March 11, 2021
Evidence shows us that sustainability management can lead to more efficient and profitable corporations. So what exactly is corporate sustainability management (CSM,) and how does it lead to better and more sustainable businesses?
In this article, the GHG emissions management specialists at SINAI explain sustainability management within the context of the corporate world and the benefits of prioritizing it within your organization.
Corporations increasingly devote resources and strategies towards sustainability and protecting the natural environment. Many factors appear to drive companies towards investing in practices and departmental structures that are referred to and aid corporate sustainability management.
In today’s world, practices of corporate sustainability management include ethical questions and dilemmas. For example, the fundamental question of “What does it mean to be sustainable?” asks corporations to reflect on the end goal of sustainability and raises questions of standards, both internally and within the industry, each company operates in. Asking these basic questions seems inevitable because our understanding of what sustainability is and what it is not has a significant impact on how we identify problems and come up with solutions.
Corporate sustainability management is where business meets sustainable practices. It is the activity of managing a corporation’s impact on the three key bottom lines - profit, people, and the planet - so that all three can coexist and flourish well into the future. Sustainability management underpins a corporation’s long-term viability, as it prevents rather than reacts.
A growing number of corporations from a wide range of industries, including transportation, utilities, consumer goods, and real estate, are pursuing sustainable management business goals.
There are proven market benefits for corporations that prioritize CSM activities, including improving their long-term company value and the capital market response to the disclosure of earnings, in addition to several other benefits. Let’s explore four key benefits of embracing corporate sustainability management.
A recent study found that both the abnormal trading volume and the stock return volatility around earnings announcements for corporations with CSM reporting are significantly higher than those for non-CSM companies, which means that CSM organizations tend to announce earnings news in a timely manner and are more likely to provide initial earnings announcements when compared to non-CSM companies.
Interestingly, the CSM corporation’s earnings quality itself, as represented by earnings volatility, is relatively lower.
From the stakeholder value perspective, this study also sheds light on
the previously unexplored area regarding the link between corporate sustainability management and a corporation’s information ecosystem by highlighting that CSM reporting coincides with an improvement to the earnings disclosure practices. This, in turn, leads to an enhanced market response to earnings announcements from CSM corporations.
This research provides consistent evidence that should encourage more ﬁrms across the globe to adopt corporate sustainability management practices if they haven’t done so already.
Robust corporate sustainability management also makes it possible to identify and manage risk to the business quickly. In addition, scenario analyses allow CSM firms to assess which assets within the business are most at risk, including throughout their supply chain, if applicable.
To learn more about what corporations should consider when it comes to supply chain decarbonization, read our recent blog on the topic.
Depending on what country your corporation operates in and what industry they form a part of, there will be regulations and standards you will need to comply with.
Corporate sustainability management provides businesses with the framework to collect comprehensive operational data and insight for reporting purposes and even set custom emissions factors if, for example, there is a fixed internal carbon price.
Methodological guidance and transparent, auditable calculations included in an emissions factor database can help CSM firms meet EPA, IPCC, and GHG Protocol standards and more with ease.
Cutting-edge technology has emerged to help corporations achieve their corporate sustainability management goals. From seamless compliance of relevant regulations to managing risk to your corporation with ease, a focus on corporate sustainability management can bring substantial benefits to your company.
With clear evidence of the advantage provided to CSM firms when it comes to investor interest and operating a more efficient business, corporations can risk falling behind without a strategy for delivering effective corporate sustainability management.
SINAI offers CSM firms the ability to unlock capital-efficient strategies that reduce your organization's carbon footprint and help execute competitive transition plans through the planet’s leading decarbonization platform.
If you are ready to accelerate your corporations’ environmental and financial performance, reach out to us today for a demo of our software and see what SINAI can do to help you reach your CSM objectives.