The three pillars of sustainability—environmental, economic, and social—have quickly risen to high-level priorities for businesses of all sizes and industries. Sustainability is not only a matter of risk management for organizations, although that is still the most significant driver of sustainability initiatives. Potential upside for businesses that embrace sustainability strategies and practices also include greater efficiency, cost savings, new business opportunities, and brand uplift.

What Is Sustainability?

Sustainability refers to business practices that are designed to sustain ecological, human, and economic health over the long term. The idea behind sustainability is that ecological, human, and capital resources are in limited supply, so it benefits people and organizations to use them thoughtfully, conserve them, and consider the consequences of their choices and actions on those resources and society as a whole. The ultimate aim of sustainability is to find ways to meet the business and economic needs of today without compromising the ability to meet what will be needed in the future.

Sustainability refers to an organization’s strategies and tactics for reducing any negative environmental, social, and economic impacts and boosting their positive impact on each of these areas. The goals are often to maintain and even improve conditions over the long term, not only for the benefit of the business but also for its customers, employees, investors, communities, and society as a whole. Now that sustainability efforts have grown more mainstream, many businesses track, analyze, and report on their progress in each of these areas, sometimes using ESG metrics.

Key Takeaways

  • Sustainability is a set of business strategies and tactics that consider the long-term repercussions of actions and decisions.
  • There are three pillars of sustainability: environmental, social, and economic.
  • Prioritizing sustainability practices is beneficial for individual businesses and society as a whole.
  • Investing in sustainability best practices and establishing a suite of sustainability key performance indicators are critical to long-term success.

Sustainability Explained

Many might think that sustainability refers solely to making more environmentally thoughtful choices, but it’s actually more expansive than that. Focusing on the consequences of business choices on the natural environment and resources is only one of the three pillars of sustainability. The other two pillars are social (the well-being of people and communities) and economic (the long-term economic well-being of the business as well as the larger economy).

Some examples of sustainability initiatives include new systems and processes to reduce greenhouse gas (GHG) emissions, conserve water or energy, reduce water use, improve human health and well-being, increase social and economic equity, and increase economic resilience. When executed well, these initiatives have the potential to also improve the efficiency of business operations, creating a “win-win” for the business and its stakeholders.

Why Is Sustainability Important in Business?

Sustainability has evolved in recent years from a nice-to-have to a business imperative increasingly embedded in the strategies and operations of businesses of all shapes and sizes. Indeed, 90% of companies either have or are developing a formal strategy to manage corporate ESG practices, according to a Morningstar Sustainalytics survey.

The importance of sustainability efforts has grown due to the very real impacts of climate fluctuations, diminishing natural resources, and increasing demands for energy on business operations and supply chains. Examples include diminished shipping capacity on European waterways impacted by drought and heat waves shutting down manufacturing facilities in China. It’s estimated that climate-related disruptions to global supply chains could lead to up to $25 trillion in net losses by 2060. In the U.S., the demand for power to support artificial intelligence (AI) models has led to the possible reopening of nuclear power plants.

Consequently, sustainability has gone from being considered an increased cost by many companies to being perceived as a source of value by the vast majority. When asked about the impact of sustainability on long-term corporate strategy, 85% of respondents to a survey conducted by the Morgan Stanley Institute for Sustainable Investing said it was primarily (53%) or partly (32%) a value-creation opportunity. Value creation was also the top reason that companies are pursuing their sustainability strategies, with half of respondents describing it as a very significant reason. And in a separate EY survey, 54% of global CEOs said sustainability issues were a higher priority than they were 12 months earlier.

Another reason sustainability has evolved into a business must-have is that customers and employees care about it deeply. Nearly two-thirds (64%) of people reported high levels of concern about sustainability, and 50% said sustainability was one of their top four purchase criteria, according to a Bain survey of 23,00 consumers. On the employee side, 69% of employed adults said they wanted their companies to invest in sustainability efforts, including reducing carbon, using renewable energy, and minimizing waste, according to a Deloitte Consumer Center survey.

Investors also care about the sustainability stance of businesses. More than 70% of individual investors said they believe that strong sustainability practices can lead to higher returns, and over half said they plan to increase their allocations to sustainable investments in the next year, according to another 2024 Morgan Stanley survey. Additionally, countries around the world are developing regulations to compel businesses to report on a wide array of sustainability issues, including their GHG emissions and climate-related risks.

Why Is Sustainability Important to Society?

While sustainability practices can benefit businesses, their impact is felt beyond positive outcomes for any one organization—or generation. One of the earliest definitions of sustainability, developed in 1987 by the United Nations Brundtland Commission, described it as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” Preserving natural resources, such as water, clean air, and wildlife, helps to ensure that they remain available to society over the long run. Efforts to reduce pollution; improve the quality of water, air, and soil; protect biodiversity; and maintain natural habitats help to preserve the ecological systems that support life. All of this can improve society and support higher standards of living.

Similarly, improving social equity, health, and education have been shown to raise the quality of life for more people throughout a society. So sustainability practices often aim to make sure that basic human needs are met for more people and that resources are used equitably across society.

