Profit is the motivating force behind any business. Indeed, without profit, a company’s longevity is in serious doubt. But corporate sustainability–in every sense of the word–is about more than quarterly earnings. In a complex world facing “wicked problems,” corporate responsibility, recognizing its social license to operate, is arguably just as important, if not more so.
“Most business leaders agree that a company’s purpose should be about more than just making money,” writes Hubert Joly in Harvard Business Review. Joly cites a McKinsey report showing that only 7 percent of Fortune 500 CEOs believe their companies should focus primarily on “making profits and not be distracted by social goals.”
The Triple Bottom Line
Businesses devoted only to profit may survive quarter-to-quarter but ignoring the full human and environmental scope of the world they inhabit comes with its own cost. Over time, those costs come to fruition.
Corporate sustainability, therefore, rests on a triple bottom line accounting principle, or “TBL” (people, planet, profit). TBL accounting assesses the social, environmental, and financial costs, benefits, and broad impacts of corporate activities, including its supply chains.
Adding to our acronym soup is ESG reporting–environment, social, and governance. Historically, ESG reporting appealed primarily to business leaders individually motivated to address sustainability issues within their organizations. Over the past several years, however, ESG has gone mainstream. Sustainably managed assets reached $330 billion by the fall of 2021, up 39 percent from the end of 2020.
Whether inspired by idealism or the realities of the shifting marketplace, ESG reporting is an increasingly critical component of measuring corporate performance and attracting investment.
Therefore, the market incentives favor companies that provide transparent, verifiable, and accurate analytics on a range of non-financial metrics.
Dr. Andrew Banasiewicz, Director of Data Science & Analytics Programs at Merrimack College, writes in a LinkedIn article that “the relatively recent proliferation of data-driven interconnected intelligent networks” defines an emerging fourth Industrial revolution.
Big data and business analytics inform both financial and non-financial risk analysis. Professionals who can marshall their business analysis skills toward a broad ESG reporting perspective will help shepherd this nascent business revolution.
What is ESG Reporting?
TBL accounting dovetails into ESG reporting. Together, they offer standards and frameworks to measure and report non-financial risk.
In an ideal world, ESG reporting would reflect the transparency and standardization required of traditional financial reports–with the same penalties for non-compliance and fraud. Today, ESG reporting is not mandatory, but shareholder expectations and increasing regulatory oversight carry reputational and financial risk. Failing to measure and transparently report non-financial risk factors impacts profitability.
According to Social Accountability International, certified TBL is “based on the belief that while outcomes matter, authentic measurement must come first.”
Inevitably, we find ourselves resolved to a tried-and-true maxim.
You Can’t Manage What You Don’t Measure (But You Can Greenwash)
Data is the conscience of stakeholder capitalism. Free market capitalism is capable of “producing remarkable prosperity and growth,” writes Peter in Forbes. “Yet it has no moral judgment or conscience. And lately, it can’t see much past the next financial quarter. Most importantly, who is the beneficiary of the prosperity it’s creating?”
The rise of ESG reporting and the growing business adoption of relevant UN-sanctioned Sustainable Development Goals brings the moral compass Georgescu argues is absent in free markets. The business world stands at an inflection point as the business case for corporate sustainability catches up with its social and environmental necessity.
As such, some are tempted to greenwash, employing ESG as no more than a marketing buzzword. The standards and methods of ethical ESG reporting are required to avoid spurious, inaccurate, or false statements of corporate stewardship.
Careers in ESG and Corporate Sustainability
With the evolving business and regulatory landscape comes new opportunities for business analysts to help lead the charge for corporate sustainability.
Experienced professionals with technical skills, business savvy, and ESG knowledge can find C-suite leadership positions as Chief Sustainability or Compliance Officers.
Many smaller organizations don’t have the resources to deploy a dedicated department or the workforce to measure and report ESG metrics. Small and medium-sized businesses drive an expanding market for ESG-focused business analysts who can provide these services, either as independent consultants or working for a consultancy firm.
Merrimack College Online
Online degree programs help prepares students for general business analytics careers. They can also apply their expertise in non-financial management as CSOs, CCOs, or as ESG business analysts.
The top-rated, 100 percent online program is offered through a unique collaboration between the School of Science & Engineering and the Girard School of Business. This combination provides the technical analytical expertise and business acumen required to launch or advance a career in business analytics, TBL accounting, and ESG reporting.
Various online business programs are designed around input from an industry council, delivering the latest, most in-demand skills and knowledge students can immediately apply to their professional careers.
The fourth Industrial Revolution that Dr. Banasiewicz and others speak of is here. It is a revolution driven, in part, by aspirations to remake business in a new model. We speak of it in many ways: stakeholder capitalism, the triple bottom line, ESGs, and SDGs. Whatever term we employ, the critical goals they express come to fruition only through clear, comprehensive analysis and transparent communication.
A master’s in business degree arms professionals motivated to meet the challenge and help shape the future of business and corporate sustainability.