Sustainability in business takes more than words. How much do you know?

Written in collaboration with Carla Santos, a former member of The Blog team. 

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“Sustainability means putting life at the center of every decision.” Vandana Shiva, physicist and ecofeminist. 

Open any news site and it’s hard to feel optimistic: headlines are dominated by violence, hunger, war, political division, environmental crises, and the looming specter of climate change. The current outlook is far from encouraging. 

And yet, not all is bleak. Though the challenges are big, countries, communities, and organisations are working together to address inequality, environmental degradation, poverty, and lack of access to basic needs with the shared vision of building a future where no one is left behind. Momentum built during the COVID-19 pandemic. As UN Secretary-General António Guterres stated in December 2020:  

“We have a chance to not simply reset the world economy but to transform it. A sustainable economy driven by renewable energies will create new jobs, cleaner infrastructure and a resilient future. An inclusive world will help ensure that people can enjoy better health and the full respect of their human rights and live with dignity on a healthy planet. COVID recovery and our planet’s repair must be the two sides of the same coin.” 

The words ‘sustainable’ and ‘sustainability’ are everywhere these days. But the concept itself is far from new. Ancient civilizations often lived in tune with nature—respecting the resources around them while meeting their needs and pursuing growth, out of both necessity and wisdom. Unlike today, where sustainability is often shaped by buzzwords or policy frameworks, they had a deep understanding of limits.  

In this blog, we explore how sustainability has evolved, what non-financial dimensions like Environmental, Social, and Governance (ESG) really mean, and why they’re crucial to any long-term strategy. To wrap up, we’ve prepared a fun quiz to test your knowledge. 

A brief history of sustainability 

Sustainability didn’t just pop out of the soil like a fresh organic carrot—it evolved, slowly and sometimes awkwardly, across centuries.  

In the 1700s, early agricultural innovators introduced crop rotation, giving us one of the first practical glimpses into sustainable thinking. Fast forward to the post-war boom of the 1950s and ’60s, people began to realise that industrial growth came with consequences. 

By the 1970s, sustainability started putting on a suit and stepping into boardrooms. Regulatory pressure ramped up: the US launched the Environmental Protection Agency (EPA), and environmental laws gained traction around the world. Businesses could no longer ignore the smoke pouring out of their factories or the public demanding change. 

In the 1980s, companies like Ben & Jerry’s began baking values into their business models, along with chunks of cookie dough. Corporate Social Responsibility (CSR) gained ground, and in 1987, the United Nation’s Brundtland Commission gave sustainability its now-iconic definition: “meeting the needs of the present without compromising the ability of future generations to meet their own needs”. 

The 1990s ushered in a new era: tracking progress. Leading companies like Shell and Interface started measuring the impact of their sustainability efforts. In 1994, Interface’s CEO, Ray Anderson, had something of a green epiphany and set out to eliminate the company’s environmental footprint. He embraced renewable energy, resource efficiency, and circular design well before these practices became mainstream. 

And now? Sustainability isn’t a side project or a feel-good initiative—it’s a business imperative. ESG investing is on the rise. Regulations like the Corporate Sustainability Reporting Directive (CSRD) are raising the bar on transparency. Today, companies are expected to manage their environmental and social impact with the same rigor they apply to financials. Because let’s face it: if your profits are growing but your planet is melting, you’ve missed the plot. 

Sustainability reporting: a key driver of transparency 

Back in 2015, the United Nations gave the world a to-do list: the 2030 Agenda for Sustainable Development, complete with 17 Sustainable Development Goals (SDGs). It’s an ambitious blueprint calling for governments, businesses, and society to work together to build a more sustainable world. 

One key area of focus is ‘Goal 12: Ensure responsible consumption and production patterns’. Specifically, Target 12.6 throws the spotlight on big companies, urging them to adopt sustainable practices and make them visible by reporting their impact. 

Enter sustainability reporting, the grown-up version of show-and-tell for businesses. By tracking and disclosing their ESG efforts, companies offer stakeholders a window into what they’re doing, not just what they say they’re doing. Basically, investors, regulators, customers, and the planet all want receipts. 

This is where Non-Financial Performance Indicators (NFPIs) come into play. Think of them as metrics that look beyond your profit margins to evaluate how your company behaves in the real world. They help answer questions like: Are your customers happy? Are your employees sticking around? Is your company polluting less and innovating more? 

Some common NFPI categories are: 

• Customer-related: satisfaction scores, Net Promoter Score (NPS), retention rates. (Basically, do your clients like you?) 

• Operational: employee turnover, production efficiency, on-time delivery. (Are you good at your job?) 

• Sustainability and ESG: carbon footprint, energy consumption, waste reduction, leadership diversity. (How much damage are you not doing?) 

• Innovation and growth: Research & Development investment, patents, employee training hours. (Are you getting smarter or just older?) 

While these don’t show up directly on a balance sheet, they’re often the early warning signs for long-term success. So, let’s dive into how these indicators actually shape business outcomes. Because yes, they do matter. A lot. 

Why does sustainability reporting matter (and isn’t just paperwork)?

Here’s the deal: sustainability reporting isn’t just corporate busywork. It’s a powerful tool that delivers value to everyone, from investors to employees to, you know, the entire planet. Let’s break it down: 

• For investors and regulators, clear ESG disclosures boost valuation accuracy, improve liquidity, and help sniff out risks. 

