Sustainable management for industrial enterprises: The three dimensions of ESG

The concept of sustainability is present in every sphere of our modern lives. Centuries of exploitation of natural resources and the excessive release of greenhouse gases have put our planet’s future under intense threat. There is no question that we humans are consuming more resources than are available to us on the earth and that man-made climate change can no longer be stopped — on the contrary. It is already well underway. When we talk about the topic of sustainability in this connection — whether in a business or a private context — it is often associated exclusively with the environment. As a result, one might assume that internationally active industrial and commercial enterprises have their hands tied when it comes to sustainability. In a sector where the top priorities are global logistics, sales and high-speed delivery, environmental protection and CO2 savings face challenging limitations. But if we look at the topic of sustainability in its entirety, we find that companies have more scope for action than we might suspect. Sustainable corporate management covers far more than simply environmental conservation.

The fact is that sustainable development can only take place when the ecological, social, and economic aspects are taken into account. These are brought together in the “three-pillar model of sustainable development”. According to this model, there must be a balance among the three dimensions, and sustainable development cannot be achieved by focusing on any one aspect by itself. What is more, the three pillars exert a direct influence on one another. This represents a major advantage for companies, since it gives them significantly more room to manoeuvre than many business models lead one to suppose at first glance. The three-pillar model also serves as the foundation for the EU’s ESG regulations (ESG = environmental, social, and governance).

Legal and normative requirements, such as an annual ESG report that reveals what efforts are being made to achieve sustainability, are mandatory for every company from 250 employees and over 40 million euros in net revenue. The three dimensions of sustainability are also among the ten principles of the UN Global Compact, which we will discuss in a later article.

We present the ESG dimensions in greater detail below and explain how commercial enterprises can use them as a foundation for implementing sincere and authentic sustainability strategies.

The three dimensions of sustainability


  1. The ecological dimension

The ecological dimension has to do with the aspect of sustainability, which concerns the protection and preservation of the natural environment and its resources. The focus here is on the interactions between human activities and the environment and above all, on how these activities can be brought into harmony with ecological systems and processes in order to guarantee the long-term health and integrity of the planet. This means that, in an ideal situation, no more natural resources (such as water, oxygen, and raw materials) should be consumed than can be regenerated. Therefore, it becomes essential to minimise companies’ negative effects on the environment as much as possible by replacing substances that pollute the environment with biodegradable materials, or reducing the use of raw materials. In implementing ecologically compatible business activities, we must therefore look at matters such as resource consumption, greenhouse gas emissions, waste management, renewable energies, and biodiversity. The direct connection with the other two dimensions can be thought of as follows: the ecological dimension focuses on the environmental compatibility of products and processes, the social dimension deals with the well-being of the people in the company and the economic dimension has to do with a company’s profitability. Thus, all three dimensions depend equally on one another.

  1. The social dimension

The social dimension of sustainability is far less well known than the ecological dimension. Social sustainability refers by definition to the ability of a company or community to fulfil the needs and respect the rights of the people in the present without compromising opportunities and resources for future generations. This is about social justice, fairness, and the protection of human rights. It is about creating an inclusive society in which no one is shut out or deprived. For you as an entrepreneur, this translates into efforts to promote equal opportunities among your employees and to create a diverse corporate culture and fair working conditions, for example. Even when selecting your suppliers, you should make sure that they are maintaining sustainable supply chains and fair working conditions for employees. In order to find this out, you can request to see their sustainability reports or their Code of Conduct. Social sustainability also includes the right to free professional and personal development and opportunities for professional training and further education. By making socially sustainable corporate decisions, you in turn benefit from higher employee productivity and satisfaction, as well as lower employee turnover.

  1. The economic dimension

The economic dimension of sustainability has to do with ensuring long-term financial success and prosperity without depleting existing resources and systems. In this dimension, we aim to configure our business activities in such a way that they are both environmentally sound and socially just, as well as economically profitable. Companies make an important contribution to society by creating jobs, investing in the professional training of young people, paying taxes, and supplying consumers (B2C) or other businesses (B2B) with essential products and services. The long-term economic success of companies is the engine of social and macroeconomic development. Economic sustainability is therefore a balancing act – between being sustainably economical and economically sustainable.

An example of economic sustainability in business is effective innovation management, in which developments and solutions are always evaluated on the basis of their ecological, social, and economic implications. Another example is the development of an effective energy and environmental management system, which not only conserves resources but also minimizes costs. Economically sustainable corporate activities are those that ensure the long-term success of a company while minimizing the negative effects on the environment and society.