Explore

S1V3

Do organizations have responsibilities beyond benefiting their shareholders? Do they need to consider other stakeholders in their field, and how can they incorporate sustainability? That’s what we will explore in this video. We want to understand that an organization’s responsibility goes beyond satisfying shareholders. We will also look at various stakeholders of organizations and the importance of accounting for the “triple bottom line” of sustainability—profit, ecology, and social sustainability. Finally, we will understand the concept of regenerative businesses and how this differs from being merely a sustainable organization.

⁠

How Do Organizations Contribute to Social Welfare?

A 2007 McKinsey study, with around 2,600 respondents, examined how organizations contribute to or harm the common good. Some organizations help the common good by creating jobs (about 65% agreed) or supporting the local economy through tax revenue (around 35%). Others preserve the environment, adding further benefits.

However, certain organizations harm the common good by polluting or damaging the environment or by treating employees unfairly. People perceive both positive and negative impacts from organizations, reflecting the range of ways companies can affect social welfare.

⁠

CEOs’ Perspectives on Responsibilities

Another study looked at CEOs and board members of German companies. Only 11% agreed that a company’s only responsibility is to maximize profit, a view that has declined from 2005 to 2015. Meanwhile, 97% agreed that businesses should act in ways that account for social and environmental concerns, and many felt companies should engage in community projects.

When asked whom they feel responsible for, these leaders named employees, customers, and shareholders, but also mentioned the broader community, the location or region where they operate, and even suppliers and government. This shows they recognize responsibilities that go beyond pure profit-making.

⁠

Stakeholders, Not Just Shareholders

Companies now increasingly factor in various stakeholder groups: not only owners and shareholders but also direct business partners (suppliers, customers), employees, investors, activists, trade unions, or trade associations. These groups can influence or be influenced by a company’s practices and decisions. Therefore, organizations must interact openly with multiple stakeholders and consider their societal and ecological impact.

⁠

What Is Sustainability?

Sustainability has several definitions. In a general sense, it refers to something long-term, permanent, and systematic—nothing specifically environmental. Narrowing it down to ecology, it implies strengthening, preserving, and lasting over time. Going further, sustainability involves balancing resource consumption and reproduction, ensuring we do not deplete resources faster than they can be replenished.

A widely cited definition comes from the 1987 Brundtland Commission report, which says:

“Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

It emphasizes both intragenerational justice (meeting the needs of all people in the present) and intergenerational justice (preserving resources for future generations).

⁠

Triple Bottom Line: Profit, People, Planet

John Elkington’s concept of the “triple bottom line,” introduced in Cannibals with Forks, says businesses should account for three dimensions:

Profit: Financial returns, growth, and efficiency.

People: Social well-being, respect for employees, social cohesion, institutional development, and overall contribution to society.

Planet: Environmental stewardship, integrity of ecosystems, biodiversity, and climate-change mitigation.

In corporate philosophy, this might look like:

Economy: Survival, profitability, economic leadership.

Ethics (People): Respect, justice, cooperation, trust.

Ecology (Planet): Efficient resource use, protection of species, and fairness for future generations.

⁠

Corporate Social Responsibility (CSR)

CSR is about integrating social interests into business, sometimes sacrificing profit in the social interest. It aims for joint value creation, going beyond legal requirements to identify, prevent, and mitigate a firm’s negative impacts on society. There are four levels of CSR:

Economic Responsibility – Being profitable to survive in the market.

Legal Responsibility – Obeying the law, playing by society’s rules.

Ethical Responsibility – Doing what is right, just, and fair.

Philanthropic Responsibility – Being a “good citizen,” contributing resources to the community and improving quality of life for all.

⁠

Pathways to Sustainability

Businesses can become more sustainable in different ways:

Doing It Better

Same benefits with fewer resources or less harm.

Example: LED bulbs vs. traditional bulbs, improving energy efficiency and reducing damage.

Doing It Differently

Using renewable energy or recyclable materials.

Example: Using jute bags instead of plastic—long-lasting and less harmful to the environment.

Doing Less

Consuming and producing less, promoting sharing, repair, reuse, and new business models.

Example: Shared mobility services, collaborative consumption, and circular economy practices.

⁠

Measuring Sustainability Efforts with ESG Scores

“Environmental, Social, and Governance” (ESG) criteria help measure sustainability and CSR efforts.

Environmental: Resource use, emissions, innovation.

Social: Workforce, human rights, community impact.

Governance: Stakeholders, strategy, management systems.

ESG scores show how a company implements its sustainability strategy in practice.

⁠

Moving Beyond Sustainability to Regenerative Business

Some argue that “sustainable” (i.e., net zero harm) may not be enough because much damage has already been done to our planet. Instead, companies should strive to become regenerative, which means actively restoring resources and improving ecosystems. This approach involves:

Business as Usual (not sustainable) – Degenerative for the planetary system.

Greener Business – Less harm but not net zero.

Truly Sustainable – Net zero harm, but stops at neutral impact.

Regenerative – Net positive, actively restoring systems.

Some companies, such as Decathlon, have declared a vision of responsible growth that benefits people and the planet—beyond just being sustainable.

⁠

Shifting Motivations for Sustainability

A McKinsey survey of corporate employees shows that while improving a company’s reputation remains a reason for addressing sustainability, alignment with society and core values is gaining importance. Cost-cutting as a motivation has become relatively less critical, while a genuine commitment to societal well-being has grown.

⁠

Key Takeaways

Organizations have responsibilities beyond profit. They must consider multiple stakeholders, including communities and the environment.

Sustainability involves balancing profit (economy), people (ethics), and the planet (ecology).

Corporate Social Responsibility (CSR) addresses social needs beyond legal requirements, and ESG scores help measure these efforts.

Some businesses now move toward regenerative models, aiming not just to do less harm but to restore and enhance societal and environmental systems.

We look forward to seeing you in our next video.

Want to print your doc?
This is not the way.

Try clicking the ⋯ next to your doc name or using a keyboard shortcut (

CtrlP

) instead.