Bottom Line approach encourages organizations to balance and
optimize these three dimensions to achieve a more holistic and sustainable form
of success. By considering economic, social, and environmental factors,
companies aim to be socially responsible, environmentally conscious, and
financially viable. This approach recognizes that financial success should not
come at the expense of people and the planet.
- It acknowledges that businesses have a role to play in addressing societal and
environmental challenges while still generating profits.
- 3 Parts of the Framework
- Environmental - achieving ecological balance; This dimension addresses a
company's impact on the environment and natural resources. It includes
factors like energy consumption, waste management, carbon emissions,
resource conservation, and sustainability efforts. Evaluating the "planet"
bottom line assesses how a business's activities affect the environment
and whether it is adopting environmentally responsible practices.
 - Social - developing people and society; This dimension focuses on the
social and human aspects of a business. It involves considerations such as
employee well-being, workplace diversity and inclusion, community
engagement, labor practices, and the company's impact on society.
Evaluating the "people" bottom line takes into account how a business
contributes to the welfare and development of its employees and the
broader community.
- Economic - growing the business; This represents the traditional financial
aspect of a business, including revenue, profit margins, and return on
investment. It measures a company's economic success and its ability to
generate financial value for shareholders and stakeholders.

MODULE 2: A THEORETICAL FRAMEWORK FOR SUSTAINABILITY IN BUSINESS

- What is Sustainable Development?
- It is the development that meets the needs of the present without compromising
the ability of future generations to meet their own needs
- Sustainability can be achieved by maintaining the balance/harmony among
environmental, economic and socio-political (this is usually being left out)
aspects of a business
- Sustainability is not just about the environment because it encompasses a
broader and more holistic concept that extends beyond environmental concerns.
Sustainability, often referred to as the "triple bottom line" or the three pillars of
sustainability, takes into account three interconnected dimensions:
environmental, social, and economic.
- The Concept of Sustainability:
- Creates economic value (contribute to the bottomline of the business)
- Increases public wealth [We share whatever profit and wealth to our internal and
external stakeholders (employees, suppliers, communities)]
- Must have social impact (socially justified)
- Environmentally sound
- Ethically conducted (being ethical is subjective)
- Compliant to laws and regulation
- Systems Perspective in Sustainability
- Business, society and environment
- Business has an impact to the society and environment and vice versa
- Business, society, and the environment are interdependent for several reasons:
- Economic Impact: Businesses are an integral part of society, and they
contribute to the economy through job creation, wealth generation, and
 tax revenues. A healthy economy benefits society, while businesses rely
on a stable and prosperous society for their success.
- Environmental Sustainability: The environment provides the resources
necessary for business operations. Businesses depend on natural
resources, and the health of the environment affects their long-term
viability. Environmental degradation can harm business operations and
society's well-being.
- The interdependence of business, society, and the environment
underscores the need for businesses to consider their social and
environmental impacts while contributing positively to society's
well-being. This interconnected relationship is critical for sustainable and
responsible business practices.
- They have interdependencies.
- In business, almost every activity must be purposeful and has the society in mind
(in their products processes, policies for the people, and the communities they
serve)
- Global issues will have an indirect impact on the business which is why they
should work to address these issues. Businesses are crucial in enabling
sustainability
- Business and society operate within the natural environment
- For businesses and societies to survive, they must operate in a way that does not
destroy or deplete these natural resources for future generations.
- Holistic perspective - business leaders consider as both a challenge and an
opportunity
- EGSEE Dimensions of Business Sustainability Performance
- Economic - The economic dimension of business sustainability performance
focuses on the financial aspects of a company's operations and their impact on
long-term viability and success. It involves ensuring that a business can thrive
economically while also contributing to broader sustainability goals. Key
elements of the economic dimension of business sustainability performance
include:
- Governance - The governance dimension of business sustainability performance
is a critical aspect that focuses on the way a company is managed and governed
to ensure ethical, responsible, and sustainable practices. Effective governance is
essential for driving sustainability throughout an organization.
- Social - The social dimension of business sustainability performance focuses on
the impact of a company's operations on society and stakeholders. It
 encompasses a wide range of considerations related to social responsibility,
human rights, and community engagement.
- Ethical - The ethical dimension of business sustainability performance is centered
on conducting business in a morally and ethically responsible manner. It
encompasses a range of principles and practices that align with ethical values
and societal norms.
- Environmental - The environmental dimension of business sustainability
performance focuses on the impact of a company's operations on the natural
environment and its efforts to reduce negative environmental effects while
promoting ecological responsibility.
- Key Performance Indicators
- Quantifiable, visible, and tangible measures that are critical to the success of an
organization and important in the assessment of its overall performance.
- KPIs vary depending on the type of organization and the industry/sector where it
operates.
- KPIs are crucial in assessing the extent of sustainability practiced by an
organization
- KPI stands for Key Performance Indicator. KPIs are measurable metrics that are
used to evaluate the performance of an organization, a specific department, a
project, or an individual. They are important tools for assessing progress, setting
goals, and making data-driven decisions. KPIs are typically specific, measurable,
achievable, relevant, and time-bound (SMART), and they vary depending on the
area of focus.
- KPIs are a practical and strategic tool for assessing and enhancing business
sustainability. They provide a structured way to quantify and evaluate
environmental, social, and ethical performance, supporting the organization's
commitment to responsible and sustainable business practices.
- The Sustainability Performance and Accountability Framework
- The Sustainability Performance and Accountability Framework consists of the 5
EGSEE Dimensions with the corresponding goals, reports, and assurances used to
assess sustainable business operations.
- This framework is essential in assessing the degree to which business operations
are sustainable.
- Data is the basis for assessing org performance and coming up with action plans
- The Role of Business in Society
- Philanthropy
 - Philanthropy is the act of donating money, resources, time, or effort to
support charitable causes or to promote the well-being of others or the
common good.
- Philanthropy plays a vital role in addressing societal challenges,
supporting nonprofits and NGOs, advancing scientific research, and
promoting social justice. It is often driven by a commitment to
contributing to the welfare and betterment of individuals and
communities, both locally and globally. Many philanthropic efforts are
guided by a desire to address issues like poverty, education, healthcare,
environmental conservation, and more.
- Donations, volunteering
- Give without expecting something in return
- Focus is helping people and the environment
- CSR
- CSR stands for Corporate Social Responsibility. It is a concept and practice
that involves businesses and organizations acknowledging and taking
responsibility for the social, environmental, and ethical impacts of their
operations. CSR goes beyond profit generation and focuses on the
broader responsibilities that companies have to society, the environment,
and various stakeholders.
- CSR is driven by the belief that businesses have a broader role in society
and can contribute positively to the well-being of communities and the
environment. It is often seen as a way to build trust, enhance brand
reputation, and foster long-term sustainability. Many companies
incorporate CSR into their corporate strategies and practices, recognizing
that it's not only about doing well economically but also about doing
good for the world.
- Give something to the people but you expect something in return
- Creating Shared Value
- Integrating social improvement into economic value creation itself
- Driving social improvement with a business model
- Think of stakeholders as part of the ecosystem. Your stakeholders grow as
your business grows. Both are benefiting from each other
- When businesses are creating shared value (CSV), they are actively
seeking to generate economic value for themselves while simultaneously
creating social and environmental value for the communities and
stakeholders they engage with. This approach goes beyond traditional
corporate social responsibility (CSR) and philanthropy, emphasizing the
 integration of social and environmental concerns into core business
strategies and operations.
- By creating shared value, businesses aim to address pressing societal
issues while improving their competitive advantage and financial
performance. This approach recognizes that societal problems are not
just external challenges for businesses to address but opportunities to
innovate and create solutions that benefit both the company and the
communities they serve. It represents a more integrated and sustainable
way of doing business that aligns profit with positive societal impact.
- companies can move beyond corporate social responsibility and gain
competitive advantage by including social and environmental
considerations in their strategies. Treating societal challenges as business
opportunities is the most important new dimension of corporate strategy
and the most powerful path to social progress.
- Sustainability Reporting
- Sustainability Reporting is a documentation of a company's Environmental,
Social, and Governance (ESG) performance that may or may not be publicly
disclosed.
- Most businesses follow criteria of Sustainability indicators to determine overall
Sustainability Performance and to assess poor performing indicators needing
improvement plans.
- Sustainability strategies, initiatives and actions can be publicly disclosed via
Sustainability Reports that follow the Global Reporting Initiative (GRI) framework.
- Sustainability reporting, often referred to as Environmental, Social, and
Governance (ESG) reporting, is the practice of disclosing an organization's
non-financial performance and its impact on various environmental, social, and
ethical aspects. The primary purpose of sustainability reporting is to provide
transparent, comprehensive, and credible information about a company's efforts
and performance related to sustainability and responsible business practices.
- The goal of sustainability reporting is to enhance transparency, accountability,
and trust among stakeholders by demonstrating a company's commitment to
sustainability and responsible business practices. It helps stakeholders evaluate a
company's performance in areas beyond financial results, promoting long-term
sustainability and responsible corporate behavior.
- This is voluntary
- According to their website, Global Reporting Initiative is an independent
international organization that helps businesses, governments, and other
 organizations to understand and communicate the impacts of business on critical
issues.
- Issues such as climate change, human rights, anti-corruption and many others
are being reported
- GRI Sustainability Standards enhance the global comparability and quality of
sustainability information, resulting in greater transparency on economic,
environmental and social impacts
- GRI Sustainability Standards Criteria
- The GRI Sustainability Reporting Standards (GRI Standards) help organizations
increase their transparency and communicate both their positive and negative
impacts on sustainable development.
- Economic, Environmental and Social
- Materiality Assessment
- A materiality assessment, also known as a materiality analysis or materiality
determination, is a process used in various fields such as corporate sustainability
reporting, financial accounting, and environmental impact assessments. The
primary goal of a materiality assessment is to identify and prioritize the most
significant issues, factors, or aspects that have a substantial impact on the
performance, reputation, or decision-making of an organization or project. It
helps organizations focus their efforts on what matters most to their
stakeholders and to themselves
- In sustainability reporting, organizations assess the environmental, social, and
governance (ESG) factors that are most relevant to their business and
stakeholders. They then report on these material issues in their sustainability
reports, providing transparency about their performance and efforts to address
these concerns.
- The process of conducting a materiality assessment typically involves engaging
with stakeholders, both internal and external, to gather input on their concerns
and expectations. It may also involve a quantitative analysis of data and a
qualitative assessment of the significance of various issues or factors. Ultimately,
the goal is to define what is material or significant and what isn't, allowing
organizations to prioritize resources and efforts on the areas that matter most to
their stakeholders and business objectives
- The specific methods and criteria for conducting materiality assessments can
vary depending on the context and industry. It's a dynamic process that
organizations may revisit periodically to ensure they remain responsive to
changing stakeholder expectations and evolving business conditions
- “Materiality is a principle used in decision making to define whether an aspect or
 issue is sufficiently important to warrant attention.”
- 3 P’s
- Purpose - A clear understanding of objectives helps manage expectations
and drives the optimisation of results
- Perspective - Balancing internal and external viewpoints is the mark of a
leader and need not be resource intensive.
- Process - A robust process brings confidence and improved decision
making.
- Materiality Matrix
- High Impact, High Interest (Top-Right Quadrant): These issues are
considered highly material and are typically the top priorities for
reporting and action. They are of significant importance to both the
organization and its stakeholders
- High Impact, Low Interest (Top-Left Quadrant): These issues are
important to the organization but have relatively less stakeholder
interest. They are typically addressed primarily for internal reasons, such
as compliance or operational efficiency
- Low Impact, High Interest (Bottom-Right Quadrant): These issues have
significant stakeholder interest but lower impact on the organization's
performance. They may be addressed to meet stakeholder expectations
and maintain reputation
- Low Impact, Low Interest (Bottom-Left Quadrant): These issues are of
limited importance both to the organization and its stakeholders and are
often considered less material

