Introduction
Every enterprise, small and large, strive for its development, and all its activities are directed precisely along this vector. The theoretical foundations of business development are often of a specific nature that meets financial performance requirements, including aspects of marketing and economics, but not global environmental factors. Previously, many businesses sought to maximize revenue at any cost, and the price was sometimes too high. Human resources, the unique resources of nature, began to be valued relatively recently, centralizing the main ideas for business development around these categories. As a result, questions were raised about the sustainable development of companies, that is, about a long process and mechanisms that contribute to the positive dynamics of this process.
Modern trends in global processes affecting the largest enterprises increasingly concern the issue of sustainable development of enterprises, their flexibility and adaptation to external factors in the economy and politics. Along with this, global warming concerns are on the rise. It resulted in the organization and development of a number of environmental initiatives raised during the World Economic Forum 2020 and documents aimed at combating climate change. The general approach to the definition of sustainable development assumes the financial condition of an enterprise, the economic activity of which ensures, under normal conditions, the fulfillment of the obligations.
According to modern requirements and trends, social and environmental responsibility has been added to these obligations. The reputation, and often the results of the company’s operations, have become indirectly but strongly dependent on the organization’s attitude to global issues. Maintaining neutrality in such matters is already seen as a negative connotation of the dynamics of attitudes towards the company. Global problems have long been ignored, and the current increased attention to them is dictated by a range of irreversible consequences inflicted on the environment and social infrastructures. This paper discusses the main aspects of this type of responsibility, as well as the types and mechanisms of their manifestation, such as philanthropy and corporate ethics. The prerequisites for the formation of these terms, phenomena, and reasons for increased attention to issues and aspects of business sustainability, value transformation are discussed in advance, as well as the main issues of discussion of the problem at the World Economic Forum 2020 and how such responsibility is regulated at the legislative level.
Background of Sustainability
Researchers paid attention to the global environmental problems of humankind a long time ago, but the involvement of state structures, authorities, and society took place only around the 70s of the twentieth century. Meadows presented the first disappointing predictions made using mathematical modeling methods in a report to the Club of Rome (Bowles, Alexander, and Hadjikakou, 2019). According to the research results, it turned out that humanity has decades left to live a whole life (Gomez-Baggetun, 2020). After this period, the planet’s critical resources will reach a point of no return in terms of replenishment, food problems will begin, and the environment will be highly unfavorable in terms of pollution (Herrington, 2021). After this report, the public and authorities began to devote more resources and attention to this problem, primarily focusing on assessing the use of resources.
Previously, business sustainability was dictated in isolation from social and environmental responsibility concepts. As a central goal, production achievements and technical revolutions singled out not a person but scientific, technological development, enterprise efficiency, and opportunities for increasing profits. For a long time, with the discovery of non-environmental but adequate energy resources at that time, many people were forced to work in challenging and uncomfortable conditions. In addition, various kinds of discrimination on a national scale persisted for a long time. Needless to say, ecology was the last thing the company leaders thought about, while incentives from the government, science, and the public did not even exist.
Since then, the trend has become firmly entrenched in today’s realities. The human has become a central figure in the sustainable development of enterprises, and as a result, the values associated with people have been centralized. Social responsibility has become a product of a mindset in which human values have come to the fore and have come to determine organizations’ reputations and the main aspects of efficiency. Research began to prove that employee satisfaction and engagement directly affect their performance. Severe discrimination issues have come to be regulated by a code of conduct with shared values and trends but are generally the same for most companies.
The human environment has also become an essential determinant of the well-being of employees and companies. In addition to the apparent need to care for the environment, preserve flora and fauna and reduce the rate of global warming, working conditions and employees’ health in the workplace are improving. The consequences of the activities of developed countries led mainly to water and air pollution, which contributed to the deterioration of the entire infrastructure of the city in which they were opened. More careful planning at the national and even international levels is now driving strong regulation and the transition to renewable energy. Such transformations also led to a change in the main aspects of the term company sustainability.
World Economic Forum 2020
During the 2020 World Economic Forum, despite the fact that the environmental agenda of the event was announced, the defenders of the planet held an action to draw attention to how large corporations, in their opinion, worsen the situation. Even before the start of the anniversary forum, its founder Professor Klaus Schwab put forward the ideology of “stakeholder capitalism”, in which profit ceases to be the only criterion of truth and companies behave as environmentally and socially responsible players in all markets of their presence (World Economic Forum, 2021). Climate change, in addition to more frequent natural disasters, affects demographic and social processes, migration, health, lifestyle and employment.