Understanding the Three Pillars of Sustainability

Sustainability is one of the three dimensions involved in securing the future needs of businesses and society; the other two are social sustainability and economic sustainability. Taken together, they aim to protect the Earth’s ecosystems, its people, and its businesses.

infographic 3 pillars of sustainability
Sustainability is supported by three interconnected pillars.

What Is Environmental Sustainability?

Environmental sustainability refers to business practices that help protect and preserve the natural environment and its resources. The goal is to ensure the continuity of these resources so that the planet can continue to support life as we know it.

Environmental sustainability faces numerous challenges, including climate change influenced by GHG emissions, loss of biodiversity, overuse of natural resources, pollution (of air, water, or soil), and overconsumption. Practices and policies that are known to improve environmental sustainability include procurement practices such as partnering with suppliers that prioritize eco-friendly practices and ethical sourcing, managing product life cycles with careful consideration about materials and packaging, and investing in energy-efficient systems that help reduce GHG emissions. Businesses can reduce their environmental impact by implementing waste-reduction strategies, such as minimizing unnecessary packaging and encouraging recycling programs. Additionally, companies can carefully select supply chain partners that are willing to work together to reduce waste and their environmental impact throughout the production and distribution processes.

“Circular economy” business models have also emerged to support environmental sustainability. These approaches represent a fundamental reimagining of how products and materials flow through an economy. Circular economy principles focus first on eliminating waste and pollution through thoughtful design—the idea being that if you can anticipate a product’s end-of-life destination from its conception, you can design out waste from the start and create sustainable value throughout the supply chain. The second key principle is to keep products and materials in active use through sharing, leasing, reusing, repairing, refurbishing, and recycling. This closed-loop model helps businesses minimize resource consumption while supporting nature’s regenerative processes, by, for example, returning nutrients to soil. Circular economy approaches also often reveal new business opportunities and cost savings through the more efficient use of resources.

What Is Social Sustainability?

Social sustainabilityencompasses actions meant to enhance the well-being of people and communities. It aims to address issues such as discrimination, lack of access to resources, socioeconomic inequality, and governance issues, such as institutional inefficiency or corruption. To that end, initiatives that businesses, governments, and other institutions may pursue include the introduction of strategies and investments in diversity, equity, and inclusion (DEI) practices, better health and mental health programs, safer and more balanced work options, and the protection of basic human rights, such as access to healthcare and education. Of note, some DEI programs have become controversial, as opponents have accused them of discrimination.

What Is Economic Sustainability?

The idea behind economic sustainability is for companies to seek long-term economic well-being and growth in a way that also balances environmental and social stability. As a result, there is some overlap between this pillar and the previous two. The goal of economic sustainability is to find ways to foster the development and profitability of a business (or community or country), while responsibly managing resources and supporting both environmental and community needs—in other words, to do well while doing good.

This approach includes practical initiatives, such as providing competitive salaries, creating positive working conditions, investing in renewable energy, and implementing efficient resource management practices. For individual businesses, economic sustainability should drive innovation in areas like energy efficiency, waste reduction, and technological advancement, while also promoting fair labor practices. For example, companies might invest in energy-efficient facilities, implement recycling programs, or create employee development initiatives that boost retention and productivity. Doing so often results in cost savings and new business opportunities, such as reaching environmentally conscious customers or developing innovative sustainable products.

Proponents of economic sustainability say that the more that businesses align their economic goals with responsible resource management and positive social impact, the more likely they are to achieve lasting success—while ensuring that future generations will be able to meet their own needs.

Benefits of Adopting Sustainable Business Practices

Sustainability is about making more efficient use of all the resources available to a business, so it makes sense that putting sustainable practices to work can help a business operate more efficiently as well. Among the many benefits of adopting sustainable practices for businesses are:

  • Increased revenue: Consumer and business customers alike continue to show increasing concern about the sustainability efforts of the companies from which they buy products and services. A recent McKinsey study, for example, found that over the prior five years, consumer products that made sustainability-related claims on their packaging accounted for 56% of all spending growth. That was 18% more than would have been expected given their standing at the beginning of the period. So products making such claims averaged 28% cumulative growth over the period, while products with no claims averaged 20%.

    On thecorporate side, sustainability has become one of business buyers’ top three purchasing criteria, according to a Bain survey. Thirty-six percent of the B2B customers surveyed said they would leave suppliers that didn’t meet their sustainability expectations, and almost 60% said they would be willing to do so in three years. What’s more, half of those surveyed said they would pay a premium of 5% or more for sustainability today and expected their willingness to pay to increase in the future. The takeaway is that sustainability can unleash new customer and market opportunities that drive increased revenue growth.

  • Cost reduction: Sustainable business practices can help companies bolster their bottom lines by driving cost savings in several ways. For example, instituting circular economy efforts to reduce waste or implementing energy-saving initiatives, such as switching to LED lighting, can reduce expenses, and can have a big impact for businesses in manufacturing and retail. Likewise, comprehensive recycling, composting, and other waste initiatives also can reduce costs. Allowing employees to work from home can cut employees’ commuting expenses, reduce GHG emissions, and lower office and administrative costs for employers.

