Environmental, Social and Economic Sustainability

Sustainability, the 3 ESG pillars and the SDGs

When we talk about sustainability, we’re talking about a development model that can meet the needs of the present without compromising the ability of future generations to meet their own. It’s a holistic approach that considers the social, environmental and economic impacts of actions and decisions taken today.

From a historical perspective, the concept of sustainability was formulated at the first United Nations Conference on the Environment in 1972, but it has only really taken shape since 1987, when the publication of the so-called Brundtland Report (“Our Common Future”) clarified the goals of sustainable development.

The same report introduced the three pillars or principles of environmental, social and economic sustainability, also known as ESG (Environmental, Social, Governance).

The transition to sustainable development is primarily grounded in a series of international agreements and goals that are then implemented at the level of the individual states and communities involved. Among these, the best known are:

• The United Nations Framework Convention on Climate Change and its protocols, which set commitments to reduce greenhouse gas emissions;
• The Convention on Biological Diversity (CBD), which promotes the conservation of biodiversity;
• and especially the UN Sustainable Development Goals (SDGs), which cover a wide range of sustainability issues. Built around these goals is the UN 2030 Agenda, a plan of action for people, planet and prosperity, signed into law by the UN General Assembly on September 25, 2015. The Agenda includes 17 goals, valid for everyone around the world, articulated along the three dimensions of sustainable development: economic, social and environmental.

1. What is environmental sustainability?

Environmental sustainability is the ability to preserve and protect the natural environment over time through appropriate practices and policies, meeting present needs without compromising the availability of resources in the future.

Factors influencing environmental sustainability

Environmental sustainability is influenced by several factors that can have a significant impact on the ecological balance and the planet’s ability to sustain life.

Some of the main ones include:

• air, water and soil pollution;
• climate change, caused by the excessive amount of greenhouse gases released into the atmosphere due to human activities;
• The loss of biodiversity;
• The overexploitation of natural resources;
• Economic models that involve unsustainable consumption.

What goals should we aim to achieve?

To achieve environmental sustainability, a number of key goals must be achieved, including:

• Reducing greenhouse gas emissions, especially in crucial sectors such as power generation, industry, agriculture and transportation.
• Increasing the production and use of energy from renewable sources.
• Implementing policies to conserve biodiversity by addressing its causes.
• Adopting sustainable practices in agriculture and the food chain, such as precision agriculture strategies, optimizing and increasing soil quality and productivity through a series of targeted interventions using technology, regenerative agriculture and agrivoltaics, non-soil cultivation methods such as hydroponic or aeroponic systems, and reducing food waste.
• Raising awareness and engaging communities on the issue of environmental sustainability.
• Promoting the circular economy.

Among the practices of great importance for sustainability, it is essential to conserve and sustainably manage natural resources, including water, soil, forests, wildlife and natural habitats, to ensure the ecological balance of the planet and the availability of these resources for future generations.

2. What is social sustainability?

Social sustainability involves a focus on the well-being of people and communities.

It’s about promoting equity, human rights, access to education and health care, and decent work. 

Social sustainability aims to create inclusive societies, reduce inequality, and ensure long-term well-being for all people while preserving social cohesion and justice.

To achieve sustainability, it is necessary to overcome:

• Poverty and socioeconomic inequality.
• Discrimination, prejudice and social exclusion.
• Lack of access to resources.
• Insecurity and conflict, locally, regionally and globally.
• Poor governance, which includes phenomena such as corruption and institutional inefficiency.

In the path to social sustainability, the promotion of systems and policies that can reduce social and economic inequalities play a particularly important role in ensuring equitable access to opportunities and resources for all members of society.

In addition to the fight against inequality, the goals to be achieved in terms of social sustainability include:

• The promotion of policies to respect basic human rights, such as the right to health and education.
  
  
• The adoption of practices that value and include people of diverse backgrounds, gender, ethnicity, ability, and sexual orientation.
• The creation of safer living environments with more efficient administration of justice.
• The improvement of people’s health and mental and physical well-being through quality health services.

3. What is economic sustainability?

Economic sustainability is the approach whereby economic activities are conducted in such a way as to preserve and promote long-term economic well-being. In practice, it aims to create a balance between economic growth, resource efficiency, social equity and financial stability.

Factors influencing economic sustainability

Factors influencing economic sustainability include:

• The responsible management of resources.
• The capacity for efficiency and innovation of economic systems and enterprises.
• Financial stability at the macro level.
• States’ level of social innovation, that is, each country’s commitment to promoting policies, programs and initiatives that address crucial social issues such as poverty, gender equality, access to education and health care, environmental sustainability, and other social issues.
• International cooperation and partnerships between public administration and private enterprises.
• The level of equity and social inclusion.
• Corporate responsibility.

How an economy becomes sustainable

To make an economic system sustainable, it is necessary to encourage energy generation from renewable sources, to adopt policies and regulations that encourage energy efficiency, and the promotion of economic models based on the circular economy which, as such, are able to reduce waste and contain resource exploitation.

Achieving these goals requires fostering social and economic inclusion, technological innovation through dedicated investments, promotion of efficient and transparent governance, as well as public awareness and education.

Responsible management of economic resources is of paramount importance because it implies and ensures:

• The minimization of environmental impact;
• Social and economic equity;
• A more resilient and challenge-capable economy;
• A more widespread adherence of companies to management based on principles of responsibility and ethics.

Is there also a fourth ethical pillar?

There’s another pillar of sustainability, which we could imagine as the midpoint of a triangle connecting the other three.

Processes leading to sustainable development would not really be such if all those involved in supply chains did not receive fair – and sustainable – remuneration. Also included in this pillar are some of the practices we’ve already considered, for example, respecting human rights and promoting social responsibility.

In short, the ethical pillar consists of the core set of fundamental guidelines that underpin the practical actions provided for in the other three: these include integrity, transparency, fairness, respect for diversity and promotion of collective welfare.

The pillars of sustainability are interconnected

The pillars of sustainability are closely interconnected, in that every action taken within each of the spheres has spillover effects on the others. There is a strong interconnection between the environmental and economic spheres, where good environmental practices, such as responsible resource management, are essential to maintaining the stability of the economy and the very existence of the food supply chain. Not only that: some sustainability strategies, such as transitioning to a low-carbon economy and adopting sustainable practices, can create economic opportunities, promote innovation and increase the competitiveness of businesses.

The social sphere is also connected to both the environmental and economic spheres. It is well established that in an equitable and inclusive society, where inequalities are reduced, social cohesion, active citizen participation and the basis for a sustainable and resilient economy are fostered – just as it is evident that people’s health and well-being are closely linked to the quality of the environment in which they live.

What does the ESG Integration strategy involve?

ESG Integration is the investment strategy that takes into account the factors and risks related to the environment, the importance of the social sphere, and the governance of a company.

This strategy uses non-financial indicators to evaluate the performance of businesses and organizations. ESG Integration involves gathering information on a company’s policies, practices, and performance related to environmental issues (such as environmental impact and resource use), social issues (such as employee and community relations management), and governance issues (such as governance structure and transparency).

The goal is to promote sustainable investments that generate long-term financial returns, taking into account the social and environmental impacts of economic activities and promoting transparency and corporate responsibility. Enel, for example, was the first company in the world to launch – in 2019 – a bond tied to its ESG performance.

Adopting a sustainability policy for companies that is truly measurable is important in order to foster transparency and accountability to all stakeholders – from shareholders to employees, suppliers and local communities – ensuring that the measures taken really do have an impact.