MODULE 3:
Economic Vitality as a Component of Sustainability
- Vitality: stability, has importance, capacity to develop (growth and survival), strength,
resilience
- It is how to make your business resilient
- Businesses need to sustain their economic vitality because of crises and
economic downturn so that they can still contribute to stakeholders and the
positive environment–creating shared value (the stakeholders and environment
are also developing).
- Economic vitality: strong economic performance capable of withstanding crisis; resilient
business
- In the context of businesses, economic vitality refers to the financial health,
strength, and sustainability of a company or organization. It encompasses various
factors that contribute to the company's overall economic well-being and
prosperity. Economic vitality for a business is essential for its growth,
competitiveness, and long-term success
- Economic vitality for businesses is not just about short-term profit but also about
long-term sustainability, resilience, and adaptability. Companies that focus on
 these aspects are better positioned to thrive in a dynamic and competitive
business environment, even when faced with economic challenges and
uncertainties
- Factors to consider (according to McKinsey):
- Growth:
- Composition of business portfolio
- Innovation and new products
- Reaching new customers and markets
- Businesses need to grow to create value to stakeholders but
growth is not enough
-
- Risk management:
- Regulatory management
- Reputation management
- Returns on capital
- Effectively managing risks, including financial, operational, and
strategic risks, is important for safeguarding economic vitality. This
involves identifying potential threats and having strategies in place
to mitigate them
- returns on capital
- Green sales and marketing
- Sustainable value chains
- Sustainable operations
-
- Disconnect between business and society?
- There is a disconnect between business and society because businesses don't
know their systems' perspective theory; they think independently and do
operations without thinking of the society and environment. There is a
disconnect because of this narrow thinking.
- Adoption of narrow model of economic value creation lead to unmet societal
needs and negative impacts to growth and innovation
- Many businesses prioritize short-term financial gains over long-term
sustainability. This can lead to decisions that have negative social and
environmental consequences but are financially beneficial in the short term
- Not all businesses fully understand the complex, interconnected nature of
today's global systems. They may not appreciate the interdependence between
their operations and the broader society and environment
 - addressing the disconnect between businesses and society requires a shift in
mindset, corporate culture, and regulatory approaches. It involves recognizing
that the well-being of a business is intimately connected to the well-being of the
society and environment in which it operates, and that a more holistic, long-term
perspective can lead to greater success and resilience in the modern business
landscape
- SOCIETAL NEEDS AND ECONOMIC VALUE CREATION
- It is important that companies become productive and efficient because If
companies remain productive and efficient they have an eventual impact of
society
- Improving productivity and efficiency is a key driver of success and sustainability
for businesses. It helps them reduce costs, increase competitiveness, boost
profitability, and address environmental and social responsibilities. In today's
fast-paced and competitive business landscape, companies that do not
continually seek ways to become more efficient may struggle to thrive and adapt
to changing conditions
- The impact of companies becoming productive and efficient on society is positive
and multifaceted. It contributes to economic growth, job creation, lower costs for
consumers, environmental sustainability, and improved overall quality of life.
Efficient businesses are often seen as contributing to the well-being of
communities and playing a role in addressing broader societal challenges, such as
environmental degradation and resource scarcity
- Social deficits create economic costs
- when there are shortcomings or inadequacies in the social aspects of a
society, such as education, healthcare, social services, or community
well-being, it can lead to financial or economic consequences. In other
words, the social challenges and problems within a society can have a
direct impact on its economic performance and prosperity
- The statement highlights the interconnectedness of social and economic
aspects. It suggests that social well-being and economic prosperity are
not isolated from each other but are deeply interrelated. Social deficits
can lead to economic costs because they affect the human capital,
workforce, and overall societal health, which, in turn, can have economic
implications
- By addressing these deficits and promoting social well-being, a society
can potentially reduce the economic costs associated with social
problems and create a more prosperous and resilient economy
- “Externalities” shape internal company productivity
 - externalities often have ripple effects that impact internal company
productivity. Companies must respond to these external factors by
investing in compliance, risk management, innovation, and other
strategies, which can influence internal operations and resource
allocation. Ultimately, companies that effectively address externalities can
enhance their long-term sustainability and competitiveness.
- Social needs represent the largest market opportunities because they are driven
by demographic, cultural, technological, and societal shifts. Businesses that
recognize and respond to these evolving needs can tap into significant and
growing customer bases, driving economic growth and innovation.
- According to Porter, if the company is productive, there is positive environmental
impact, develop workers skills, safety and health, and there is shared value in it
because they are not only becoming productive but they are also helping internal
and external stakeholders
- There is a connection between societal needs and economic value
- The connection between societal needs and economic value is intricate
and reciprocal. Addressing societal needs stimulates economic activity,
leads to innovation and entrepreneurship, and improves the overall
well-being of individuals and communities. A society that effectively
meets these needs can experience higher economic value through
increased productivity, consumer spending, and social stability.
Conversely, economic value generated through businesses and economic
growth can be reinvested in addressing societal needs, creating a cycle of
mutual benefit.
- Levels of Shared Value
- Shared value results from policies and practices that contribute to competitive
advantage while strengthening the communities in which a company operates.
Companies can create shared value in three ways: by reconceiving products and
markets, redefining productivity in the value chain, and strengthening local
clusters. All three require a sufficiently robust market ecosystem.
- Reconceiving products, needs, and customers
- Meeting societal needs through products
- Serving unserved or underserved customers
- Redefining productivity in the value chain
- Utilizing resources, energy, suppliers, logistics, and employees differently
- Using resources better across the value chain to improve fundamental
productivity
- Design products and services to address societal needs
 - Open new markets by serving unmet needs in underserved communities

