Keywords

Sustainability

Sustainability is a dynamic term that can be applied to various purposes, and although several different definitions can be found for sustainability in the literature, they all have the same core message. For businesses, sustainability is defined as (World Commission on Environment and Development—known as Brundtland Report, 1987, p. 40): ‘An investment strategy that uses the best business practices to meet the needs of the present stakeholders without compromising the ability of future stakeholders to meet their own needs’.

Although this report specifies that sustainability consists of three areas—economic development, social development, and environmental protection—the concept of the triple bottom line (TBL) was only introduced by John Elkington in 1994 (Elkington, 1994). TBL is an accounting framework which expands the reporting framework—i.e. criteria used to determine items appearing in the financial statements—by adding environmental and social performance to the traditional financial (economic) performance. This model calls for organisations to be responsible for all the stakeholders rather than just shareholders.

TBL identifies three dimensions of sustainability, known as pillars. These traditional pillars are also commonly called the three Ps: profit, planet and people. Although the three traditional pillars of sustainability have been commonplace in the literature, some studies have considered new dimensions, such as cultural sustainability and governance, to address a wider coverage of sustainability. All the above-mentioned dimensions are briefly explained in the next two sections.

Traditional Pillars of Sustainability

Economic Sustainability—Profit

The economic dimension is the most commonly accepted dimension of sustainability as it is directly related to the primary goal of any business (i.e. creating value for shareholders through economic performance). However, to be economically sustainable, businesses should focus on activities that generate long-term rather than short-term profitability. In other words, economic sustainability is about the impact of the business practices on the economic system focusing on the economic value created by the organisation in a way that supports future generations (Elkington, 1997). Economic sustainability does not refer to ‘profit at any cost’. Instead, it refers to practices that support long-term economic growth without negatively impacting the social, environmental, and cultural aspects of the community. Economic sustainability performance can be measured through financial activities between an organisation and its stakeholders, or non-financial costs and benefits of economic relations and their effects on stakeholders (Rezaee, Tsui, Cheng, & Zhou, 2019).

Environmental Sustainability—Planet

The environmental dimension of sustainability performance enables businesses to evaluate the impact of their practices on the environment. Environmental sustainability is about organisations being engaged in business practices without compromising the environmental resources for future generations (Elkington, 1997). Environmental sustainability is defined as ‘maintenance of natural capital’ (Goodland, 1995). In other words, it is a process of protecting the quality of the environment in the long term, measuring the environmental effects of business operations, increasing the positive impact of a business on natural resources, and creating a better environment for future generations while creating value for shareholders and maximising their economic profit (Rezaee et al., 2019).

Social Sustainability—People

The social dimension is about conducting beneficial and fair business practices to the human capital—i.e. workforce—society and the community (Elkington, 1997). Social sustainability is about making the company’s mission align with the interests of society by including accepted social values and fulfilling social responsibility (Rezaee et al., 2019). According to the Western Australia Council of Social Services (WACOSS) (n.d.):

Social sustainability occurs when the formal and informal processes, systems, structures, and relationships actively support the capacity of current and future generations to create healthy and liveable communities. Socially sustainable communities are equitable, diverse, connected, and democratic and provide a good quality of life.

Social sustainability performance ranges from delivering high-quality products and services, improving customer satisfaction and increasing employee health and well-being, to contributing to the quality of life for future generations (Rezaee et al., 2019).

New Dimensions of Sustainability

Culture

Cultural sustainability was first introduced as the fourth pillar of sustainability by Jon Hawkes in 2001 (Hawkes, 2001). He argued that to have effective planning, a new framework which evaluates the cultural impacts of environmental, economic and social decisions is needed. Cultural sustainability is a significant component of sustainability. It originally emerged out of social sustainability but has been gradually recognised as having a separate and integral role in sustainable development. Cultural sustainability means change happens in a way that respects cultural values. It contributes to the sustainability concept by adding an element of understanding of culture, as well as the place in which it evolves. Therefore, community and geographic context will not be ignored (Creative City Network of Canada, 2007).

Governance

After the global financial crisis of 2007–2009, companies decided to establish a stronger regulatory framework and improve their corporate governance. To do so, some measures were set and aimed to integrate business sustainability into corporate governance and in the hope of a long-term performance (Brockett & Rezaee, 2012). According to the Financial Markets Authority (FMA) (2018, p. 4), corporate governance is defined as ‘the principles, practices, and processes that determine how an entity is directed and controlled’; thus, corporate governance is at the centre of business strategies. Sustainability is a strategic approach that tries to integrate economic, environmental and social dimensions; therefore, governance should be part of the sustainability concept, along with the other three dimensions (Iribarnegaray & Seghezzo, 2012).