  • Improved resource management: As explained above, sustainable practices often lead to more efficient use of company resources. Companies that embrace all three pillars of sustainability may also find that they are able to better retain workers and enjoy greater productivity. In many cases, companies that examine their business practices across the enterprise will identify misuse or overuse of resources that they may not otherwise have uncovered. Implementing increased digitization and automation—and employing AI capabilities that can help identify more efficient ways to operate—are some other ways that companies can improve their resource management while boosting sustainability.

  • Supply chain resilience: Building stronger supply chains is a big area of focus for many companies. Sustainability practices can boost supply chain resilience by helping them address issues that might disrupt their supply chains, such as climate change and geopolitical instability. Seeking alternate suppliers, such as ones that are closer to home and require less complex, costly, and environmentally unfriendly logistics, can also boost resilience. The same practices can also lead to cost reductions. One in four European businesses with more than $250 million in sales experienced revenue growth from investments in supply chain sustainability, and around a third (34%) have seen cost savings, according to a survey by assurance and risk management firm DNV.com.

  • Enhanced brand reputation: Sustainability can burnish a brand in the eyes of customers, investors, and regulators. That may come through good press or social media buzz and result in increased brand recognition or more interest from potential customers or investors. As mentioned above, customers are prioritizing sustainability more in their buying decisions and are willing to pay more for sustainable products. So a brand with a positive reputation for sustainability may be able to get premium pricing for its products and boost overall revenue. Some employees seek out employers known for sustainability, so such a reputation could have a positive impact on recruitment and retention, as well.

  • Increased customer loyalty: Sustainability practices can help companies forge deeper relationships with customers who care about the topic, fostering increased customer loyaltyand turning them into advocates for the brand. Companies can encourage this connection by, for example, offering sustainability-centric experiences, events, webinars, and podcasts to loyal customers who value the trait. Some organizations build sustainability into their loyalty programs to drive greater engagement. This might include rewards for sustainable customer behaviors (recycling or returning goods they’re no longer using, for example), permitting loyalty points redemption for causes important to customers, or providing sustainable products as loyalty rewards.

  • Strengthened community engagement: Social sustainability, in particular, can foster stronger ties with the communities in which a business operates and build goodwill among local populations. The more a business invests in improving its local communities, the stronger those relationships can become. Sustainability programs with a community focus can also open the door to partnerships with local organizations, businesses, and individuals that can benefit the business as well, in terms of improved brand awareness, easier local recruitment, and higher customer loyalty in the community.

  • Ethical supply chain: In recent years, many businesses have focused attention not only on the sustainability of their own actions but on those of their supply chains, too. It makes sense: Companies with ethical and sustainable supply chains often see enhanced brand reputation and customer loyalty, as modern customers increasingly favor businesses that demonstrate social responsibility. For many businesses, sustainability efforts have the additional benefit of helping them to design more ethical supply chains. The transparency of ethical supply chains helps reduce operational risks, eases regulatory compliance, and can lead to improved efficiency through better supplier relationships and quality control. Furthermore, ethical supply chains can boost profitability through premium pricing power with ethically conscious consumers and cost savings from more efficient, sustainable operations.

  • Compliance: There is no shortage of government regulations related to environmental, social, and economic sustainability. And legislative bodies around the world continue to evolve and expand their oversight of corporate behaviors, increasingly requiring businesses to submit detailed sustainability reporting.Companies that proactively pursue forward-looking sustainability strategies, data collection, and reporting can stay ahead of the compliance curve, thereby reducing the risk of penalties and fines. They can also position themselves to take advantage of sustainability-related government incentives and other programs.

Strategic Approaches to Integrate Sustainability

Historically, many businesses approached sustainability in a piecemeal, ad hoc, or otherwise informal manner. Today, such informal approaches are ill-suited to helping companies meet the expectations of their customers and other stakeholders. Businesses require sustainability strategies that are coordinated with their strategic goals and integrated into their operational processes.

Six of the more common and effective strategic approaches to integrating sustainability into business operations are outlined below.

  1. Align sustainability with core business strategy: Aligning a business around its core mission is a best practice to help everyone row in the same direction, so to speak. It’s important that sustainability is part of that overarching business strategy so that it doesn’t become a side activity that lacks the resources, attention, and relevance to succeed. The first step is to develop clear sustainability goals that sync with the company’s mission, objectives, and business strategy. Then collect the data needed to measure and report on progress toward those sustainability goals. Just as importantly, alignment shouldn’t exist only at the top of an organization. Involve representatives from various functions and departments in setting sustainability objectives, setting them up with their own goals and collaborating on them in an ongoing fashion. Investing in technology, such as an enterprise resource planning (ERP) system, can significantly help integrate sustainability into day-to-day business processes.

