Sustainable commerce

Sustainable commerce is a business practice that strives to have a minimal impact on the environment, conserve environmental resources, be socially responsible, and improve its community. Businesses that engage in sustainable commerce put a priority on not only ecological resources, but also on human health and welfare, social concerns, and economic support of a community. By maintaining this delicate balance, sustainable commerce businesses create value for their customers, investors, and the broader scope of the environment and society. Sustainable commerce practices can range from implementing small-scale environmentally friendly movements, such as recycling programs, to investing in long-range and large-scope educational programs to improve human welfare. While individuals can be responsible for sustainable practices, business practices that are sustainable are generally viewed as having a larger impact on the environment, society, and the economy.

Brief History

Since the Industrial Revolution began in the late eighteenth century, the world economy has grown and developed at an enormous rate. As far back as the eighteenth century, some business owners were concerned about industrialization creating unhealthy levels of pollution and destroying natural resources, such as trees. Some business owners of the late eighteenth through early twentieth centuries took these concerns seriously and made efforts to reduce pollutants in manufacturing and conserve natural resources and raw materials. These efforts were the start of the concept of corporate social responsibility and management practices.

During the years prior to World War I (1914–1918), since industry grew so quickly, there was little in the way of social or environmental protection in business plans or governmental regulation on a large scale. However, following the war, the League of Nations formed the International Labour Organization to improve working conditions for employees. Western countries then began to legislate working conditions. For example, the New Deal of 1934 impacted major industries and brought reforms that limited the control of large corporations and provided social welfare reforms.

The post-World War II (1939–1945) era brought more commercial prosperity, but social and environmental concerns also became more of a political issue. The environmental and social movements of the 1960s prompted more commercial enterprises to embrace the concept of sustainability and to begin to incorporate more clearly defined sustainability measures in business plans. These first practices mainly focused on environmental controls in response to newly imposed regulations and organizations, such as the Environmental Protection Agency (EPA).

In the following decades, the concept of sustainability grew broader and more complex, and came to include other social and economic issues. In the 1970s, non-governmental environmental groups, such as Greenpeace, developed campaigns that involved the commercial sector. By the 1980s, it became clear that the environmental and social practices of a business’s organization could affect its reputation with consumers and investors, either for positive or negative.

In 1987, the World Commission on Environmental Development (WCED) released the Brundtland Report to help bring attention to the goal of globally sustainable development. It provided guiding principles for sustainable business development practices in response to growing concerns about environmental problems, such as the depleting ozone layer and global warming. In addition to addressing business practices, the report also suggested greater cooperation between governments to provide long-term, large-scale solutions.

In the 2000s, the label “green” became popular and was quickly embraced by businesses as a marketing concept. Public concern for the environment and social issues continued to grow as researchers brought to light more negative environmental impacts of more than two centuries of industrialization. This concern became linked to efforts to increase sustainability, and business terminology began to reflect these ideas. Terms such as “triple bottom line, “eco-friendly,” and “eco-efficiency” became commonplace in business plans.

In the 2010s and 2020s, climate change and environmental concerns became an even more urgent issue. Climate change scientists released data to the media which encouraged public support for more action, and political policy began to reflect this to an even greater degree. Ecological experts met with governmental leaders in an effort to avert serious environmental consequences due to the destruction of natural resources and pollution. The United Nations’ Intergovernmental Panel on Climate Change, for example, in 2021 warned that the atmosphere had already warmed significantly and that in the next 30 years, continued warming would be disastrous. Since much of the environmental impact is the result of commercial activity, many governments enacted stricter environmental mandates and pledged to work with industries to increase efforts in sustainability.

Overview

Sustainable commerce is also sometimes known as “green commerce” or “sustainable business practices.” The Brundtland Report of 1987 lists three different factors of commercial sustainability: the environment, the economy, and society. The concept of commercial sustainability functions on the principle that the economy, human society, and the environment are all interconnected. When these factors intersect, it creates sustainability as a whole for a business. However, these basic factors have expanded in the decades since that report to encompass more complex and nuanced aspects of sustainability.

Environmental sustainability, or natural capital, relates to limiting negative impact on the environment through commercial operations. The impact of human activities on the environment is often put into terms of harmful levels of carbon dioxide produced, and is known as the “carbon footprint.” This analyzes the impact of the consumption of a product or the use of a service. It also takes into consideration the use of limited natural resources, such as wood, fossil fuels, or minerals. Many businesses strive for the goal of being carbon neutral, which involves no net release of carbon dioxide by offsetting emissions. This is usually accomplished by using alternative energy and planting trees.

This type of sustainability also involves environmentally friendly practices in running offices and warehouses, such as using alternative energy sources and sustainable packaging, and this could include practices such as using recycled, biodegradable, or organic materials. Sustainable commerce also supports local vendors or suppliers, such as shipping services, that reduce carbon emissions and have a similar commitment to sustainability. Some businesses provide incentives to consumers who reuse or recycle products to extend their lifecycle. The education of employees, consumers, or the community may also play a vital role in implementing or understanding a commercial sustainability initiative.

Economic sustainability aims to improve the standard of living for people and help human capital feel empowered in the economy. It also focuses on using local or fair trade vendors and suppliers, which puts money back into the local economy or provides fair compensation and working conditions. Educational efforts to help employees, consumers, or vendors to gain more economic benefits may also be part of a sustainability plan.

Social sustainability invests in social capital, or the societal aspects of a business, through programs or services that improve a social framework. It maintains and improves factors such as interpersonal relationships, working conditions, and equal treatment of people.

In addition, sustainable commerce supports local programs which promote positive changes in the community. This may take the form of creating recycling programs, supporting initiatives that enhance employees’ well-being, or working with local organizations that encourage social or economic responsibility. These efforts are often used to provide an opportunity for marketing a business and bringing the public’s attention to sustainability plans.

Many consumers consider sustainability when deciding from which company they should purchase goods or services, and they typically prefer to patronize a business that most closely aligns with their personal values on environmental, economic, and social issues. This creates more of a demand for sustainable goods and services, which encourages companies to make sustainability a priority. While sustainable options may be more expensive, reports have shown that many consumers are willing to pay higher prices for goods that align to their values. A 2023 survey conducted by PDI Technologies found that over two-third of surveyed Americans were willing to pay more for environmentally sustainable products. Marketing tactics capitalize on consumers demand for sustainable goods and bring to their attention any efforts being made.

However, not all sustainability claims are valid, and they can sometimes be hard to substantiate. False or misleading advertising in this respect may lead a business to be accused of “greenwashing” or using a “green sheen.” This involves a business making an unsubstantiated claim about sustainability that is purposely meant to deceive consumers into thinking a product or service is more environmentally responsible than it really is. To combat this and provide consumer protection, the Federal Trade Commission (FTC) created Green Guides that provide guidelines to help businesses avoid misleading consumers and to promote sustainable commerce. The FTC also has the authority to enforce sustainability claims and can provide legal consequences to businesses that are guilty of greenwashing.

Other challenges in implementing sustainable commerce beyond ensuring claims are valid include the cost of investing in more eco-friendly technology or practices while keeping costs low enough to stay competitive. Often, equipment that uses alternative fuels or reduces the carbon footprint of a business is more difficult and expensive to obtain. Recycled, organic, local, or fair-trade resources are usually more expensive too. Sustainable commerce also requires skilled personnel and a framework to implement and maintain practices. All of these factors may create obstacles to sustainable commerce.

Bibliography

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