Despite climatic changes, such as the change of seasons, changing ocean currents, volcanic activity, solar radiation, the climate is by nature relatively stable. These changes occur with a certain regularity, winter always gives way to spring, and monsoons come in a particular season. Thus, climate change is a long-term impact that leads to significant and global consequences of environmental change due to, for example, temperature increase, the preservation of sunlight radiation, ozone depletion, and much more (World Economic Forum, 2021). Climate change, in addition to more frequent natural disasters, affects demographic and social processes, migration, health, lifestyle and employment.
Measures taken to mitigate the impact of climate change risk on insurers’ assets include limiting investment in non-green industries. Such measures encourage organizations to switch to green energy or reduce CO2 emissions, net-zero transition, circular economy, innovation, and raise awareness of asset managers about climate risks. Additionally, the World Economic Forum in 2020 raised the topic of job creation. Few of the provided case examples included the Food Systems Initiative and Forum’s Trillion Trees platform (World Economic Forum, 2021). One current sample of the organization striving to reach the carbon neutral status includes Amazon (Chrobak, 2021) Therefore, most relevant topics of corporate sustainability were discussed during the forum.
Nowadays, the main scientific problem of optimizing nature management is changing the nature management strategy itself, its continuous improvement in order to overcome negative consequences on a global scale. To solve the problem, research is needed in environmental, technological, economic, and legal areas (Kiesnere and Baumgartner, 2019; Reed and Abernethy, 2019). It is necessary to intensify the study of the evolution of the biosphere, energy and mass transfer in the biosphere, the biological aspects of nature conservation, and the chemistry of the biosphere.
The technological direction is associated with the development of an optimal strategy for environmental management. The management is applicable to multiple segments, including energy, industry, agriculture, forestry, urban planning, fashion, and other areas of human activity (Raja et al., 2019; Barbier and Burgess, 2020). Efficient use of resources is important to prevent the loss of the opportunity to use the most important ones. The economic and legal direction is associated with the study of methods. The study methods are used for the economic assessment of natural resources, the development of an economic mechanism that stimulates the fulfillment of the requirements for the protection of the natural environment (Purvis, Mao and Robinson, 2019). Additionally, they ensure rational nature management and improvement of the scientific foundations of environmental legislation.
Environmental Responsibility
Reducing CO2 emissions, purifying water, saving the environment through waste recycling are many possible ways to protect the environment. In proportion to their income, large companies include environmental responsibility in their long-term development plans, gradually switching to renewable energy sources, reducing greenhouse gas emissions in production by a certain percentage. These obligations are not regulated and, as a rule, are not subsidized by the states of the countries where the company operates. The climatic situation in the world has endangered the existence of all humankind in the coming centuries, and therefore such a responsibility should be along with the need to improve efficiency, sales geography, and financial performance. As a result, environmental liability is legalized in many countries and provides penalties for violations in the field of the environment, and social structures reward the company if it carries out waste disposal or other environmental activities.
The logical consequence was the introduction of environmental responsibility in various areas and levels of human activity. Large enterprises began to invest money to meet environmental responsibility requirements; the authorities began to create programs for the transition to renewable energy sources, and international environmental organizations began to form (Taylor et al., 2020). Overall, these entities, special groups were created to coordinate the main directions in environmental protection issues. The term sustainable development has acquired a fundamental environmental aspect.
The Aspects of Sustainable Development
Each unit, from small businesses to large international giants, began to include various activities in their development program to meet environmental responsibility requirements. The external environment has become essential to continued effective performance as internal organizational processes (Nathanail et al., 2018). This environment, in many cases, provides not only the company’s resources but also creates the conditions for conducting operations (Bansal, Grewatsch, and Sharma, 2021). Environmental externalities have now become important at both political and social levels: environmental damage is punishable by law, and environmentally friendly businesses are more valued among customers, all other things being equal (Purvis, Mao, and Robinson, 2019). As a result, the sphere of influence of this issue entirely affects the organization’s internal processes, from design and production to financial sales indicators.
This relationship of factors is now best tracked by analysis of the PESTLE macro environment. The totality of their influence is due to the complex interaction of modern trends. Businesses are equally exposed to the consequences of environmental incidents as individuals (Lennox, Maher, and Reed, 2018). Accordingly, in the division of the environment into business and background, environmental issues are increasingly integrated from the sphere of indirect influence to the sphere of direct influence (Fischer and Riechers, 2021). The consequences of human activity have already gone far enough, in connection with which each enterprise has the same share of responsibility as the governments of countries.