  2. Engage stakeholders in sustainability efforts: This works best if key stakeholders are included from the start in the collaborative development of the organization’s sustainability plans. That way, all of their interests are considered early—and their expectations can be managed effectively. Successful stakeholder engagement helps foster trust in the teams that implement sustainability strategies and programs. Bringing in expertise from all levels of the organization (and from the outside—third-party sustainability experts can help guide the process and identify key challenges and opportunities) can lead to better results. Some common stakeholders to include are employees, customers, suppliers, business partners, investors, policymakers, and representatives of the communities impacted by the organization’s plans.

  3. Drive innovation and sustainable product development: Effective sustainability should be about more than keeping up with regulatory requirements and evolving stakeholder expectations. The most forward-looking companies try to stay a step ahead by investing in sustainable product innovation. Sustainability-focused innovation can lead to new and better products or services or those that use fewer natural resources, have a positive (or less negative) social impact, and reduce waste or GHG emissions. These efforts can go far beyond the design of a product or service through the “systems-thinking model,” a holistic approach that considers the entire life cycle and broader impacts of a product. Systems thinking examines interconnections among components, stakeholders, and environmental factors to create more sustainable and efficient solutions. For example, a smartphone manufacturer applying this model might redesign its product to source materials from ethical suppliers, optimize energy efficiency during use, and implement a take-back program for proper recycling of the product at the end of its life. In addition, some companies may opt to foster a culture of open innovation around sustainability to gather ideas from across the enterprise.

  4. Enhance operational efficiency for sustainability: Improving operational efficiency is always a good business practice, whether it’s raising throughput on a production line, automating labor-intensive manual tasks, or eliminating unnecessary steps from a business process. In addition, there is often a sustainability upside to any efficiency gain. In fact, viewing operational efficiency through a sustainability lens can open up greater opportunities to simultaneously improve business operations while contributing to environmental and social sustainability goals. This approach aims to create a win-win situation where the company reduces costs, increases productivity, and minimizes its environmental impact.

  5. Develop human capital for sustainability: As a Deloitte Insights article on why organizations should focus on human sustainability put it, “When people thrive, business thrives.” The consultancy notes that companies that create value for their people achieve better outcomes for themselves, their employees, and society. Thus, effective and thoughtful human capital management should be designed not only to get the most output from employees, but to protect their well-being as well. Deloitte argues that a company’s sustainability strategy should include human sustainability, which it defines as “the degree to which the organization creates value for people as human beings, leaving them with greater health and well-being, stronger skills and greater employability, good jobs, opportunities for advancement, progress toward equity, increased belonging, and heightened connection to purpose.” Thus far, just 10% of organizations describe themselves as leading in advancing human sustainability—but 76% recognize the importance of doing so, according to Deloitte.

  6. Integrate sustainability into financial performance: Sustainability initiatives should be measured not just in terms of goodwill or reputation, but as part of a company’s financial performance. Chief financial officers can play a central role in this integration by developing concrete metrics that demonstrate sustainability’s impact on enterprise value. This involves creating specific key performance indicators (KPIs), quantifying sustainability risks and opportunities, and establishing clear methodologies for measuring returns on sustainability investments. To effectively integrate sustainability into financial operations, companies need robust systems and processes. This typically starts with identifying clear accountabilities within the finance team and developing comprehensive frameworks for sustainability accounting. Many organizations are creating new roles and responsibilities specifically focused on sustainability finance, while also upgrading their data systems to better capture and analyze sustainability metrics.

    Enterprise performance management (EPM) has emerged as a valuable tool for this integration. While EPM traditionally focused on purely financial metrics, forward-thinking organizations now use it to track and guide sustainability efforts alongside standard financial performance measures. This integrated approach helps companies make more informed decisions about sustainability investments and demonstrate their concrete impact on business value.

Overcoming Challenges in Business Sustainability

Companies may encounter a number of hurdles when initiating, managing, and maintaining sustainability efforts, not the least of which is organizational inertia. While more attention is being paid to sustainability than ever before, it can still seem to employees like a less urgent priority than more time-sensitive risks and opportunities. To combat inaction, it can be helpful to reframe investment in the three pillars of sustainability as something the organization must act on today to achieve future business goals. This is easier to do when the sustainability agenda is aligned with the overall corporate strategy.

Resistance to change is just one issue that organizations come up against in their sustainability efforts. Some other common challenges organizations face include:

