Frequently Asked Questions
What are eco-labels?
Eco-labels (or eco-seals) are certifications that a product complies with a certain level of environmental or social friendliness.
However, the recent pressure on organizations to be more sustainable has resulted in a proliferation of eco-labels—some of which with questionable credibility—which can make them part of the current greenwashing trend. This has various implications, including a loss of trust by stakeholders and increased confusion by companies that seek genuine sustainability certification.
What is greenwashing?
Greenwashing is the practice of making an organization or product appear more environmental friendly than it is.
Because measuring the exact environmental impact of goods and services is extremely complex, some greenwashing might be involuntary, the result of a honest mistake. However, in other cases, greenwashing is the result of downright disingenuous thinking. In either case, one might argue that it is an organization's responsibility to represent correctly its environmental impact.
As consumer's, employee's and other stakeholder's interest grows for environmentally friendly goods and services, there is added pressure on organizations to communicate the environmental merits—real or not—of their products. As a result, it appears that greenwashing is widely pervasive in some markets; for instance, a 2009 analysis by a Canadian consultancy found seven ways in which an organization can mis-represent the environmental friendliness of products and found that 98% of the products it tested were mis-represented in at least one way.
Is aiming for carbon neutrality a worthy goal?
Aiming at carbon neutrality means that an organization reduces as much as possible its carbon emissions and offsets what it cannot reduce. In that sense, carbon neutrality is positive. However, it can also counter-productive.
Carbon emissions aren't the primary environmental impact of many industries and therefore focusing on carbon results in dedicating less resources to more important problems. Also, in those cases, announcing publicly one's goal to be carbon neutral is a form of greenwashing which can result in the loss of the public's and other stakeholder's trust in the organization's future environmental claims.
Therefore, before embarking in a quest for carbon neutrality, an organization must first identify if its carbon emissions have a significant environmental impact. If so, it is a worthy goal.
What are LCAs?
The life cycle of a product is commonly modelized with five stages: raw materials procurement (the so-called cradle stage), manufacturing, distribution, consumer use and disposal (the grave stage). The product impacts the environment at each of these stages.
A life cycle assessment (LCA) (also life cycle analysis or ecobalance) is an evaluation of the environmental burden that a good or service represents from its cradle to its grave.
The need to understand the environmental impact of products along their entire life is a strong force behind the construction of sustainable supply-chains: as manufacturers realize that their products are only as sustainable as the raw materials they use, they increasingly involve their suppliers in the search of environmental impact reduction opportunities.
LCAs can be conducted at various levels of complexity (qualitative analyses are the simplest, quantitative the most complex) and using various approaches. The ISO 14000 establishes standards to conduct them and many software and databases are available.
What do the dimensions of the triple bottom line framework consider?
The environmental, economic and social dimensions are interdependent.
The environmental dimension includes natural resource utilization—water, energy, materials, land—as well as the waste and pollutant streams resulting from their use and ecosystem and human health effects.
The economic dimension includes internal costs, revenue opportunities and shareholder value; it also includes costs and benefits of externalities resulting from corporate activities. Financial flows to the community from taxes, philanthropic dollars, community investment and job creation are included, as well as intellectual capital and other capital assets. Eco-efficiency resides at the interface between the environmental and the economic dimensions; it focuses on making the system more efficient by reducing the environmental impacts per unit of economic output.
The social dimension incorporates the human factor, including workplace conditions and labor practices; employee health, safety and well-being; and security, ethics and human capital development. Additional social factors include social impacts from operations, contribution to quality of life in the community, fulfillment of basic human needs, social investment, promotion of human rights, understanding of stakeholder and community engagement, and equity.
These dimensions apply to the company and its supply chain, as sustainability considerations are increasingly transcending any given organization to incorporate a life cycle perspective, from the extraction of natural resources to end of life or rebirth.
What are the drivers of corporate sustainability?
Various corporate executives surveys address the question of what is driving companies to move toward greater sustainability.
According to a 2009 survey of 1,500 business leaders by the Boston Consulting Group and MIT Sloan Management Review, the issues that have the most significant impacts on their organizations are: government legislation, consumers concern, and employees interest. These were followed in descending order by pollution, depletion of non-renewable resources, social pressures, water supply and access issues, global political security, population growth, and climate change.
The good news is that executives believe that being more sustainable isn't a financial burden for the organization: a 2008 Economist Intelligence Unit survey of over 1,200 business executives found that sustainability is very much compatible with strong financial results. In fact, a majority of executives think that it pays for itself: “the benefits of pursuing sustainability practices outweigh the costs… Specifically, sustainable practices can help reduce costs, open up new markets and improve the company’s reputation.” More specifically, most executives see the primary value of sustainability as improving the image of the company. This is a recurrent finding in numerous surveys.
What is the triple bottom line?
The triple bottom line extends the traditional scope of organizational success—economic achievement—to include two other dimensions: ecological and social.
With this extension comes a recognition that all three dimensions are linked; the economic dimension includes costs associated with environmental and social impacts and the value realized by creating positive effects on the environment and the community. It is not about altruism; it is about making business sense.
Sustainability programs in businesses are called many things, including corporate social responsibility (CSR) andenvironmental, social governance (ESG). Many companies focus these programs solely on environmental aspects—one such trend is the popular push to become carbon neutral—while others also include social programs, economic implications, and governance factors. Some corporate definitions of sustainability refer to improving quality of life while protecting ecosystems; and some bring in the concept of long-term thinking, preserving quality of life opportunities for future generations.
What does "sustainability" mean?
While there is no consensus on the definition of sustainability, the weaving of environmental, social and economic considerations into a system of thought is common to most. The Brundtland Commission definition of sustainable development remains standard: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.
For its part, the World Business Council for Sustainable Development conceptualized sustainable development as living off the interest the Earth generates: living within natural system limits while not drawing down that principal.
While both are solid foundations on which to build, they aren’t operational definitions for corporations. In the business environment, sustainability is often referred to as having a triple bottom line (see below).