- Businesses create and market solutions to community problems better

than governments and NGOs.

- New needs and new markets open up opportunities to differentiate,

innovate and grow

- A new generation of social entrepreneurs

- Enabling local cluster development
- Improving available skills, suppliers, and supporting institutions in the
communities in which a company operates to increase productivity,
innovation, and growth
- A strong local cluster improves company productivity and growth

- Local suppliers and service providers

- Supporting institutions and infrastructure

- Related businesses

- Companies, working collaboratively, can catalyze major improvements in

the cluster and the local business environment
- Local cluster development strengthens the link between a company’s
success and community’s success
- Local cluster development can create a symbiotic relationship between
companies and their surrounding communities. When companies
prosper, they have the capacity to uplift the community, and in turn, a
thriving local community can provide the resources, labor force, and
support needed for companies to succeed. This interdependence can lead
to a mutually beneficial and sustainable relationship, strengthening the
overall success of both the companies and the community.
- THE IMPORTANCE OF CREATING WEALTH WITH INTEGRITY
- The primary function of business entities is to create value for their owners,
investors, and other stakeholders. This value is not only measured by the wealth
which the business creates but also by the public trust and investor confidence
that is earned over time.
- The reliability of financial reports and the quality of audit reports are essential to
maintaining trust and confidence among all stakeholders.
- Creating wealth with integrity is not only a moral imperative but also a pragmatic
choice for long-term success. It leads to trust, reputation, sustainability, and
positive social impact, while reducing legal risks and the potential for harm to
individuals and communities. It is a principled and responsible approach to
wealth creation
- Integrity in business refers to the quality of being honest, ethical, and principled
 in all aspects of one's commercial activities. It is a fundamental value that guides
the behavior and decision-making of individuals, organizations, and leaders
within the business world. Integrity is not just a personal quality but also a
cultural and organizational attribute. It sets the tone for the entire business,
influencing the behavior of employees and shaping the business's reputation.
Businesses that prioritize integrity tend to build trust with customers, employees,
and other stakeholders, which can lead to long-term success and sustainability
- OVERALL SUSTAINABILITY REPORTING EFFORT INCLUDES
- Public Trust and Investor Confidence in public financial information
- Public trust in public financial information refers to the belief and
confidence that individuals and organizations have in the accuracy,
reliability, and transparency of financial data and reports that are made
publicly available
- Investor confidence in public financial information is a specific aspect of
public trust, focused on the belief that financial information is reliable
and reflects the true financial condition of the entities providing the
information
- Ensuring and maintaining public trust and investor confidence in public
financial information is a shared responsibility among companies,
regulators, auditors, and other stakeholders. Companies are expected to
provide accurate and transparent financial information, while regulatory
bodies enforce standards and regulations to safeguard the integrity of
financial markets. The integrity of financial reporting and transparency in
financial information are crucial elements in fostering trust and
confidence in public financial information

- Financial Reporting: Financial reporting is the process of producing and

communicating financial information about an organization's financial
performance and financial position. It provides a comprehensive view of a
company's financial activities and helps various stakeholders, including investors,
creditors, regulatory authorities, and management, assess the company's
financial health. Financial reporting typically includes a range of documents and
statements, and it follows specific accounting and reporting standards to ensure
accuracy and consistency

- Incorporating financial reporting into sustainability reporting provides a

well-rounded and transparent view of a company's overall sustainability,
which includes its economic, social, and environmental performance. This
integrated approach helps organizations communicate their commitment
to sustainability and economic viability while meeting the expectations of
diverse stakeholders.

- Internal Control Reporting

 - Internal control reporting refers to the process of evaluating,
documenting, and reporting on the effectiveness of an organization's
internal controls over financial reporting (ICFR). This process is essential
for maintaining the integrity and reliability of a company's financial
statements and for ensuring compliance with regulatory requirements,
- Investor Confidence and KPIs
- Investor confidence is a key driver of economic growth, prosperity and financial
stability
- investor confidence is a foundational element for a thriving and stable
economy. It encourages investment, promotes economic growth, and
ensures the efficient allocation of resources and capital. It is an indicator
of trust in the financial system, and maintaining a high level of investor
confidence is a shared responsibility among businesses, regulatory
bodies, and policymakers to foster economic well-being and prosperity.

- The key to creating usable financial KPI´s is to offer stakeholders sufficient

measures to assess sustainable performance

- Creating usable financial Key Performance Indicators (KPIs) involves

providing stakeholders with the right set of metrics that allow them to
assess not only financial performance but also the sustainability and
long-term health of a business

- CONVENTIONAL AND NON-FINANCIAL INFORMATION

- Important economic KPI´s consist of financial and non-financial information
presented in the financial statement and Management Decision Analysis
- A balanced scorecard approach incorporates both financial and non-financial KPIs
to evaluate performance in various areas, such as financial, customer, internal
processes, and learning and growth. This approach provides a more holistic
understanding of an organization's performance
- Combining financial and non-financial KPIs in economic performance evaluation
allows organizations to have a more holistic understanding of their performance,
address both short-term and long-term objectives, and align with the
expectations of various stakeholders. It is a strategic approach to manage and
assess a company's success in a well-rounded manner
- TRANSPARENCY IN FINANCIAL REPORTING
- Transparency in financial reporting refers to the extent to which a company's
financial information and reporting practices are open, clear, and easily
understandable. It involves providing comprehensive and accurate information
about a company's financial performance, financial position, and related
activities to stakeholders, including investors, creditors, regulatory authorities,
and the general public
- transparency in financial reporting is vital for maintaining trust, confidence, and
accountability in financial markets and the broader economy. It ensures that
 stakeholders have access to reliable information, enabling them to make
informed decisions and assess the financial health and performance of
companies. Additionally, transparency helps safeguard against unethical and
fraudulent practices and promotes responsible business behavior.
- Transparent financial reporting is vital to the continued growth and strength of
the capital markets and investor confidence.