  • Initial investment costs: Introducing new, sustainable business practices and strategies can require upfront investments because it is always less costly to stay on the current course—at least in the moment. Building a business case that quantifies the return on investment (ROI) for sustainability initiatives can illustrate how short-term costs result in greater profitability and other positive outcomes over the long term.
  • Risk of greenwashing: Making claims about sustainability practices or goals without backing them up with action is a risky choice, and some companies have tarnished their reputations that way. Greenwashing is a general term for making false, misleading, or unsubstantiated claims regarding the sustainability of a company’s products or practices. While it typically refers to intentional efforts to deceive, some companies may find themselves inadvertently misleading the public by not following through on their promises. In either case, it can have negative implications, such as reputational damage, lost sales, or even legal ramifications. Companies can avoid the risks of greenwashing by being transparent about their efforts and progress, being very specific about sustainability claims, making sure that what they say publicly aligns with what they’re actually doing internally, and staying up-to-date on the latest sustainability language and best practices. Some have even obtained third-party “green certifications.”
  • Absence of clear guidelines: Any lack of clarity in corporate sustainability guidelines increases the likelihood that an enterprise will stray from its sustainability strategy and goals. Without clear policies and processes, it will be difficult for functions, departments, teams, and individuals to make sustainable decisions. That can diminish the potential benefits of a company’s sustainability efforts, putting the organization at greater risk of noncompliance with sustainability regulations, decreased investor confidence, loss of access to capital, reputational damage, loss of customers and sales, and greater difficulty recruiting and retaining employees who value sustainability. The absence of clear guidelines from governments or other institutions can also complicate compliance.
  • Global inconsistencies in standards: Sustainability is a relatively new corporate practice, and many different sustainability reporting frameworks and standards have emerged in recent years. The lack of a standardized framework for sustainability reporting results in different companies reporting different metrics and using a variety of different methodologies. This makes it difficult to compare sustainability efforts from company to company or benchmark sustainability performance.
  • Complexities in supply chain management: Many stakeholders expect businesses to be accountable for sustainability practices throughout their supply chains, but achieving full transparency and consistent standards across multiple tiers of suppliers is challenging. Companies frequently struggle to obtain reliable sustainability data from both their direct suppliers and their suppliers’ suppliers. Even when data is available, integrating and interpreting it can be a struggle due to its volume and complexity. Finding suppliers that align with a company’s sustainability goals presents another hurdle. In some cases, sustainable options for certain goods or components may not exist at all. Companies with complex or disorganized supply chains face additional difficulties in unraveling existing relationships and implementing improvements. To address these challenges effectively, companies should first clarify their short- and long-term supply chain sustainability goals. They can then work collaboratively with their strategic tier-1 partners to identify specific risks and opportunities for improvement, gradually expanding their efforts across their broader supplier network.
  • Challenges in data collection and analysis: An effective sustainability program requires assembling and analyzing a wide variety of data at large volumes from many sources, both inside and outside of the organization. Collecting and managing all of that data is a significant challenge because you may need everything from human resources and operational data, to data from supply chain and logistics partners, to third-party data on environmental standards—and even weather patterns. It should be no surprise that data gaps are one of the biggest issues in effective sustainability management and reporting.To close those gaps, it is helpful to review ESG data collection processes with an eye toward identifying missing data, investing in automated data collection tools, and working with third parties to provide supplemental data. Then there is data integration. Bringing together data from myriad internal and external sources in both structured and unstructured formats can be challenging and time-consuming. Investing in tools and processes for data integration is critical. Finally, advanced analytics is essential for understanding the current state of an organization’s sustainability program and suggesting improvements for the future.
  • Technological limitations: A variety of technological limitations challenge companies’ sustainability programs.Many organizations, for example, struggle to integrate new sustainable technologies with their existing infrastructure. Others face challenges collecting and analyzing sustainability-related data, as described in the preceding bullet. The high initial costs of cutting-edge sustainable solutions can be prohibitive, especially for smaller companies. And truly sustainable technological alternatives may not be fully developed for some industry sectors. So companies should carefully plan their sustainability initiatives by starting with a realistic assessment of the current technological capabilities and limitations. They can consider investing in staff training to build internal expertise for managing new sustainable technologies or partnering with technology providers that can help bridge their knowledge gaps. Additionally, companies can explore collaborative approaches to making advanced sustainable technologies more accessible and cost-effective, such as sharing resources and best practices with other organizations in their industries.

Measuring the Impact of Sustainability Initiatives

Businesses must measure the results of their sustainability initiatives to know whether they’re worth it—i.e., meeting or exceeding their expected ROI—and also share them with stakeholders to avoid the perception of greenwashing. As with the measurement of any business initiative, begin by determining sustainability goals and identifying the appropriate KPIs that are best for tracking performance against those aims. Make sure your KPI choices are measurable and specific.

Here are some of the most important environmental, economic, and social KPIs.

Environmental KPIs

Environmental KPIs are metrics designed to assess, monitor, and report on an organization’s performance and progress toward its environmental sustainability goals. These can be customized to reflect business- or industry-specific goals and priorities. Some common environmental KPIs include:

