This website uses features that your browser doesn't support. Please upgrade to a recent version of your browser.
Media
  • Hamza





Is Law the Bridge Between Business Profit and Sustainability?

A digital story by Livia LABELLE (Third Year Law Student, Paris-Saclay University).











Take a look at these two pictures:

Rana Plaza collapse in Bangladesh, 24th April 2013 (Munir Uz Zaman/Agence France-Presse - Getty Images)

Fires in Amazon rainforest's Amacro region in Brazil, 22nd August 2022 (Nilmar Lage - Greenpeace)

What do they have in common?

These two catastrophes were the result of businesses activities, and caused great harm to the people and the environment.

What does it teach us?

Businesses play a key role in climate change. If they can cause and worsen climate change, they can also help fight against it. If businesses can be the culprits, they can also be the cure.



In the heart of Brussels, at the European Parliament, a new European directive is being discussed by eurodeputies.

Its objective ? Encourage companies to take human rights and environmental factors into account when making business decisions.

Elena, the Committee's Chair opens up the debates.

Elena: The adoption in 2020 of the European Green Deal - a set of policy initiatives by the European Commission to make the EU climate neutral in 2050 - has been a step in the right direction, but we must go further.

Elena: We are asking companies to identify and act on actual and potential risks to people and to the environment.

The voluntary integration of social and environmental concerns into a company's business activities and relationships with stakeholders is formally known as Corporate Social Responsibility (CSR). This movement dates back to the 1960s when it first appeared in the American literature on business. Since then, it never stopped growing.

While the assembly applauds, a man shakes his head in disapproval.

Lucas : While we fully support the noble intentions behind environmental protection, we cannot ignore the potential repercussions on our businesses' competitiveness in the global market.

Lucas : The reality is, these regulations come with significant costs. Costs that will inevitably be borne by our companies, our workers, and ultimately, our consumers. We must ask ourselves, are we ready to face the potential of jobs moving overseas, where regulations may not be as stringent ?

Lucas' concerns resonates with the European Parliament. When the EU was created in 1990, it main objective was the promotion of trade. European integration went along with the primary objective of businesses in a capitalist economy: to make profits.

But this dualistic vision must end. In today's context, examples have showed that making profits and sustainability can and should go hand in hand.

Jose is an academic that has studied the intersection of economics and environmental policies for decades. For him, CSR at the European level is sought to have many benefits for companies.

The triple bottom line is a business concept invented by consultant John Elkington in 1994 that states that firms should commit to measuring their social and environmental impact rather than solely focusing on generating profit.

Triple bottom line business concept

Some people might think that considering social, environmental and financial impacts sounds idealistic in a profit-driven world. However, many firms have demonstrated that financial sucess can be achieved by prioritazing sustainable business practices.

1. Increased productivity

More and more people are wanting their working life to have a higher purpose that goes beyond doing a job and earning an income. Being sustainable will lead to employees being more motivated to perform better. That way, companies with an inclusive culture for example have a greater productivity.

Productive companies are more efficient, which means that they will be able to reduce costs, leading to increased profits.

2. Increased attractivity

This goes for consumers and investors.

Consumers are increasingly inclined to support businesses that prioritize sustainability. Balancing profitability with sustainability can help build a strong brand reputation, foster customer loyalty, attract new customers, and differentiate oneself from competitors.

Investors and banks are also integrating environmental and social criteria into their investment decisions. Sustainable companies can access a wider range of sustainable financing options and potentially receive preferential terms.

Sophie, a member of the Parliament's Green Party, exclaims: Law is the perfect tool to encourage companies to be more sustainable.

From waking to sleeping, from crossing the street to signing contracts, law is everywhere. Legal principles guide our choices by imposing and restricting certain behaviors.

So why not use legal frameworks to incentivize companies to adopt eco-friendly behaviors?

Now that everyone has been heard, it is the time to vote.

As the European Union faces the critical decision related to sustainability, it's time to see whether or not it will take a bold step towards a more sustainable future.

Results of the vote

374 votes for

235 against

19 abstentions

"Thank you for this utopic story" you might say. But this directive is not a fictive one.

This is the Corporate Due Diligence Directive. It has been adopted on the 15th of March 2024 and formally approved by the Council on the 24th of May 2024.

Members states will have 2 years to transpose the directive into national law.