Corporate Ethics and Organizational Development
Corporate ethics is a mechanism that aims to provide similar unifying conditions based on company values in order to create a social structure. More and more organizations are creating their code of ethics. Although this issue was discussed casually at the World Economic Forum in 2020, the environmental issue has appeared on the agenda in many organizations, somewhere with government leverage, somewhere to increase reputation (Horng, Hsu, and Tsai, 2019). Corporate ethics makes it possible to document these provisions to resolve conflicts unequivocally.
Within the framework of these provisions, values form standardized norms of behavior that are common for all company representatives. The face of the company is created according to the signs of how its representatives behave in communication and business meetings. These rules and regulations are developed theoretically and empirically, directly in the interaction process between employees and managers (Jannat et al., 2021). Thus, one of the aspects of the company’s reputation is formed, based on which investment decisions, contracts, and much more are often made.
The company’s code of conduct increases the sense of inclusion and encourages diversity, which is now extremely important in terms of social responsibility. Along with environmental responsibility, these activities aim to attract highly qualified specialists to the company, providing them with comfortable working conditions and interaction in the business environment (El-Kassar et al., 2021). The corporate culture reflects the company’s internal processes in external negotiations, which significantly affects its image, including sustainability (Lee, 2019). Resilience is built from a healthy internal and external environment (Ferrell et al., 2019). As a rule, the first aspect consists of efforts towards social responsibility, and the second of actions to preserve the environment.
An essential aspect in determining sustainability factors is the market share occupied by the enterprise. Small local organizations have more risk factors, especially when there are significant players in the market who seek a monopoly (Sroka and Santo, 2018). Market sustainability is driven by competitiveness, which depends primarily on a company’s operations and secondarily on its reputation (Wang, Li, and Bian, 2020). Development in the market requires technological innovation, management optimization, and marketing efficiency improvement. Any improvements are made only on the condition of positive financial indicators that demonstrate the company’s ability to cope with short-term obligations, make gross profits and at the same time meet the requirements of social and environmental responsibility. The larger the company, the proportionately more it must do for the environment and the people around it.
Social responsibility can also manifest itself in the form of philanthropy, in addition to an appropriate attitude towards values within the company’s team. Non-material factors dictate the increased interest in philanthropy in recent years in the development of organizations that are closely related to their reputation (Boodoo, Henriquez, and Husted, 2021). Competitive products must have a clear and solid underpinning of the brand of the issuing company: if an organization supports charitable foundations in its context by promoting product sales, this fact can stimulate sales or at least reduce the risk of their decline for this reason. The uniqueness of a product will thus be dictated not only by its properties but also by the brand background (Mei and Wang, 2021). In addition, social and environmental business is now supported by various kinds of subsidies at the federal level.
Corporate charity in the world is becoming more organized – companies are moving from past targeted actions to large-scale, long-term projects. Philanthropy is turning into a hallmark of a business, which is used to judge its success and ability for sustainable development. Many large companies have developed boards or committees that coordinate all matters related to philanthropy. They develop criteria for the direction of the corporate charity and think over the motivation for the company’s employees if they are directly involved in the action. In fact, philanthropy becomes a marketing tool and an opportunity for a company to show its proper position by supporting certain funds. As a result, activists and people who are not indifferent to this issue pay attention to the company’s operations and can only stimulate sales to support the issue raised.
Thus, the sustainability of the business is dictated by several internal and external factors of the company’s activities, directly or indirectly influencing the financial performance, reputation, and positioning of the company in the market. There is a linear correlation between financial stability and complexity, but the mechanisms of their mutual influence become more complicated every year (Bruninx, Ovaere, and Delarue, 2020). However, achieving sustainability is still a priority and sometimes a forced goal for many organizations (Nawaz and Koc, 2018). Modern organizations and their management are forced to adapt to the changing requirements of the market for products and services. However, following the sustainability trends, the management of the organization receives a positive attitude from society, potential investors, and employees.
Conclusion
In conclusion, successful organizations in the market take into account their trends and the needs of society. Nowadays, ethics, social and environmental responsibility have become an important part of the corporate structure, as discussed during the World Economic Forum 2020. The sustainability of an organization is determined by its ability to meet the needs of people and society while not losing its own economic position in the market for products or services. In fact, having provided its own financial market and observing ethical attitude towards employees, taking into account the interests of other organizations and the population, the organization comes to corporate sustainability.
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