- The achievement of effective internal controls is the key to business success,

long-term survival and sustainable performance

- In most organizations, internal controls are usually done by an internal audit

team, which includes risk management and control.

- Board of Directors are responsible for its internal control systems

- PROMOTING TRANSPARENCY IN FINANCIAL REPORTING IS A KEY TO SUSTAINABILITY
- Promoting transparency in financial reporting is integral to sustainability because
it fosters trust, supports responsible financial practices, facilitates long-term
planning, and encourages investment in organizations committed to
sustainability. Transparent financial reporting is a cornerstone of sustainable and
responsible business operations
- The business owner must play a more active role in the preparation of the
financial statements.

- Full disclosure of all critical information must be given in order for financial
reporting to be conducted with integrity.
- Independent and credible auditors must be responsible for overseeing financial
reports and related audits.
- The business owner must certify the completeness and accuracy of all financial
reports in order to ensure accountability.
- Financial statements and internal control reporting
- Financial statements are vital for providing information about a company's
financial performance and position, while internal control reporting is crucial for
safeguarding assets, ensuring compliance, and maintaining the integrity of
financial information. Both aspects are integral to responsible and transparent
financial management, which is essential for the trust and confidence of
stakeholders and the overall success of the organization.

- It assists shareholders in meeting appropriate investment and voting decisions,

- Enable them to exercise ownership rights on informal basis

- Protects them from receiving misleading financial information.

SUSTAINABLE ENTERPRISES FOR THE 21ST CENTURY

- Sustainability leads to competitive advantage and is seen as a human and planetary
imperative
 - sustainability can provide a competitive advantage by reducing costs, driving
innovation, expanding market opportunities, enhancing reputation, and
improving risk management. Businesses that prioritize sustainability are better
positioned to succeed in an evolving business landscape focused on
environmental and social responsibility.
- sustainability is crucial for addressing both human and planetary imperatives. It
seeks to balance the needs of people and the planet by promoting responsible
resource use, economic stability, social equity, environmental protection, and the
well-being of current and future generations. It represents a holistic approach to
ensuring a harmonious coexistence between humanity and the planet
- BEST PRACTICES OF COMPANIES FROM 10, 20 AND 30 YEARS AGO MAY HAVE BROUGHT
THE COMPANIES TO WHERE THEY ARE, BUT PROBABLY WILL NOT GET THEM WHERE
THEY NEED TO BE IN THE FUTURE
-
- Human Values as a Key Driver of Sustainable Business Operations
- Our fundamental assumptions, values, and mindsets must be challenged because
they have driven us to adopt insatiable consumption patterns and to attain
economic growth based on increasingly scarce, nonrenewable resources.
- Many of our values are self-justifying and resistant to change.
- Non-Sustaining values are those that do not promote the well-being of people
and planet, present and future.
- Some of these values are individualism and hedonism, nondemocratic values,
and pretense of knowledge.
- Human values that promote sustainability must be embraced if we want to craft
a path to sustainability.

- Some of these values are mutuality, equity and honesty, innovativeness,

collaboration, and the co-creation of common ground.
- Deeply infusing sustainability- oriented values and creating holistic integration
are the highest level challenges associated with implementing sustainable
strategies
- Positive benefits of this ethical orientation include better risk management,
improved organizational functioning, increased market attractiveness and better
public relations.

- Human Side of Sustainability

- At present, more and more leaders are becoming more authentic,

conversational, and transparent. This is by making Sustainability a core concept
- Operational best practices begin with targeting areas of operations that need
improvement

- Systems thinking : At a more fundamental level, employees and leaders of

sustainable enterprise understand that their organizations are whole systems and
not collections of isolated functions.
 - The sustainable enterprise simultaneously addresses the economic bottom line
(profits), the social bottom line (people), and the environmental bottom line
(planet).

- 8 Characteristics of State of the Art Enterprise Companies

- Base decisions ons a long-term, collaborative, holistic mindset

- Pursue a triple-bottom line

- Generate or regenerate earth’s 5 capital stocks: natural, human, social, financial,
and manufactured capital
- Operate on ethics-based business principles and sound corporate governance
practices
- Consider rights and interests of all stakeholders
- Commit to transparency and accountability
- Give stakeholders opportunities to participate in decision making
- Use stakeholder influence to promote meaningful systemic change among peers
and their communities
- How to Create a Culture of Sustainability in Your Enterprise
- Enhance brand reputation
- Reduce utilities expense
- Less office space
- Reduce travel expenses
- Redesign or innovate product specs
- Increase employee productivity by boosting morale

MODULE 4:
SOCIAL, ETHICAL AND GOVERNANCE DIMENSIONS OF BUSINESS SUSTAINABILITY
- SOCIAL DIMENSION
- THIS REFERS TO HOW ORGANIZATIONS CONSIDER AND MANAGE THEIR IMPACTS ON DIFFERENT STAKEHOLDERS
TO EMPHASIZE THAT THEY ARE NOT SIMPLY INDEPENDENT UNITS OPERATING IN ISOLATION TO MAKE MONEY
FOR SHAREHOLDERS AND ACHIEVE THEIR OBJECTIVES.

- SOCIALLY RESPONSIBLE ACTIONS BY BUSINESSES MAY INVARIABLY HAVE AN IMPACT ON ITS REPUTATION BUT IT
WOULD BE VERY DIFFICULT TO SHOW THEM HAVING A DIRECT IMPACT ON ITS PROFITABILITY.

- THE CONCEPT OF “CORPORATE SOCIAL RESPONSIBILITY” (CSR) BECOMES NOT JUST DESIRABLE BUT
ESSENTIAL IN ESTABLISHING LONG-TERM SUSTAINABILITY THROUGH IMPROVED RELATIONSHIPS WITH FIRM’S
STAKEHOLDERS.
- CORPORATE POWER AND RESPONSIBILITY
- CORPORATE POWER – CAPABILITY OF CORPORATIONS TO INFLUENCE GOVERNMENT, ECONOMY, AND
SOCIETY BASED ON THEIR ORGANIZATIONAL RESOURCES

- JOB CREATION, IMPROVED COMMUNITY WELL-BEING AND STANDARDS OF LIVING, INCREASE TAXES
FOR ESSENTIAL MUNICIPAL, STATE AND NATIONAL SERVICES, AND NEEDS FOR BANKING AND
FINANCIAL SERVICES, INSURANCE, TRANSPORTATION, AND HEALTH CARE.
 - HUGE BUSINESSES CAN INFLUENCE POLITICS, SHAPE TASTES, AND DOMINATE PUBLIC DISCOURSE.
THEY CAN ALSO WEAKEN UNIONS AND COMMUNITIES DUE TO PRODUCTION’S MOVEMENT FROM
ONE SITE TO ANOTHER.
- COMPANIES CAN ALSO INFLUENCE THE ECONOMY THROUGH PRICE FIXING FROM COLLUSION,
MARKET DIVISION, AND COMPETITION BUSTER.

- IN TURN, THIS CAN RESULT IN CONSUMER CHOICES, EMPLOYMENT OPPORTUNITIES, AND CREATION
OF NEW BUSINESSES.

- A UN REPORT ESTIMATED THAT THE WORLD'S 3000 BUSINESSES WERE RESPONSIBLE FOR $2.2
TRILLION ENVIRONMENTAL DAMAGE WORLDWIDE.

