What is the Role of the Shareholder When Considering a Commitment to Sustainability?

Many will argue that the sole responsibility of a business is to its shareholders. In recent years, just as many people have argued against this notion with a focus moving towards corporate sustainability.

At Strategic Sustainability Consultants, we take the view that both are actually correct.

This is because it is in the shareholders’ best interest to ensure that a business is committing to an economically, socially and environmentally sustainable future.

As consumers shift towards a want for a more sustainable future and make purchase decisions which align with these values, companies which are putting in place sustainability practices with this will find themselves with a competitive advantage over those which do not prioritise sustainability.

For businesses to maximise profits and prioritise shareholders in the long-term economic sustainability of the company, it is vital that sustainability at all levels is considered. Shareholders are placing increasing pressure on businesses to ensure they are meeting their commitments to economic, social and environmental sustainability.

While some may argue that a donation to charity from a company is of equal value to that of a donation from a shareholder, it is important to note that sustainability is not just about philanthropy — it is about the day-to-day operations and governance of a given business.

For companies relying on non-renewable resources, it is in the shareholders’ best interest to engage in sustainability practices. If this purchase of shares is a long-term investment for the shareholder, there will be a time where these non-renewable resources run out, the shareholder in question may find themselves questioning their investment as the company struggles to change its business practices, fighting price increases and supplier demands.

Additionally, the model of expecting shareholders to donate their money to certain causes if they so choose does not make long-term economic, social or environmental sense. For instance, it is far better for the economy if companies invest their money in such practices as renewable energy instead of relying on shareholders to donate to charities working to mitigate climate change. The most impact can happen from a company’s direct involvement, which will mean the best economic outcome not only for the company but for society and the planet.

For more information about how to consider your shareholders in your business’ journey towards sustainability, contact us today!

This article was originally published on the Strategic Sustainability Consultants website.