The contributions of these four concepts are illustrated in Figure 1. Corporate sustainability is imperative for business today – essential to long-term corporate success and for ensuring that markets deliver value across society. Mix sustainable development, corporate social responsibility, stakeholder theory and accountability, and you have the four pillars of corporate sustainability. This was followed in 1992 by the book Changing Course, by Stephen Schmidheiny and the Business Council for Sustainable Development (now the World Business Council for Sustainable Development; MIT Press, 1992). Most authors agree that if the term ‘stakeholder’ is to be meaningful, there must be some way of separating stakeholders from non-stakeholders. This relationship is based on the fiduciary model, which in turn is based on agency theory and agency law, wherein corporate management is the ‘agent’ and the shareholders the ‘principal’. However, sustainable development by itself does not provide the necessary arguments for why companies should care about these issues. The contribution of sustainable development to corporate sustainability is twofold. Currently various innovative approaches and new theories emerged, such as Co-evolution Theory and Multi-level Perspective, reflecting three directions of theory development, namely 1) … The arguments in favour of corporate managers having an ethical responsibility to society draw from four philosophical theories: CSR contributes to corporate sustainability by providing ethical arguments as to why corporate managers should work toward sustainable development: If society in general believes that sustainable development is a worthwhile goal, corporations have an ethical obligation to help society move in that direction. is composed of four obligations: The contribution of stakeholder theory to the corporate sustainability is the addition of business arguments as to why companies should work toward sustainable development. According to Archie B. Carroll, one of the most prolific authors on CSR, the modern era of CSR began with the publication of the book Social Responsibilities of the Businessman by Howard Bowen in 1953. Corporate Governance and Sustainability Concepts . Freeman defined a stakeholder as “any group or individual who can affect or is affected by the achievement of the organization’s objectives.” The basic premise of stakeholder theory is that the stronger your relationships are with other external parties, the easier it will be to meet your corporate business objectives; the worse your relationships, the harder it will be. Umsetzung der Aalborg Commitments in 5 Schritten. This trend will be reinforced if shareholders and other stakeholders support and reward companies that conduct their operations in the spirit of sustainability. © 2020 Elsevier Ltd. All rights reserved. Both publications focused on the role of corporations in sustainable development, and the authors argued that supporting sustainable development was as much an economic necessity as it was an environmental and social necessity. Companies enter into contracts (both explicit and implicit) with other stakeholder groups as a matter of everyday business, and these contractual arrangements can serve as the basis for accountability relationships. It starts by integrating relevant theoretical and empirical literature into a coherent theory of corporate sustainability asserting that the sustainability organizational culture comprising sustainability vision and values leads to emotional commitment among organizational members to attain the vision. The issue of qualifying criteria for stakeholder status is currently being debated. Accountability is the legal or ethical responsibility to provide an account or reckoning of the actions for which one is held responsible. Beyond these, however, it becomes more challenging because there are no clear criteria for defining stakeholders. The agent is also held accountable by the principal for how that capital is used and the return on the investment. Privacy Policy. 3. All rights reserved. Over time, until today, an increased awareness of the impact of business and its interaction with social and environmental issues have emerged.Companies are today obliged to some certain responsibilities in the society where they are active. Introduction. This paper addresses these questions. © Copyright 2018 Ivey Business School Foundation. It is the opportunity for businesses to improve their profitability, competitiveness, and market share without compromising resources for future generations. … Central here is the notion of the so-called triple bottom line—that businesses should pay attention to social performance and environmental performance as well as to financial returns. The authors argued that while corporations have always been the engines for economic development, they needed to be more proactive in balancing this drive with social equity and environmental protection, partly because they have been the cause of some of the unsustainable conditions, but also because they have access to the resources necessary to address the problems. Corporate Governance . … To fill in a gap in the corporate sustainability literature, the present study proposes an integrated theory of corporate sustainability. By continuing you agree to the use of cookies. As a specific theory of the way corporations interact with the surrounding community and larger world, corporate social responsibility (CSR) As a specific theory of business ethics, a package of four obligations the corporation holds as an independent ethical actor in society; the responsibilities are economic, legal, ethical, and philanthropic. Stakeholder theory, which is short for stakeholder theory of the firm, is a relatively modern concept. It also sets out the arguments as to why companies should report on their environmental, social, and economic performance, not just financial performance. How to Govern, Manage, and Work Amid COVID-19, How to Sell When the World Is Upside Down, Maintaining Professional Networks in Good Times and Bad, Understanding the Link Between Crisis and Innovation. Although the concept acknowledges the need for profitability, it differs from the traditional growth and profit-maximization model in that it places a much greater emphasis on environmental, social, and economic performance, and the public reporting on this performance. As a concept, CSR has been around much longer than sustainable development or the other concepts discussed in this paper. Accountability differs from responsibility in that the latter refers to one’s duty to act in a certain way, whereas accountability refers to one’s duty to explain, justify, or report on his or her actions. They espouse five corporate sustainability practices of Perseverance, Resilience Development, Moderation, Geosocial Development and Sharing to enhance corporate sustainability prospect. https://doi.org/10.1016/j.jclepro.2020.122292. Corporate accountability provides the rationale as to why companies should report to society on their performance in these areas. In the corporate world, there are many different accountability relationships, but the relevant one in the context of this paper is the relationship between corporate management and shareholders. Sreeti Raut is holding a Master’s Degree in Business Administration focusing on Finance and Insurance & Risk Management and presently she is a Research Scholar with Institute of Directors, India . Dementsprechend herrscht häufig Verwirrung über die Bedeutung dieser Ansätze. They espouse five corporate sustainability practices of Perseverance, Resilience Development, Moderation, Geosocial Development and Sharing to enhance corporate sustainability prospect. For the first few decades after 1953, the main focus of these writings was whether corporate managers had an ethical responsibility to consider the needs of society. Or, as described in the book, it is “a process of change in which the exploitation of resources, the direction of investments, the orientation of technological development, and institutional change are all in harmony and enhance both current and future potential to meet human needs and aspirations.” Sustainable development is a broad concept in that it combines economics, social justice, environmental science and management, business management, politics and law. In the most general terms, CSR deals with the role of business in society. Since then, many business leaders and corporations have come forward to show their support for the principles of sustainable development. As sustainability champions, we are sometimes confronted by frustrated people who ask what we mean by “sustainability.” What they really want to know is sustainability’s relevance to them, their organization, or their community. A review of the literature suggests that the concept of corporate sustainability borrows elements from four more established concepts: 1) sustainable development, 2) corporate social responsibility, 3) stakeholder theory, and 4) corporate accountability theory. Shareholders and investors want optimum return on their investments; employees want safe workplaces, competitive salaries and job security; customers want quality goods and services at fair prices; local communities want community investment; regulators want full compliance with applicable regulations. 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