  • Carbon footprint: This metric measures the total amount of GHG emissions an organization produces, converted into carbon dioxide equivalents (CO2e). This KPI will include a company’s own direct emissions (called Scope 1 in the international GHG Protocol), as well as indirect emissions, such as those produced by its power usage (Scope 2) and in its supply chain (Scope 3). Purchased carbon offsets, if any, are factored into this metric. It provides a holistic view of an organization’s climate impact and serves as a baseline for setting reduction targets and tracking progress toward sustainability goals.
  • Energy consumption: This KPI reflects the total amount of energy an organization uses and is usually broken down by energy source (e.g., natural gas, electricity, or renewable sources like solar or wind), each of which has a different environmental impact. It’s usually reported in kilowatt-hours (kWh) or joules. Tracking this KPI over time helps identify efficiency improvements, assess the effectiveness of energy-saving initiatives, and monitor progress toward renewable energy goals. It’s also valuable for operational efficiency purposes, since lower energy consumption can translate directly into lower costs.
  • Water consumption: Similar to energy consumption, the water consumption KPI tracks how much water an organization uses in the course of operations, typically measured in cubic meters or gallons. Again, this may be broken down by source, such as municipal supply, groundwater, or rainwater harvesting. It may also be categorized by use, including manufacturing processes, cooling, or sanitation. The goal of monitoring this KPI is to identify opportunities for greater water conservation, more efficient usage, and cost savings. Some organizations will normalize this KPI, by, for example, reporting it per unit of production to support comparisons over time or among different facilities.
  • Waste generation: This KPI measures how much waste an organization produces by weight or volume. It is often broken by disposal method (incineration, landfill, recycling, composting) and type (hazardous, nonhazardous, electronic, organic). Companies use it to track progress in waste reduction efforts, identify opportunities to improve resource efficiency, and guide circular economy initiatives. It is crucial for sustainability reporting, regulatory compliance, and assessing the effectiveness of waste-minimization strategies.
  • Resource efficiency: This measures how effectively a business uses its resources (energy, water, raw materials) in relation to its output. It is usually expressed as a ratio of input to output, such as energy used per unit produced or raw material consumed per dollar of revenue. Resource efficiency encompasses aspects of other KPIs, such as energy and water consumption, but focuses on the productivity aspect of resource use. Tracking this KPI highlights areas for improvement in terms of process optimization, waste reduction, and cost savings.
  • Biodiversity impact: Maintaining biodiversity is essential, since healthy ecosystems—including the air we breathe and the food we eat—depend on it. Biodiversity KPIs assess an organization’s effect on local ecosystems and species diversity. To track their biodiversity impact, companies may collect metrics or qualitative data related to habitat preservation, restoration investments, or the effect of operations on local species. There are many available metrics, such as species richness indices, which track the number and variety of species in areas affected by company operations, and habitat area metrics, which measure the total area of natural habitat preserved, restored, or impacted. Such KPIs assess an organization’s environmental stewardship to help it manage reputational risks, as well as the long-term sustainability of operations that depend on natural ecosystems.

Economic KPIs

Remember, the economic sustainability pillar is all about activities that improve a business’s financial health while also contributing to environmental or social sustainability. Economic KPIs enable organizations to measure, track, and report on those activities. These KPIs also allow companies to monitor the financial viability of their sustainability initiatives. Here are four common economic sustainability KPIs:

  • Revenue from sustainable products: This metric refers to the revenue generated from products that meet specific sustainability criteria. Companies use it to track the growth rates of sustainable products versus traditional offerings, assess the financial impact of sustainability initiatives on sales, determine the contribution of sustainable products to overall revenue, and guide ongoing product development and marketing strategies.
  • Cost savings from sustainability initiatives: This looks at the benefits of sustainability initiatives to the bottom line. It measures cost reductions that are attributable to sustainability efforts, such as water conservation, increased energy efficiency, or waste reduction and management.
  • ROI of sustainability projects: Tracking the financial returns from sustainability projects can demonstrate their positive financial impact. ROI calculates the financial returns on sustainability investments (dividing net return by project cost), expressed as a percentage. For example, a waste reduction project that costs $150,000 and leads to $200,000 in cost savings over five years would have an ROI of 33.3% (200,000 – $150,000 = $50,000 net return; $50,000 / $150,000 = 0.333 x 100). ROI is essential for securing buy-in from stakeholders for sustainability initiatives and for prioritizing future sustainability investments.
  • Market share of sustainable products: Tracking market share is another way to measure and demonstrate the financial success of sustainable products. This KPI tracks the percentage of sales or revenue derived from products marketed as sustainable within their specific product categories. For example, the NYU Stern Center for Sustainable Business’s annual Sustainable Market Share Index found that the share of sustainability-marketed consumer packaged goods (CPG) products was 18.5% of all CPG sales in 2023. Sustainable CPG product sales had a five-year average growth rate of 9.9%, compared with 6.4% for conventionally marketed products. Such market share KPIs can help companies evaluate the potential growth of sustainable product offerings relative to conventional alternatives, customer demand for sustainable products within specific categories, and the effectiveness of their sustainability marketing efforts.

Social KPIs

Social KPIs focus on an organization’s impact on its employees and their communities. Measuring and tracking these metrics can demonstrate the impact of social sustainability in both quantifiable and qualitative terms.