Social Sustainability in Research

The social dimension of sustainability has been barely investigated compared to the other dimensions, especially environmental sustainability. The social dimension of sustainability did not emerge from the 1960s environmental movement or the 1970s basic needs approach to economic development (Colantonio & Dixon, 2010), and it is considered a vague area.

Although the social dimension has gained more attention recently with more researchers focusing on this area, there is still limited literature (Colantonio, Dixon, Ganser, Carpenter, & Ngombe, 2009; Dempsey, Bramley, Power, & Brown, 2011). Prior studies have mostly covered legislative issues and health and safety (Hutchins & Sutherland, 2008). There is no clear theoretical conceptualisation and a lack of an international framework for evaluating social aspects resulted in some complexity and uncertainty in measurement as indicators are mostly chosen based on practical understanding (Dempsey et al., 2011; Griessler & Littig, 2005). Social sustainability is recognised as the least quantifiable part of sustainability in the TBL model since it cannot be easily measured through metrics like cost–benefit analysis, gross national product and greenhouse gas emissions. There is no clear understanding of the meaning and interpretation of the social concept (Weingaertner & Moberg, 2011). Davidson (2009) stated the term social sustainability is, in some cases, used to describe the current system of social welfare and policy. Omann and Spangenberg (2002) reported that social sustainability has been approached differently in different countries due to internal political conversation.

Social Sustainability in Practice

Various terminologies have been mentioned in the management literature to conceptualise the non-transactional relationship between a business organisation and the society in which that organisation operates. These include, among others, ‘Business Social Performance’, ‘Corporate Ethics’ (Carroll, 1998), ‘Reputational Management’ (McAlister, Ferrell, & Ferrell, 2003), ‘Corporate Social Responsiveness’ (Logsdon & Wood, 2002) and ‘Stakeholder Management’ (Clarkson, 1995). A similar term that gained considerable attraction is that of ‘Corporate Social Responsibility’ or CSR (Carroll, 1991); this term seems to have more recently evolved into the concept of ‘Corporate Citizenship’ or CC (Logsdon & Wood, 2002). CSR has been described as encompassing the economic, legal, ethical and discretionary expectations that society has of business organisations (Carroll, 1991). Similarly, the concept of Corporate Citizenship has been defined as ‘the extent to which businesses assume the economic, legal, ethical and discretionary responsibilities imposed on them by their stakeholders’ (Maignan & Ferrell, 2001, p. 38). To a large degree, all of the terms mentioned above normatively contend that in addition to maximising profits, business organisations should also pay attention to the interests and expectations of others in society who might be affected by their business activities (Carroll, 1998; Logsdon & Wood, 2002). In other words, the role that a business organisation is expected to play in a society today is significantly different from Milton Friedman’s (1970) assertion that the responsibility of a business is to make as much money as possible. It could be argued that not only there are similarities between the aforementioned terms, but they are also all related to the concept of social sustainability.

Philanthropy

Carroll (1991, 1999) included philanthropy as one of the core components of CSR, along with economic, legal and ethical responsibilities. While the other components can be thought of as obligations of a business, philanthropy is a voluntary choice and a business that is not performing philanthropic activities is not generally considered to be an unethical one. Although no single definition has been widely adopted, the voluntary nature of philanthropy is typically noted. For example, Payton (1988) defined philanthropy as ‘voluntary action for the public good’. Wartick and Wood (1998) expanded on this in their definition of philanthropy as ‘a voluntary allocation of a firm’s resources to activities that are not business-related and for which there are no clear social expectations as to how the firm should perform’. From their meta-analysis of 162 studies of corporate philanthropy, Gautier and Pache (2015) defined the concept as ‘voluntary donations of corporate resources to charitable causes’. The resources that may be voluntarily given by a business include money, goods, time or expertise. Today, philanthropy is widespread in small, medium and large-sized enterprises around the globe (Gautier & Pache, 2015). In academic literature, the terms ‘philanthropy’, ‘corporate philanthropy’, ‘corporate contributions’ and ‘corporate giving’ have largely been used interchangeably.

Social Enterprises

Emerson and Twersky (1996) coined the phrase ‘double bottom line’ to describe the way that social enterprises operate; these businesses have both social and financial motivations. In other words, social enterprises are defined as ‘organisations that seek business solutions to social problems’ (Thompson & Doherty, 2006). Social enterprises have also been defined as ‘not-for-profit private organisations providing goods or services directly related to their explicit aim to benefit the community’ (Defourny & Nyssens, 2008). Peattie and Morley (2008) argued that the concept is still not well defined because social enterprises include different organisational types of various sizes, activities, legal structures, ownership, funding, motivations and degree of profit orientation. According to Peattie and Morley (2008), the only clearly defined characteristics of social enterprises are (1) the primacy of their social aims and (2) the trading of goods or services. Social enterprises are thus businesses that have a significant social purpose, they use assets and wealth to create benefit for society, and they pursue trade in a marketplace.