• For companies, they’re a reality check. Transparent reporting sharpens decision-making, helps target investments more efficiently, and improves how companies handle risks. 

• For society, it’s about impact. Better reporting can lead to safer workplaces, cleaner air, and fewer empty climate pledges. 

That being said, voluntary disclosures or ‘feel-good’ documents with no oversight can lead to greenwashing, where companies exaggerate their sustainability claims while quietly polluting like it’s 1992. That’s where regulation steps in. 

Regulation: keeping companies in check (and on track) 

To  give sustainability reporting some real muscle, the European Union introduced the Corporate Sustainability Reporting Directive (CSRD). Think of it as ESG’s official upgrade from optional homework to audited, real-deal business reporting. It requires external assurance, meaning companies can’t just self-report feel-good stats anymore; they need to back them up with real evidence. This makes ESG disclosures credible, comparable, and consistent, finally putting them on par with financial reporting. 

As a key pillar of the European Green Deal, which aims to make the EU climate-neutral by 2050, the CSRD enhances transparency by establishing common reporting standards. The directive applies to large companies, listed small and medium enterprises, and financial institutions operating in the EU. 

This enables investors, clients, and regulators to compare apples to apples. They can: 

• Assess and compare how companies are doing on ESG; 

• Understand the broader impact of business models; 

• Evaluate how sustainability risks affect financial health. 

In short, the CSRD ensures sustainability commitments aren’t just vague buzzwords or polished infographics but translate into measurable action. It’s about substance over spin. 

Our take on turning ESG dimensions into action 

At PwC Luxembourg, sustainability isn’t a sticker we slap onto our strategy. It’s part of the engine. For us, ESG is about future-proofing everything we do, aligning long-term growth with long-term responsibility and measuring our progression. Here’s how we’re making that happen: 

• Double materiality assessment: we conduct it under the CSRD framework to identify key sustainability priorities in collaboration with stakeholders. 

• ESG commitment: 

• • Environmental commitment: we set and pursue emission reduction targets validated by the Science Based Targets initiative (SBTi). These targets are:  

• • • Reduce absolute Scope 1 and 2 emissions by 50% by fiscal year (FY) 2030, using FY2019 as the baseline.  

• • • Reduce absolute Scope 3 (business travel emissions) by 50% by FY2030, using FY2019 as the baseline.  

• • • Ensure that 50% of purchased goods and services suppliers (by emissions) have set science-based targets by FY2025.   

• • • Transition to 100% renewable electricity by FY2030.   

• • • Continue to offset remaining emissions through high-quality carbon credits.  

• • Social commitments: We play a key role in driving our ESG agenda, with a strong focus on the Social pillar where we have historically achieved our highest scores. This includes advancing our commitments to Diversity, Equity, and Inclusion (DEI), fostering employee wellbeing, and upholding the highest standards of ethics and business conduct. These efforts are not only integral to maintaining our leadership in ESG performance but are also key to ensure that our culture and operations reflect our values and positively impact our People and communities. 

• • Sustainability governance: learn more about our ESG vision and initiatives in our 2024 Annual Review. We are actively involved in sustainable firm governance, structuring our organisation and decision-making with a long-term perspective, ensuring that sustainability principles guide every level of our operations. This approach extends to engaging in sustainable business practices, where our market strategies actively consider environmental, social, and ethical impacts. Ultimately, sustainability cannot be achieved without sustained governance itself: it is the solid foundation on which all our other sustainability efforts are built. 

• • Social responsibility: we engage with local communities through various initiatives. These include our volunteering programme ‘Time to Engage’, which offers our people up to five days per year to support causes they care about —whether through skills-based volunteering or ad hoc pro bono services. In parallel, our employee-run foundation, in collaboration with the Fondation de Luxembourg, provides financial support to education and cultural projects.  

We’re also fully aware that navigating the alphabet soup of ESG and CSRD requirements can feel like a full-time job. That’s why we’re constantly expanding our services to help clients stay ahead of the curve (and avoid drowning in regulation-speak). Here’s how we’re making the process less painful and more powerful: 

• CSRD Reporting as a Service: provides reporting templates, a compliance platform, and writing support. 

• Advisory services: supports companies in aligning with regulatory requirements and integrating ESG into their strategy. This includes the ESG Management Solution, which helps businesses collect, manage, and monitor ESG data efficiently (because doing so shouldn’t feel like assembling IKEA furniture with no instructions). 

ESG is embedded in our operations because we believe real change starts at home. That way, we’re not just helping clients tick boxes. We’re helping them create impact that lasts. 

Building a future that doesn’t implode

As we’ve explored, sustainability has come a long way—from ancient farming methods to a core pillar of modern business and global policy. Today, it’s no longer a distant ideal. It’s real, it’s urgent, and it’s showing up in boardrooms, courtrooms, and living rooms alike. The pressure is on. Addressing ESG issues is essential, and it can’t fall solely on governments or companies doing the heavy lifting. It takes everyone, individuals included. 

The choices we make today shape the world we’ll live in tomorrow. So, let’s stay curious, keep adapting, and push for progress together.  

Now that you’ve made it this far, are ready to put your knowledge to the test? 

Pop quiz: Test your knowledge on sustainability

Think you’ve got what it takes to call yourself sustainability-savvy? Then take our quiz and see how well you really understand the issues shaping our future (no peeking!).

 

What we think

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