  • Employee satisfaction: Surveys are the main way companies measure employee satisfaction, though focus groups and one-on-one interviews are also useful. The goal is to understand the extent to which employees feel that their workplace offers a healthy, engaging, and supportive work environment. Tracking employee retention rate and employee satisfaction can offer a more comprehensive view of employee sentiment and the effectiveness of workplace policies.
  • Diversity and inclusion: As social initiatives, diversity and inclusion has become controversial in the past year. But there is no doubt that including workers from different backgrounds and experiences in decision-making roles correlates with superior business performance. Tracking KPIs that measure diversity in leadership, management, and throughout an organization is important, but companies should track more than demographic numbers. They should also review inclusive practices and the efficacy of those practices to ensure that different perspectives and experiences are encouraged and valued. It’s also smart to capture employees’ perceptions of the organization’s diversity and inclusion practices through surveys, focus groups, and individual interviews.
  • Community impact: An organization’s efforts to support and collaborate with the communities in which it operates are a vital aspect of social sustainability. Metrics that can be used to track the impact of those efforts include the value of investments in community projects, employee volunteer hours, donations to local causes, partnerships with local organizations, and local hiring rates.
  • Customer satisfaction: Companies should measure how effectively they meet or exceed customer expectations in general and with respect to any sustainability initiatives. For example, customer satisfaction surveys and net promoter scores are a strong start, as are customer retention and loyalty rates. But when trying to understand the relationships among a business, its customers, and its sustainability initiatives, companies should also measure customer engagement with those initiatives and customers’ perception of the company’s social and environmental responsibility.
  • Supplier ethics: As mentioned earlier, customers expect companies to take responsibility for their own sustainability practices as well as for their suppliers and business partners. Therefore, it’s vital for companies to understand and, in some cases, audit the ethical and sustainability practices of third parties. The key metrics to measure include the percentage of suppliers meeting the organization’s stated ethical and sustainability standards, the frequency—and results—of supplier audits, improvements in supplier sustainability practices over time, and compliance with human rights and labor standards throughout the supply chain. One new area of focus is the ethical use of AI. Already, 21% of companies are reporting on the responsible use of AI, according to the Harvard Law School Forum on Corporate Governance.

Sustainability in Action: Customer Success Stories

One of the best ways to gain a full understanding of how organizations can embrace sustainability is to examine real-life examples. A wide variety of companies are embracing sustainability in different ways that deliver business value. Let’s take a look at sustainability in action at some companies across different sectors.

Waiākea

Waiākea is a packaged water company that launched specifically to meet a growing demand for more environmentally sound approaches to bottled water sourcing and packaging. The brand, based outside of Hilo, Hawaii, has been sourcing its water from a sustainable aquifer at the base of the Mauna Loa volcano for more than a decade. Waiakea’s water begins as rain and snowmelt at the top of the volcano and filters through thousands of feet of porous volcanic rock before the company then bottles and ships the resulting alkaline water at a rate of 10,000 gallons a day (which still accounts for less than 0.003% of the water that feeds the company’s aquifer).

Waiakea’s sustainability work extends beyond sourcing—it encompasses the full production process. Waiakea offsets its carbon footprint through a renewable energy facility and local and regional reforestation projects. It uses 100% recycled bottles—made of high-grade rPET, a type of plastic that requires less energy and water to manufacture than virgin plastic bottles—as well as aluminum recycled. The brand has also launched a number of other societal impact initiatives, from supporting local communities and allowing employees to use some of their work hours for community service to its program to donate clean water to Malawi, Africa, for each case of water it sells. Today, Waiakea continues to see significant growth while selling to 10,000 stores in 48 U.S. states.

BioPak

BioPak focuses on producing the most sustainable, environmentally friendly packaging available. It uses compostable, plant-based (rather than oil-based) “bioplastic” to provide food packaging, including to hospitality customers in Australia, New Zealand, Asia, and Europe.

BioPak describes its vision as “a world without waste,” and its mission is to close the loop in customers’ circular economy business initiatives with its compostable products and composting infrastructure. The packaging is designed to be composted either at home or in an industrial facility, diverting waste from landfills that continue to produce methane emissions.

To increase the impact of its efforts, BioPak works with governments, customers, and the waste industry to encourage new behaviors. In 2021, it launched a not-for-profit platform dedicated to education, increasing composting rates, and connecting food-service businesses to commercial organic waste pick-up services. Its Emission Reduction Plan also funds related research, education, and advocacy projects to boost composting as an end-of-life option in its local markets. BioPak’s sustainability efforts extend beyond the environment to ensure that people are treated and paid fairly and that its products are safe. The company has a partnership with DoorDash to introduce sustainable packaging to customers; it also recently introduced compostable beer cups for outdoor events and an environmental-impact label designed to increase transparency and minimize greenwashing.

Coda Coffee

Coda Coffee made a name for itself as the world’s first recycled air coffee roaster. Instead of heating ambient air, Coda recycles the air inside its roasting chambers, so seasonal changes in humidity and temperature have no impact. The company finds that because the recycled air quickly becomes depleted of oxygen, creating an inert roasting atmosphere, the delicate flavors of the coffee bean are protected.

In addition, Coda has long been committed to working with its coffee bean suppliers to encourage sustainable growing practices that often exceed fair trade standards. The company has prioritized maintaining its sustainability stance as it has grown and expanded from B2B distribution to online B2C sales, coffee equipment maintenance, and its own brick-and-mortar retail store.

