“Sustainability.” This word gets thrown around in and outside of corporate fields. By definition, it refers to the act of something being maintained at a certain level or amount, and in the case of business, usually through regulation.

Since the advent of the environmental movement, the world has turned its attention to businesses and their social as well as environmental effects. These regulations are usually implemented with the intent of sustainably reducing the usage of nonrenewable resources such as fossil fuels.

Companies can observe and regulate their supply chains to make sure there is transparency in the methods that lower levels of production are using. They can also use sustainable methods of appealing to consumers such as producing items with biodegradable packaging, conserving of water (specifically in the food production industry such as with meat packing), and considering renewable energy sources. 

A big part of emissions comes from delivery. USPS conducted a survey recently explaining that 35 percent of the time, freight trucks are simply empty. Around 70 percent of the shippers surveyed stated that they consider ending this needless use of energy a huge goal. Companies can avoid the changing regulations in sustainability by ending their unsustainable freight practices ahead of time. USPS added that the EPA and SmartWay Transport Partnership can aid companies in regulating their truck and transportation usage.

Sustainability can also refer to a company’s ability to maintain and upkeep its workforce and labor systems. This can pertain to work hours, conditions, and even housing. Examples of companies that have recently been facing backlash about labor rights and lack of transparency within the labor sector of their companies have coined the name “fast fashion.”

Fast fashion companies include Shien and Forever 21, among other worldwide clothing and accessory stores that have struggled with being transparent about worker pay and factory conditions. Companies like this tend to have factories in countries that have fewer regulations. American labor standards prohibit discrimination, unsanitary conditions, and other violations that some foreign countries may not regulate.

Enough companies actually choose to be green promoters because they want to set themselves apart from the competition. An IFC article published through Medium a few years ago explained that companies go above and beyond regulations with sustainable practices in order to gain a return on equity and a return on assets.

Companies that possess a high ESG (Environmental Social Governance) score tend to experience greater equity return and greater asset return than their counterparts. The ESG score evaluates a company’s ethical and social impact, which allows investors to analyze carbon footprint, diversity, and other factors.

Deutsche Bank recently conducted a study assessing academic studies which revealed that companies with a high ESG tended to have a lower amount of debt. Companies that are a part of the Carbon Disclosure/Performance Leadership Index, which evaluates performance on greenhouse gas emissions, tended to also have greater stock market returns.