- SOCIAL RESPONSIVENESS
- The degree of effectiveness and efficiency an organization displays in
pursuing its social responsibilities
- The greater the degree of effectiveness and efficiency, the more socially
responsive the organization is said to be
- Being socially responsive means that an organization is attentive and
responsive to the needs, wants, and expectations of the community and
society the organization operates in. Businesses and organizations have to
be socially responsive because not only is it morally and ethically right but
it also has an underlying strategic implication for businesses in today’s
world where consumers and other stakeholders increasingly value
businesses addressing social, environmental, and governance issues.
Socially responsive organizations have a higher chance of succeeding
since being socially responsive allows businesses to improve their
reputation and increase customer trust. By being socially responsive,
businesses are able to break away from the notion and stereotype that
businesses only operate to earn profit without care for the society and its
underlying social, environmental, and governance issues. Business
operations and activities must all be purposeful and should have the
society and environment in mind in today’s world. Social responsiveness
allows businesses to take into consideration the society and the
environment which it operates because they are all interdependent.
- STAKEHOLDER THEORY OF A FIRM
- THE STAKEHOLDER THEORY OF A FIRM IS A MANAGEMENT AND ETHICAL THEORY THAT SUGGESTS
THAT BUSINESSES AND ORGANIZATIONS SHOULD CONSIDER THE INTERESTS AND NEEDS OF ALL
STAKEHOLDERS, NOT JUST SHAREHOLDERS, WHEN MAKING DECISIONS AND FORMULATING
STRATEGIES. STAKEHOLDERS ARE INDIVIDUALS, GROUPS, OR ENTITIES THAT CAN AFFECT OR ARE
AFFECTED BY AN ORGANIZATION'S ACTIONS, OBJECTIVES, AND PERFORMANCE. THE STAKEHOLDER
THEORY POSITS THAT A FIRM HAS A RESPONSIBILITY TO NOT ONLY GENERATE PROFITS FOR ITS
SHAREHOLDERS BUT ALSO TO CONSIDER THE IMPACT OF ITS ACTIONS ON A BROADER RANGE OF
STAKEHOLDERS, INCLUDING EMPLOYEES, CUSTOMERS, SUPPLIERS, COMMUNITIES, GOVERNMENTS,
AND THE ENVIRONMENT. IT HIGHLIGHTS THAT A BUSINESS OPERATES WITHIN A COMPLEX WEB OF
RELATIONSHIPS AND SHOULD STRIVE TO CREATE VALUE FOR ALL STAKEHOLDERS
- STAKEHOLDER THEORY TAKES A MORE HOLISTIC AND INCLUSIVE APPROACH TO BUSINESS
DECISION-MAKING. THE AIM IS TO CREATE A WIN-WIN SITUATION WHERE THE ORGANIZATION
 SUCCEEDS ECONOMICALLY WHILE ALSO CONTRIBUTING POSITIVELY TO SOCIETY AND ITS
STAKEHOLDERS
- FIRMS SOLE PURPOSE IS TO CREATE VALUE TO THE SOCIETY.

- IMPORTANT TO DETERMINE WHO ARE THE FIRM’S RELEVANT STAKEHOLDERS

- THROUGH STAKEHOLDER ANALYSIS, MANAGEMENT CAN DETERMINE INTERESTS AND POWER OF

EACH STAKEHOLDER IN AND TO THE COMPANY, RESPECTIVELY.
- TYPES OF STAKEHOLDERS
- INTERNAL: Internal stakeholders are individuals or groups within
an organization who have a direct interest in its operations,
decisions, and success. They are typically individuals who are
actively involved in the day-to-day activities of the organization
and can have a significant impact on its performance (E.G.
EMPLOYEES, MANAGERS)
- EXTERNAL: External stakeholders are individuals, groups, or
entities that are not directly part of the organization but have an
interest in its activities, performance, and outcomes. These
stakeholders are external to the organization but can significantly
influence or be influenced by its actions (E.G. CUSTOMERS,
SUPPLIERS)
- 4 CATEGORIES OF SOCIAL RESPONSIBILITY
- ECONOMIC: Produce goods/services that society wants & needs
- LEGAL: Conduct business in a lawful and compliant manner
- DISCRETIONARY: Perform socially-desirable actions that are beyond the
other 3 obligations.
- ETHICAL: Engage in practices which are consistent with societal values
- 4 COMPONENTS OF SOCIAL RESPONSIBILITY
- OCCUPATIONAL HEALTH AND SAFETY
- ADDRESSES THE GENERAL WORKING CONDITION OF BUSINESS FACILITIES, WORKING
HOURS, ACHIEVING BALANCE BETWEEN FAMILY AND WORK, WAGES AND BENEFITS,
OCCUPATIONAL SAFETY AND HEALTH, STRESS AND VIOLENCE, HARASSMENT, AND
MATERNITY PROTECTION.
- LABOR CODE AND HUMAN RIGHTS
- COMPOSED OF A GENERAL COMMITMENT TO HUMAN RIGHTS, THE RIGHT TO EQUALITY
OR OPPORTUNITY AND TREATMENT, THE RIGHT TO FREEDOM OF ASSOCIATION AND
COLLECTIVE BARGAINING, THE PROHIBITION OF FORCED LABOR, THE ABOLITION OF
FORCED LABOR, AND WORKFORCE DIVERSITY.
- STAKEHOLDER ENGAGEMENT
- MEASURES THE EXTENT TO WHICH THE COMPANY INITIATES AND SUPPORTS COMMUNITY
PROGRAMS LIKE IMPROVED HEALTH AND EDUCATIONAL SERVICES TO THOSE WHO LIVE
WITHIN ITS SURROUNDINGS AND BEYOND.
- VOLUNTEERISM
- REFERS TO THE ASSISTANCE THAT IS EXTENDED BY THE COMPANY TO NON-PROFIT
ORGANIZATIONS, FOUNDATIONS, INSTITUTIONS, AND CAUSES WHICH SUPPORT NATIONAL
AND INTERNATIONAL ADVOCACIES.
 - TYPICAL EXAMPLES ARE A COMPANY’S SUPPORT FOR LOCAL EXHIBITS, MUSIC, AND THE
VISUAL ARTS STAGED FOR THE ADVANCEMENT OF A COMMON GOOD.

- 3 MANAGEMENT APPROACHES TO MEETING SOCIAL OBLIGATIONS

- SOCIAL OBLIGATION APPROACH: CONSIDERS BUSINESS AS HAVING PRIMARILY ECONOMIC

PURPOSES AND CONFINES SR ACTIVITY MAINLY TO EXISTING LEGISLATION

- SOCIAL RESPONSIBILITY APPROACH: SEES BUSINESS AS HAVING BOTH ECONOMIC AND

SOCIETAL GOALS

- SOCIAL RESPONSIVENESS APPROACH: CONSIDERS BUSINESS AS HAVING BOTH SOCIETAL

AND ECONOMIC GOALS AS WELL AS THE OBLIGATION TO ANTICIPATE POTENTIAL SOCIAL PROBLEMS
AND WORK ACTIVELY TOWARD PREVENTING THEIR OCCURRENCE

- ETHICAL DIMENSION

- BUSINESS ETHICS
- ETHICS: Ethics refers to the moral principles, values, and standards of
conduct that govern the behavior and decision-making of individuals and
groups. It provides a framework for distinguishing between right and
wrong, guiding people to make ethical judgments and choices in their
personal and professional lives
- The application of our understanding of what is good and right in
business (institutions, technologies, transactions, activities, and pursuits)
- “Unethical behavior in business tends to be a losing proposition because
it undermines the long-term cooperative relationships with customers,
employees, and community members on which business success
ultimately depends”.
- business ethics are essential for a company's success and sustainability.
Ethical behavior builds trust, mitigates risks, ensures legal compliance,
and enhances the reputation of an organization. It also fosters a positive
organizational culture, attracting top talent and creating loyal customers.
Ultimately, business ethics are an integral part of responsible and
transparent business practices that benefit everyone involved.