Greentech Environmental

Greentech Environmental is an air purification company founded in 2009 whose wide range of products—air filters, standalone air purifiers, and heaters—use “technology inspired by nature.” Its Greentech Filters+, for example, feature technology that attack odors and volatile organic compounds (VOCs) at the molecular level. Rather than just mask smells, it transforms the odor or VOC molecules into inert substances. Its customers are in healthcare, hospitality, and education, among other commercial sectors.

The company’s commitment to sustainability goes beyond cleaner air. Greentech Environmental has designed its filters to use 50% less synthetic material, which requires fewer resources and sends less waste to landfills.

The Future of Sustainability in Business

Call it the era of the sustainable enterprise: Sustainability has become established as more than just a passing fad. Some have referred to it as a megatrend that will dominate a company’s ability to compete—or even survive—in the years ahead.

At the 2024 World Economic Forum (WEF) conference in Davos, Switzerland, the prevailing sentiment focused on how businesses can become more proactive in creating positive sustainability impacts. “We know that the growth that we’ve experienced over the years has been powered with an overconsumption of Earth’s finite resources,” said Gim Huay Neo, managing director of WEF Geneva, during one of the Davos panels. “The big question that companies have to navigate is, can they continue to grow, can they continue to generate profits, while cutting emissions and stopping depleting natural resources?” The key, she said, is building new businesses and economic models that perform as well or better than those in place today.

Meantime, a majority of the public is also looking to corporations to lead the way toward environmental sustainability. More than half (52%) of U.S. respondents to a Pew Research Center survey said they believe that businesses and corporations can do “a lot” to reduce the effects of climate change.

The near-future agenda for businesses will extend to all three of the sustainability pillars. According to the Institute for Sustainability Studies, some trends likely to emerge include focusing on climate resilience and adaptation, adopting circular economy principles, reducing Scope 3 (or indirect) emissions, integrating social responsibility and ethical governance into sustainability strategies, scrutinizing supply chains for greater sustainability, boosting biodiversity efforts, prioritizing employee engagement and well-being, and improving sustainability reporting.

The good news is that companies can harness powerful technology tools in their efforts, including better AI and data analytics to improve resource usage, blockchain technologies to increase transparency, and enterprise technology platforms to tie it all together and produce effective reporting.

Implement Your Green Initiatives With NetSuite

As is evident from the descriptions of the three pillars, businesses that wish to pursue sustainability initiatives must be able to gather, integrate, analyze, and take actions based on large amounts of data about their own internal operations and those of their suppliers, partners, and even customers.

NetSuite ERP can help streamline sustainability data management by gathering the relevant information from finance, supply chain, human capital, and customer relationships into a single platform. Thanks to automated data collection, NetSuite reduces the risk of poor data quality and collection. Customizable dashboards enable ongoing monitoring and analysis of sustainability metrics so that a company can progress toward its goals. It also offers sustainability-specific capabilities within the platform, such as one from a NetSuite partner that measures a company’s ESG compliance relative to standard benchmarks, using proprietary modeling based on International Organization for Standardization (ISO) emissions factors. NetSuite also offers a technical customization for a carbon footprint emissions calculation that provides ongoing, real-time tracking of emissions based on an organization’s operational activities.

NetSuite Supply Chain Management can extend these capabilities throughout a company’s supply chain. It empowers companies to more easily and effectively share data throughout their supply chains, communicate and collaborate with suppliers, produce reports, perform predictive analytics, and rapidly respond to emerging sustainability issues.

Businesses’ focus on sustainability is here to stay—and companies seeking to thrive in the years ahead are likely to double down on their efforts across all three pillars: environmental sustainability, social sustainability, and economic sustainability. Fortunately, sustainability is a necessity that offers significant business benefits, from lower costs and greater efficiency, to happier customers and employees, to increased revenue and growth. While sustainability best practices and standards continue to emerge, businesses should not wait to invest in the best technologies and processes available today to underpin their sustainability efforts now and into the future.

Sustainability FAQs

Is sustainability a good thing?

Yes, sustainability is a good thing for people and businesses. In a sustainable society and economy, humans and businesses focus on conserving resources for future generations, existing in harmony with and protecting the natural environment, and improving access to social equality and quality of life. Businesses are finding that investing in sustainability—environmental, social, and economic—offers benefits in terms of lower costs, greater efficiency, market and customer expansion, and more.

How is something considered sustainable?

The concept of sustainability is built on the idea of support for environmental, human, societal, and economic well-being. Sustainability practices preserve or improve those pillars. A growing number of standards and certifications can help verify whether a product or practice is sustainable, but these are still early days.

What is the basic idea behind sustainability?

The basic idea behind sustainability is to develop strategies and plans to meet the needs of current generations without compromising those of future generations. It can be applied at the individual, business, regional, or societal level. The three pillars of sustainability are environmental, social, and economic. Ideally, the goal is to strike a balance among environmental responsibility, social well-being, and economic growth.