Do you care about the environment and the social issues of our times, but are having a hard time getting your bearings with all the acronyms? Let us clarify the ideas surrounding sustainable development in business!
This is the first in a series of articles about sustainable development and entrepreneurship.
Understanding the acronyms
Sustainable development (SD)
Let’s start with “sustainable development” (SD), a term that is everywhere. The definition in Quebec’s Sustainable Development Act is taken from the Brundtland Report, developed in 1987 by the World Commission on Environment and Development. It defines sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
Concretely, “needs” here means basic necessities, with particular attention paid to the most vulnerable. Plus, SD implies the notion of “limitation,” meaning that the environment’s capacity to meet the needs of humanity is limited and inextricable from our technologies and social organizations. Finally, SD aims for a gradual, global transformation of the economy and society in a process that promotes social equity.
Corporate social responsibility (CSR)
Corporate social responsibility (CSR) is defined by the Canadian government as “a company’s environmental, social and economic performance and the impacts of the company on its internal and external stakeholders.” This governance emerges from the following observation: the effective management of non-financial factors and risks can optimize corporate performance.
To that end, the Voluntary Applied International Standard ISO 26000 published in 2010 is the international reference in CSR. It includes guidelines that are valid for all organizations, regardless of size or location.
Environmental, social and governance (ESG) criteria
With the aim of responsible investment, taking into account environmental, social and governance (ESG) criteria encourages investors to take an interest in non-financial factors that affect their portfolio. Like boards of directors taking into account CSR, investors who consider ESG criteria are aware of the risks of harmful environmental and social practices.
That said, unlike International Financial Reporting Standards (IFRS) that enable an evaluation and comparison of financial statements for different businesses, there are still no common performance indicators between companies from the point of view of ESG criteria. However, a 2021 initiative from the International Sustainability Standards Board (ISSB) seeks to establish such international standards.
UN Sustainable Development Goals (SDG)
In 2015, the UN adopted a framework by developing 17 sustainable development goals (SDG). Far from just wishful thinking, each of these goals is broken down into targets, for a total of 169 specific goals for member states of the United Nations.
The interrelation of SDGs, CRS and ESG criteria
Whether they are more a concern for boards of directors, investors, or management, these three concepts are intended to move beyond economic performance, to take into consideration a business’s environmental and social impacts. This refers to the consequences of their activities on human resources, clients, partners, and the ecosystem.
Evol sustainable development coach Jean Martel sees the UN’s visual representation as “an inversion of traditional diagrams that put things in perspective. First, we are on a planet, second, there are people on the planet, and third, these people are necessary for business development. At the top, there is the collaboration between all stakeholders to achieve objectives.”
At Evol, we know it is indispensable for entrepreneurship today and tomorrow to take action to achieve SDGs. This is why we finance and coach businesses with diverse ownership who want to have an impact by contributing to sustainable development goals. We believe that working toward a better world means integrating SDG efforts in the DNA of any business.
At Evol, we finance change.
