Sustainability requirements for companies will increase significantly in the future. Large companies, in particular, must comply with regulatory requirements, but such regulations have an indirect impact on the entire value chain – including small subcontractors.
What do corporate responsibility and sustainable business mean?
Sustainable business means that a company operates in a sustainable way. A sustainable company integrates ESG aspects with its business. ESG means environmental and climate-related (E), social (S), and governance (G) factors.
A sustainable company promotes wellbeing from the perspective of society and the environment in addition to financial indicators. The company seeks to increase its positive influence on people and entities and to reduce the adverse effects its operations have on the environment, for example.
A socially responsible company operates so that its actions also enable a prosperous society for future generations. Social responsibility covers a wide range of themes, from environmental matters such as emissions and efficient use of materials to social and administrative matters such as human rights, occupational wellbeing and data security. It is important to identify which themes are relevant to the company and its sector. The responsibility theme is relevant to the company if the company has a significant impact on the theme through its operations, or if the theme has a significant financial influence on the company.
The integration of ESG into business means that responsibility does not only focus on individual acts of charity. Instead, the company takes responsibility for the impacts of its own core business functions.
E – Responsibility for climate and the environment
Improving the state of the climate and environment is a cornerstone of sustainability actions. This can also be called ecological responsibility. A good goal for companies would be slowing down climate change and causing the smallest possible environmental burden. This is achieved by reducing emissions and preventing their creation.
To achieve ecological responsibility, a company may need to change its energy sources, raw materials or production methods, or develop them into an environmentally friendlier form. While a company may face investment needs and costs, this may also create savings thanks to higher energy efficiency.
For companies' sustainable investments, OP offers green loans. A green loan can be used to improve the energy efficiency of buildings, switch to renewable energy sources or promote the sustainable use of natural resources. For sustainable investments, your company can also get a risk sharing guarantee from the European Investment Fund (EIF), which makes access to financing easier.
Read more about our sustainable finance solutions
S – Social responsibility
Social responsibility means taking responsibility for the company's employees, their competencies and occupational health and safety. It also means that the company appreciates its employees and treats them equally. Gender, age or ethnic background do not affect the employee's pay or remuneration.
Social responsibility can also be understood as a wider concept, with impacts on the company's customers and partners, and on local people through the employment effect. A company that excels in social responsibility is highly likely to be an attractive employer and partner.
G – Governance
Governance in ESG means that the company commits to acting carefully and systematically, complies with the law and regulations and uses best practices. The company also uses responsible tax practices, fights corruption and does business with related parties only on business grounds.
Governance also includes control and internal auditing, to ensure that potential business risks do not materialise. A company with good governance is one that has protected itself against business and legal risks.
An example of business risk could be a sharp rise in the prices of raw materials used by the company, because this would weaken the company's performance. A legal risk can materialise if the company fails to comply with the law or industry-related regulation, or an occupational accident happens due to insufficient maintenance of work equipment. Good corporate governance is also excellent risk management.
Read more about corporate risk management
Economic responsibility
A company that takes economic responsibility into account in its operations favours responsible and sustainable financial decision making and operations. The company ensures that laws and regulations are obeyed, and that the company’s finances are on a sustainable basis.
Economic responsibility covers a wide range of matters such as taking care of financial balance and managing financial wellbeing. Economic responsibility means that the company has a responsibility to its investors, customers and other stakeholders to use its assets responsibly. The company’s operations are ethically and morally transparent.
What are the benefits of responsibility for a company?
Responsibility is a hygiene factor, but a company whose corporate responsibility stands out positively among its peers can gain many benefits.
- Growth of sustainable business means new business opportunities. Seize them and you can strengthen your company's market position.
- By investing in a project promoting the green transition, your company may need less collateral when applying for financing and get a loan at lower cost. In the future, the degree of sustainability achieved by a company will have even more impacts on its access to, and terms of, financing.
- Sustainability actions can improve a company's reputation and provide a competitive edge that can feature in communications and marketing. A company that acts sustainably is attractive as an employer, investment or subcontractor for large companies.
- Customers value sustainability when making purchase or consumption decisions.
- Sustainable solutions, such as increasing energy efficiency, can bring cost savings.
