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environment-economy-society

How are businesses benefiting the societies and economies they are relying on for growth and profit?

Businesses cannot succeed in societies that fail.

An economy is a garden (1) and we are all the gardeners. We have reached a global population beyond 7 billion people, more than many centuries combined. This has resulted in impacts that our world can barely absorb, for one main reason: we are continuing as if it is business as usual. Businesses that account for approximately 90% of global economic activity (2) are not aware of their most important impacts (on the economy, society and environment) and are merely just taking action to be compliant.

We need to use every tool that is available to us to create a culture of sustainability (3) and work towards gaining the wisdom to avoid situations where we will need it. We need to be aware and conduct business in much cleverer, sustainable ways.

Direct economic value generated and distributed (EVG&D) (4)

A very useful tool to identify areas for improvement is GRI Disclosure 201-1 Direct economic value generated and distributed. Companies that properly apply the requirements of this GRI Disclosure provide their stakeholders with important information on the creation and distribution of economic value.

FBRH sustainability report assurance culture of sustainability

They demonstrate how they contributed to the local economy through:

Operating Costs
A business can calculate operating costs as cash payments made outside the business for materials, product components, facilities, and services purchased. Services purchased can include payments to self-employed persons, temporary placement agencies and other organizations providing services. Costs related to workers who are not employees working in an operational role are included as part of services purchased, rather than under employee wages and benefits.

FBRH sustainability report assurance aware of impacts conduct clever business

Operating costs can include:

  • property rental;
  • license fees;
  • facilitation payments (since these have a clear commercial objective);
  • royalties;
  • payments for contract workers;
  • training costs, if outside trainers are used;
  • personal protective clothing.

Employee wages and benefits
Total benefits can include:

  • regular contributions, such as to pensions, insurance, company vehicles, and private health
  • other employee support, such as housing, interest-free loans, public transport assistance, educational grants, and redundancy payments.

 

Amounts paid to government institutions on behalf of employees can include employee taxes, levies, and unemployment funds.

 

Payments to government
A business can calculate payments to governments as all of the organization’s taxes plus related penalties paid at the international, national, and local levels. Business taxes can include corporate, income, and property.

Community investments
A business can calculate community investments as voluntary donations plus investment of funds in the broader community where the target beneficiaries are external to the organization. Voluntary donations and investment of funds in the broader community where the target beneficiaries are external to the business can include:

  • contributions to charities, NGOs and research institutes (unrelated to the organization’s commercial research and development);
  • funds to support community infrastructure, such as recreational facilities;
  • direct costs of social programs, including arts and educational events.

 

EVG&D is a very valuable tool to get an overall picture and identify areas for improvement, contribute in better ways to the economies and societies a business is relying on for growth and profit, and build trust with key stakeholders for business success (5).

 

 

 

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