- WHY SHOULD BUSINESSES BE ETHICAL

- MEET DEMANDS OF BUSINESS STAKEHOLDERS

- ENHANCE BUSINESS PERFORMANCE

- COMPLY WITH REGULATORY REQUIREMENTS

- PREVENT OR MINIMIZE HARM

- PROMOTE PERSONAL MORALITY

- WHY ETHICAL PROBLEMS OCCUR IN BUSINESS

 - EGOTISTICAL MENTALITY - PERSONAL GAIN; SELF-INTEREST VS OTHER’S
INTEREST

- BOTTOM LINE MENTALITY: COMPETITIVE PRESSURES ON PROFITS; FIRM’S

INTEREST VS OTHER’S INTEREST

- FAVORITISM MENTALITY - CONFLICTS OF INTEREST; MULTIPLE

OBLIGATIONS OR LOYALTIES

- ETHNOCENTRIC MENTALITY: CROSS-CULTURAL CONTRADICTIONS;

COMPANY’S INTERESTS VS DIVERSE CULTURAL TRADITIONS

- ETHICAL DECISION MAKING

- UTILITARIAN APPROACH: PRODUCT MOST GOOD AND DO THE LEAST

HARM; COMPARING BENEFITS AND COST

- RIGHTS APPROACH: RESPECTS THE RIGHTS OF STAKEHOLDERS;

RESPECTING ENTITLEMENTS

- JUSTICE APPROACH: TREATING PEOPLE EQUALLY; DISTRIBUTING FAIR

SHARE

- COMMON GOOD APPROACH: BEST SERVES THE COMMUNITY AS A

WHOLE

- VIRTUE APPROACH: LEADS ME TO ACT AS THE PERSON I WANT TO BE;

VALUES AND CHARACTER

- THE UTILITARIAN PRINCIPLE

- ACT IN A WAY THAT RESULTS IN THE GREATEST GOOD FOR THE GREATEST NUMBER OF PEOPLE

- MAIN PROPONENT: JEREMY BENTHAM

- COST-BENEFIT ANALYSIS

- CHOOSE GREATEST NET BENEFIT OR LOWEST NET COST

- EFFICIENCY – MAX OUTPUT GIVEN INPUT

- MODELS OF THE FIRM

- SHAREHOLDER MODEL - THE FIRM’S PURPOSE IS TO MAXIMIZE SHAREHOLDER WEALTH;

PRIMARY PURPOSE OF A COMPANY IS TO MAXIMIZE THE FINANCIAL RETURNS AND VALUE FOR ITS
SHAREHOLDERS, WHO ARE THE LEGAL OWNERS OF THE COMPANY

- STAKEHOLDER MODEL - MANAGEMENT MUST TAKE INTO ACCOUNT THE RIGHTS OF

MULTIPLE STAKEHOLDERS. RECOGNIZES THAT BUSINESSES HAVE RESPONSIBILITIES TO A BROADER SET
 OF STAKEHOLDERS, INCLUDING EMPLOYEES, CUSTOMERS, SUPPLIERS, LOCAL COMMUNITIES,
GOVERNMENTS, AND THE ENVIRONMENT. IN THE STAKEHOLDER MODEL, THE ORGANIZATION'S
SUCCESS IS MEASURED BY HOW WELL IT SERVES THE DIVERSE INTERESTS OF ALL ITS STAKEHOLDERS.

- COMMON GOOD MODEL - THE FIRM MUST CONTRIBUTE TO AUTHENTIC HUMAN

DEVELOPMENT AND THE CONDITIONS THAT SUPPORT IT; PLACES A STRONG EMPHASIS ON
COLLECTIVE INTERESTS AND THE GREATER GOOD OF THE COMMUNITY RATHER THAN INDIVIDUAL
INTERESTS. THIS ETHICAL MODEL ASSERTS THAT DECISIONS AND ACTIONS SHOULD BE EVALUATED
BASED ON THEIR POTENTIAL TO CONTRIBUTE TO THE BETTERMENT OF SOCIETY AND THE COMMON
WELFARE.

- CORPORATION CODE OF THE PH

- THE PURPOSE OF THE LAW IS TO “ESTABLISH A NEW CONCEPT OF BUSINESS CORPORATIONS SO THAT
THEY ARE NOT MERELY ENTITIES ESTABLISHED FOR PRIVATE GAIN BUT EFFECTIVE PARTNERS OF THE
NATIONAL GOVERNMENT IN SPREADING THE BENEFITS OF CAPITALISM FOR THE SOCIAL AND
ECONOMIC DEVELOPMENT OF THE NATION.

- THE PRINCIPLE OF COMMON GOOD

- (EXTERNAL) THEY PRODUCE GOODS AND SERVICES THAT MEET AUTHENTIC HUMAN NEEDS AND
WANTS, WHEN THEY OPERATE RESPONSIBLY IN THEIR RELATIONSHIPS WITH THEIR STAKEHOLDERS,
WHEN THEY PROVIDE EMPLOYMENT THAT ENABLES PEOPLE TO ENJOY A DECENT STANDARD OF
LIVING, ETC.,

- (INTERNAL) THEY FOSTER THE EMERGENCE OF A SENSE OF REAL COMMUNITY AMONG THEIR
EMPLOYEES, SO THAT PEOPLE FIND FULFILLMENT AS PERSONS PRECISELY BY ENGAGING WITH OTHERS
IN THE PURSUIT OF THE EXTERNAL COMMON GOOD

- ETHICS VS LAW

- ETHICS
- Codes of conduct with no universal enforceability or widely
recognized disciplinary action for non-compliance.
- In some cases, ethics remain unwritten and are actually unspoken
rules of conduct that people adhere to.
- Ethical codes are intended for a particular
group/entity/organization and may differ across entities.

- LAW
-Written, approved, and enforced by the level of government
where they were written.
- Non-compliance with the law is met with generally acknowledged
penalties/sanctions.
- Laws, regulations, and ordinances are intended to foster ethical
treatment among all citizens.
- While ethics guide behavior based on moral principles and values, law is a
system of rules established by governments to regulate and enforce
 conduct within a specific jurisdiction. Both ethics and law play important
roles in shaping human behavior and society, but they operate in different
ways and have different scopes of influence.

- 4 PRIMARY COMPONENTS OF BUSINESS ETHICS

- COMPLYING WITH ALL APPLICABLE LAWS, RULES, REGULATIONS AND STANDARDS

- Refraining from breaking the law relevant to all business activities.
- Avoiding any actions that may result in civil lawsuits against the company.
- Refraining from actions that are bad for the company’s image and
reputation.

- ETHICS KPIS

- TRUTHFUL ADVERTISING

- FAIR COMPETITION

- FAIR WAGES AND BENEFITS

- EMPLOYEE SATISFACTION, PRODUCTIVITY AND ENGAGEMENT

- SUPPLIER SATISFACTION, RETENTION AND COMMITMENT

- CUSTOMER SATISFACTION RETENTION AND COMMITMENT

- ETHICAL BEHAVIOR AND MANAGERS

- MANAGERS’ ON-THE-JOB VALUES TEND TO BE COMPANY-ORIENTED, ASSIGNING HIGH PRIORITY TO
COMPANY GOALS. MANAGERS OFTEN VALUE BEING COMPETENT AND PLACE IMPORTANCE ON
HAVING A COMFORTABLE OR EXCITING LIFE, AMONG OTHER VALUES.

