Sustainability can be referred to as both economic sustainability as well as environmental sustainability. The European Commission aims to ensure that businesses are sustainable by requiring certain businesses to contribute towards environmental goals and show their progress through sustainability reporting. These goals include making changes to operations to transition to a circular economy where resources are preserved where possible, and to also contribute to environmental goals such as mitigating climate change while also avoiding operations that can go against said goals.

Sustainability reporting

Businesses are required by EU law to disclose information via sustainability reporting on details such as the measures that are being taken to reduce the impact on the environment, as well as other areas such as how employees are being treated, actions against corruption, diversity, and so on.

In particular towards environmental sustainability, businesses are required to provide reports on their progress on environmental objectives such as preventing climate change, adapting to climate change, sustainable use of resources such as marine life and finite materials, actions taken to prevent or reduce pollution, and actions taken to restore or prevent further damage to ecosystems.

They are also required to follow four conditions with the environmental objective, including the provision of a substantial contribution to one objective, to not do anything that could contradict or conflict with other objectives, and to comply with minimal safeguards and technical screening. Only when a business meets these conditions and proves it through sustainability reporting can it be seen as a sustainable business.

Measuring sustainability

When it comes to sustainability reporting, a manufacturing process may be evaluated by different factors such as the worker, the materials at the times of use, those who benefit from the products (like the climate and society), and the balance of those processes involved in the manufacture.

For example, you may be using paper to print invoices or receipts. Reducing the amount of paper used or switching to digital receipts should replace the expense of paper products, consume less energy, and contribute a good contribution to the environment. A stronger example is swapping the fuel for vehicles from petrol to electric. Viewed in light of this shift, anyone employing the sustainable model benefits from a reduced waste stream, a more environmentally friendly overall consumption, and an increase in effectiveness of the organisation.

In business sustainability, it is possible to find economic sustainability – the ability to meet current and future demands, as well as the ability for profit – but there may exist variations in all of the other areas of sustainability.

For example, sustainability within a business can be measured primarily by financial cost as well as production and the return of an investment. This is possible within the financial sustainable perspective, as well as environmental and social sustainability. From the environmental sustainability perspective, sustainability is required during both the existing and the future use of resources and businesses will need to keep their sustainability reporting up to date. Opportunities for those who seek to be more proactive are to find solutions to joint issues of sustainability between environmental sustainability activities and financial sustainability.

Evaluating sustainability

The second step is the evaluation of the sustainable model. This is essential to the sustainability of any business. At this point there is a question of how the organisation fits within the sustainable model set by the Taxonomy and sustainability reporting requirements. All of the sustainable model elements need to be evaluated. This will assist in the further steps of evaluating sustainability.

One of the key elements is to consider what needs to be retained, what needs to be removed, what needs to be made, and what needs to be eliminated. All of these areas must be evaluated.

Even if some sustainability goals can be easily identified, most are not. This may be due to the absence of any agreed-upon model, the notion that sustainability is mere compliance, and the pressure of economic realities that limit what may exist. This is why the EU taxonomy and sustainability reporting has been established, to provide a global model that defines how a business is sustainable.

In looking more deeply at each of the existing sustainability measures, there is a recurring question: “Does the business meet the Taxonomy requirements?” The organisation may operate in a way that does not fit the existing model, and may be incapable of accommodating the goal.

To determine this, it is necessary to look at the organisation and how it relates to the model. If the organisation operates in a manner that makes it difficult to achieve any one of the chosen sustainable model goals, the practice needs to be retrofitted into the existing organisation. Depending on a business’ operations, this may require more fundamental and structural changes.