Sustainability

Modern business is increasingly characterised by the need to balance economic ambition with social and environmental responsibilities.

The past decade has seen the issue of sustainability move from the peripheries of the business world and into the Boardroom. Many companies are now finding that, although shareholders expect the business to generate profits, they also want to ensure that the companies in which they invest make a positive contribution to society and minimise any negative impact on the environment.

Sustainability issues have also risen to the top of the social and political agenda. In the UK, business has come to realise that it has a crucial role to play in ensuring the UK meets its environmental objectives.

According to a 2006 report by economist Sir Nicholas Stern, global warming could shrink the global economy by 20%, and in response to these concerns the Government has stepped up its commitment to promoting corporate and social responsibility.

Among its latest initiatives for tackling key environmental issues, the Government has introduced a range of economic instruments designed to discourage business behaviour that damages the environment and to reward efficient use of resources. The climate change levy, the aggregates levy and landfill tax are now part of the reality of modern business.

Emissions trading is also emerging as a key instrument in the drive to reduce greenhouse gas emissions and introduce more sustainable ways of doing business. The Government is using this initiative to regulate the amount of emissions produced in aggregate by setting the overall cap for the scheme while giving companies the flexibility of determining how and where the emissions reductions will be achieved. By allowing participants the flexibility to trade allowances the overall emissions reductions are achieved in the most cost-effective way possible.

The issue of sustainability is not only affecting the way that companies do business, it is also increasingly impacting reputations. Left unaddressed or poorly managed, matters relating to sustainability can have serious repercussions on how the world judges a company and values its shares.

This has also become a more pressing issue for boards, and new provisions on directors' duties – as outlined in the Companies Act 2006 – specify that directors must act to promote the success of the company by considering the long-term consequences of decisions, and the impact on the community and the environment.

In a bid to achieve this balance, many companies are reviewing their strategies to bring sustainability concerns to the forefront of their business practices, and address such issues as climate change, waste reduction, ethical trading and social responsibility.

PricewaterhouseCoopers' Sustainability Group works closely with clients to understand and manage their social and environmental responsibilities and goals. We advise clients on how to develop sustainability strategies, performance management and reporting solutions, and in turn enhance their credibility and trust with shareholders and the wider public.

Contact details
Email: Frank Blin
Tel: +44 (0)141 242 7229