- INDIVIDUAL SPIRITUALITY CAN GREATLY INFLUENCE HOW A MANAGER UNDERSTANDS ETHICAL

CHALLENGES; INCREASINGLY, IT IS RECOGNIZED THAT ORGANIZATIONS MUST ACKNOWLEDGE
EMPLOYEES’ SPIRITUALITY IN THE WORKPLACE.

- INDIVIDUALS REASON AT VARIOUS STAGES OF MORAL DEVELOPMENT, WITH MOST MANAGERS

FOCUSING ON PERSONAL REWARDS, RECOGNITION FROM OTHERS, OR COMPLIANCE WITH COMPANY
RULES AS GUIDES FOR THEIR REASONING.

- GOVERNANCE DIMENSION

- BUSINESS GOVERNANCE: IT IS THE MANNER BY WHICH A BUSINESS ENTITY IS MANAGED. IT REFERS

TO “THE SET OF RESPONSIBILITIES AND PRACTICES EXERCISED BY THE BUSINESS OWNER WHICH ARE INTENDED
TO PROVIDE STRATEGIC DIRECTION, ENSURE THAT GOALS ARE ACHIEVED, MANAGE RISKS APPROPRIATELY, AND
VERIFY THAT THE ORGANIZATION’S RESOURCES ARE USED RESPONSIBLY.”

- CORPORATE GOVERNANCE
- THIS REFERS TO THE PROCESS BY WHICH A COMPANY IS CONTROLLED OR GOVERNED.
 CORPORATIONS HAVE SYSTEMS OF INTERNAL GOVERNANCE THAT DETERMINE OVERALL STRATEGIC
DIRECTION.

- CENTRAL ROLE IN CORPORATE GOVERNANCE IS THE BOARD OF DIRECTORS. THEY ARE AN ELECTED
GROUP OF INDIVIDUALS WHO HAVE THE LEGAL DUTY TO ESTABLISH CORPORATE OBJECTIVES,
DEVELOP BROAD POLICIES, AND SELECT TOP-LEVEL PERSONNEL TO CARRY OUT OBJECTIVES AND
POLICIES.

- GOOD CORPORATE GOVERNANCE IS CONSIDERED ESSENTIAL FOR THE SUSTAINABLE AND ETHICAL
OPERATION OF BUSINESSES AND ORGANIZATIONS. GOOD CORPORATE GOVERNANCE CONTRIBUTES
TO A COMPANY'S CREDIBILITY, STABILITY, AND LONG-TERM SUCCESS. IT HELPS PREVENT UNETHICAL
OR FRAUDULENT PRACTICES, WHICH CAN DAMAGE A COMPANY'S REPUTATION AND FINANCIAL
HEALTH. BY PROMOTING TRANSPARENCY, ACCOUNTABILITY, AND RESPONSIBLE BEHAVIOR, GOOD
CORPORATE GOVERNANCE IS SEEN AS AN ESSENTIAL ASPECT OF RESPONSIBLE BUSINESS CONDUCT IN
TODAY'S CORPORATE WORLD

- PRINCIPLES OF CORPORATE GOVERNANCE

- SELECT OUTSIDE DIRECTORS TO FILL MOST POSITIONS

- APPOINT AN INDEPENDENT LEAD DIRECTOR

- HOLD OPEN ELECTIONS FOR MEMBERS OF THE BOARD

- ALIGN DIRECTOR COMPENSATION WITH CORPORATE PERFORMANCE

- EVALUATE THE BOARD’S OWN PERFORMANCE ON A REGULAR BASIS

- DIMENSIONS OF BUSINESS GOVERNANCE

- CONFORMANCE: COMPLIANCE WITH ALL APPLICABLE LAWS, RULES, REGULATIONS,

ORDINANCES, AND STANDARDS, AS WELL AS ACCOUNTABILITY TO ALL STAKEHOLDERS.

- PERFORMANCE: UNDERSCORES THE IMPORTANCE OF ADOPTING POLICIES AND FOLLOWING

PROCEDURES WHICH ADDRESS OPPORTUNITIES AND RISKS, PROPER RESOURCE UTILIZATION,
STRATEGY FORMULATION, VALUE CREATION, AND THOUGHTFUL DECISION-MAKING.

- DRIVERS OF GOOD GOVERNANCE

- Knowledge, expertise, and experience of directors/business owner
- A competent CEO/business owner whose integrity is unimpeachable
- A keen focus by board members/business owner on key strategic issues
- Regular and credible information is shared through robust reporting
systems
- An ethical and competent organizational culture that starts from the TOP
- integrating the five sustainability dimensions into strategy formulation as
well as business operations
- BUSINESS GOVERNANCE KPIs
- Level of expertise by owner/board member
- Codes of conduct and ethics
 - Executive Compensation
- Number of instances of non-compliance with rules and laws
- Independence of audit function
- Existence of legal counsel
- Shareholder’s democracy
- Management’s description of its long-term vision
- CHALLENGES IN PROMOTING GOOD GOVERNANCE
- SUCCESSION PLANNING
- COMPLIANCE
- BOARD LEADERSHIP
- RISK ASSESSMENT AND MANAGEMENT
- EXECUTIVE COMPENSATION

MODULE 5:
ENVIRONMENTAL DIMENSION OF BUSINESS SUSTAINABILITY
- THREATS TO THE EARTH’S ECOSYSTEM
- PARADOX OF THE COMMONS - All individuals maximize any advantage given
their way. This causes commons to be destroyed and all consumers lose.

- Tragedy of the commons – Freedom in a commons brings ruin to all.

- Global commons – Resources shared by all nations

- EARTH’S CARRYING CAPACITY
- Carrying capacity – The maximum population that the Earth’s ecosystem can
support at a certain level of technological development

- Resolving issues in carrying capacity need improvements in technological

innovation, changing consumption patterns, and getting the Prices right
- GLOBAL ENVIRONMENTAL ISSUES AND RESPONSES
- OZONE DEPLETION: reduction in the concentration of ozone (O3) molecules in
the Earth's stratosphere, specifically in the ozone layer, which plays a crucial role
in protecting life on Earth by absorbing and blocking a significant portion of the
sun's harmful ultraviolet (UV) radiation.
- Montreal Protocol – Ban CFC and other ozone depleting chemicals
production
- CLIMATE CHANGE: long-term and significant alterations in Earth's climate
patterns, particularly those related to temperature, precipitation, and weather
events.
- Kyoto Protocol - Aim to stabilize concentration of greenhouse gasses in
the atmosphere at a level that prevents dangerous interference with the
climate system.
 - DECLINE OF BIODIVERSITY: ongoing and widespread loss of the variety and
abundance of life on Earth, including plants, animals, and microorganisms
- Convention on Biological Diversity - The treaty commits these countries to
draw up national strategies for conservation, to protect ecosystems and
individual species, and to take steps to restore degraded areas. It also
allows countries to share in the profits from sales of products derived
from their biological resources.
- THREAT TO MARINE ECOSYSTEM
- High Seas Treaty - A treaty in line with the UN Convention of the Law of
the Seas that focuses on protection of the high seas against pollution,
climate change and overfishing.
- RESPONSE OF THE INTERNATIONAL BUSINESS COMMUNITY
- LIFE CYCLE ANALYSIS -
- INDUSTRIAL ECOLOGY
- EXTENDED PRODUCT RESPONSIBILITY
- CARBON NEUTRALITY
- TECHNOLOGY COOPERATION
- IMPORTANCE OF A SOUND ENVIRONMENTAL POLICY
- Many of the business disasters that occurred in the past decade prove that the
environmental policies of business organizations are vital to the economic and
social sustainability of societies around the world.

- Organizations must establish an environmental policy framework to address

environmental matters as well as to promote the efficient utilization of scarce
resources

- This is done in order to preserve environmental quality in the long term and
create a better one for future generations.

- EMERGING ENVIRONMENTAL ISSUES

- MEASUREMENT OF ENVIRONMENTAL OBLIGATIONS AND PERFORMANCE

- CLIMATE CHANGE

- RESOURCE SCARCITY

- LACK OF A COHERENT ENVIRONMENTAL PLAN

- GOVERNMENT’S ROLE
- Multi-Partite Monitoring Team – Independent entity whose membership
represents primarily stakeholders / public that is intended to assist DENR in
monitoring environmental impacts and compliance
-
- Regulate and monitor business activities

- Evaluate Reporting Submittals for Compliance

 - Provide Training Programs

- Create Administrative Orders (DENR AO or DAO) And Implementing Rules and

Regulations (IRR)

- MAJOR AREAS OF ENVIRONMENTAL REGULATIONS

- AIR POLLUTION - POLLUTANTS EMITTED TO THE ATMOSPHERE

- WATER POLLUTION - CAUSED BY WASTE DUMPED TO BODIES OF WATER

- LAND POLLUTION - CONTAMINATION OF LAND DUE TO SOLID AND/OR

HAZARDOUS WASTE

- MAJOR ENVIRONMENTAL LAWS IMPLEMENTED BY THE DENR IN THE PH

- ENVIRONMENTAL IMPACT STATEMENT SYSTEM

- This law requires an Environmental Impact Assessment (EIA) be
conducted before a business is established. The EIA will measure the
potential impact of the establishment on the environmental quality. The
EIA is essential in applying for an Environmental Compliance Certificate
(ECC) by the DENR.

- TOXIC SUBSTANCES AND HAZARDOUS WASTE CONTROL ACT

- This law requires business establishments to manage their industrial
chemicals and hazardous wastes in all aspects of its life cycle – (cradle to
grave) – from generation, transportation, treatment, storage, and
disposal.

- CLEAN AIR ACT

- An act providing for a comprehensive air pollution management and
control program.

- Primary goal is to achieve and maintain air quality that meets the
National Air Quality Guidelines for Criteria Pollutants throughout the
Philippines

- ECOLOGICAL WASTE MANAGEMENT ACT

- An act providing for systematic, comprehensive, and ecological waste
management programs to ensure the protection of public health and the
environment.
- 3 Rs OF SOLID WASTE MANAGEMENT
- REDUCE
- REUSE
- RECYCLE

- PHILIPPINE CLEAN WATER ACT

- An act providing for a comprehensive strategy to address the degradation
 of water bodies.

- Mandates the DENR to formulate and implement more stringent policies

and strengthen partnerships with stakeholders to improve water quality
in all parts of the Philippines

- WRIT OF KALIKASAN

- ENVIRONMENTAL REPORTING COMPLIANCE IN THE PH

- Environmental Compliance through reporting is another way to sustain business
operations. Businesses need to comply in order to avoid penalties.
- Environmental Compliance Certificate (ECC) – Pre-construction
requirement

- Environmental Impact Assessment (EIA) – ECC Requirement

- Self-Monitoring Report (SMR) – Monthly

- Compliance Monitoring and Validation Report (CMVR) - Semi-annual

- ENVIRONMENTAL KPI
- A general approach to the development of environmental KPI’s is to identify
relevant factors that could shape or influence an organization’s environmental
initiatives.
- Efficient utilization of scarce natural resources including electricity, fuel, and
materials consumption.

- Continuous monitoring and replacement, where possible, of non-renewable

resources.

- Efficient utilization of recycled materials.

- Producing/Rendering environmentally safer products/services

- Addressing the number and type of litigations, legal actions, and claims made
against the company.
- DEVELOPING AN ENVIRONMENTAL MANAGEMENT SYSTEM
- DEFINE A BROAD ENVIRONMENTAL MISSION
- DEVELOP PROPER ENVIRONMENTAL STANDARDS AND PROCEDURES
- DOCUMENT AND COMMUNICATE SUCH STANDARDS TO STAKEHOLDERS
- ENFORCE COMPLIANCE OF SUCH STANDARDS
- 10 PRINCIPLES FOR AN ENVIRONMENTAL CODE OF CONDUCT
- PROTECTION OF BIOSPHERE
- SUSTAINABLE USE OF NATURAL RESOURCES
- REDUCTION AND DISPOSAL OF WASTE
- ENERGY CONSERVATION
- RISK REDUCTION
- SAFE PRODUCTS AND SERVICES
 - ENVIRONMENTAL RESTORATION
- INFORMING THE PUBLIC
- MANAGEMENT COMMITMENT
- AUDITS AND REPORTS
- What is Greenwashing?
- Greenwashing involves companies either misleading consumers about the green
credentials of a product or service, or misleading consumers about the
environmental performance of a company as a whole. It’s used to gain a financial
advantage that’s often short lived and can expose businesses to long-term
financial risk

MODULE 6: Sustainable Marketing and Marketing Sustainability

- Sustainable Marketing
- Meeting the current needs in a way that preserves the rights and options of
future generations of consumers and businesses (sustainability)
- Aligning organizational processes and goals with the general principles of
Sustainable Business practices
- It is the process of creating, communicating, and delivering value to consumers in
such a way that both natural and human capital are preserved or enhanced
throughout.
- sustainable marketing aligns business practices with environmental and
social responsibility. It recognizes the interconnectedness of natural and
human systems and seeks to create a positive impact on both fronts. This
approach not only addresses the growing consumer demand for
sustainable products but also reflects a broader commitment to
corporate social responsibility and the long-term well-being of the planet
and its inhabitants.
- It is not and cannot be business as usual
- It is the process of promoting products and services that have environmentally
and socially responsible attributes. The goal of sustainable marketing is to
communicate and emphasize the positive environmental and social impact of a
product or service, with the aim of influencing consumer behavior and fostering
a more sustainable lifestyle
- Sustainable marketing has gained prominence as consumers increasingly
prioritize environmentally and socially responsible choices. However, it's
important to note that the effectiveness of sustainable marketing depends not
only on messaging but also on genuine commitment and action by companies to
integrate sustainability into their core business practices. Greenwashing, or
falsely claiming to be more environmentally friendly than a company truly is, can
 damage a brand's reputation and undermine the credibility of sustainable
marketing efforts
- Marketing Paradigms
- These paradigms can be seen as an evolution from a more traditional,
production-focused approach (Make and Sell) to a more customer-centric
and interactive approach (Sense and Respond), and finally to a
collaborative and co-creative model (Guide and Co-create). The
progression reflects a broader shift in the business landscape toward
customer empowerment, customization, and the importance of
relationships in marketing
- Make and Sell: Enterprise-dentric; marketing’s sole purpose is sales and
promotion. Wellbeing is not a concern. The primary goal is to produce
goods or services and then sell them to customers.
- Sense and Respond: CCustomers are primary stakeholders and focus on
value creation. Driver is the current needs of customers. emphasizes
understanding and responding to customer needs and preferences
- Guide and Co-create: sustainable well-being is the focus. Co-creation of
value for both customer and firm is the goal. collaboration between
businesses and consumers.
- 2 important concepts
- Consumerism - citizens and government agencies move to improve rights
and power of buyers in relation to sellers. This response is often seen
as an effort to address potential imbalances in the marketplace and
to protect consumers from unfair practices. Empowering buyers in
relation to sellers aligns with the broader goal of creating fair and
transparent marketplaces. It acknowledges the importance of a
balanced relationship between consumers and businesses,
ensuring that buyers are not taken advantage of and have the
information and tools needed to make informed choices
- Environmentalism - citizens and government agencies move to
improve people’s living environment. The collaboration between
citizens and government agencies is crucial in addressing
environmental challenges. Environmentalism reflects a collective
effort to create a healthier and more sustainable living environment
by balancing human activities with the preservation of natural
ecosystems
-