Cause-Related Marketing

While cause-related marketing (CRM) can be thought of as a form of corporate philanthropy, the donation is more likely to be funded from a marketing budget than from a philanthropic budget (Ross, Stutts, & Patterson, 1991; Varadarajan & Menon, 1988). In addition, CRM campaigns are based on marketing aims (e.g. increasing sales and market share) rather than on any altruistic motivations. In a CRM campaign, a business commits to donating a certain amount of money to a charity per product sold (Moosmayer & Fuljahn, 2010). In other words, CRM directly links sales with a donation to a non-profit organisation or social cause (Chen & Huang, 2016). A CRM effort will typically include an extensive advertising campaign to highlight the non-profit organisation’s beneficial role in the community and to advise the public how they can assist the non-profit by linking fundraising to the purchase of the firms’ products or services (Ross et al., 1991).

CSR Communications

In developing any sustainable social strategy, communication is key. CSR-related communications have been used as tools to assess the level of organisational engagement with social sustainability. It is a representation of management commitment to improving social performance (Bebbington, 1997; Genç, 2017). CSR disclosure is not a regulated practice in most countries around the globe. However, governments, regulators, stock exchanges and investor forums have been playing an important role in driving CSR reporting (KPMG, 2017). This type of communication provides organisations with some benefits internally and externally. Adams and Whelan (2009) stated that maximisation of shareholder value, social legitimacy and risk management associated with the corporate reputation are the three main reasons for organisations to get engaged in sustainability reporting practices.

Most organisations select to communicate their practices through official documents, such as a section in their annual report or a CSR standalone report, while others dedicate a section of their official website to CSR disclosure (Du, Bhattacharya, & Sen, 2010). However, CSR information and initiatives have been communicated via different channels, like TV commercials or product packaging. Corporate responsibility reporting has gone mainstream and considered standard practice for large and medium companies around the world. According to a KPMG survey of corporate responsibility reporting (2017), 93% of the G250 companies and 75% of N100 companies worldwide issued corporate responsibility reports, up from about 35% and 24% in 1999. The majority of these reporting organisations G250 (78%) and N100 (60%) included this information in their annual reports as they believe CSR information is relevant for their investors.

Due to a lack of regulations on public disclosure, there is no generally accepted accounting and reporting principles for sustainability reporting. These types of reports are prepared by following global guidelines such as the Global Reporting Initiative (GRI), International Federation Initiative (IFAC), Sustainability Framework, Sustainability Accounting Standards Board and the Integrated Reporting <IR> (White, 2015). The GRI framework has been recognised as the most commonly used reporting guideline globally—it was applied by 75% of G250 and 63% N100 in 2017 (KPMG, 2017).

While disclosing CSR information is supposed to increase transparency by fairly presenting CSR performance, CSR reporting has not fully satisfied stakeholders and there is evidence of a loss of trust due to a lack of balance and confidence in the published information. This concern has resulted in the creation of an assurance service for CSR reporting. Although the reporting is a voluntary practice itself in some areas of the world, CSR assurance is becoming more common these days and is established as a standard practice among the world’s biggest companies (Nilipour, 2016). According to the KPMG survey of corporate responsibility reporting (2017), the assurance rate is rapidly growing among G250 and N100 companies—67% and 45% in 2017, respectively.

Sustainability in the Wine Context

Recent growth in global wine consumption has been followed by an increase in sustainability practices in the wine industry. In some wine-growing countries—like New Zealand, Australia, South Africa, Germany, Chili, and the USA, sustainability programmes and certificates have been designed and implemented for a while. However, most of these programmes focus on environmental aspects primarily (Klohr, Fleuchaus, & Theuvsen, 2013).

Similarly, sustainability studies in the wine industry have heavily invested in the environmental dimension. For example, several studies have examined the drivers of, or the barriers to, increasing sustainable practices (see, e.g., Forbes & De Silva, 2015; Gabzdylova, Raffensperger, & Castka, 2009) and the drivers or efficacy of various environmental management systems (see, e.g., Forbes & De Silva, 2012; Gilinsky et al. 2015; Marshall, Cordano, & Silverman, 2005). Many other studies have sought to examine the links between sustainable wine and consumer perceptions (see Forbes, Cohen, Cullen, Wratten, & Fountain, 2009; Jordan, Zidda, & Lockshin, 2007; Loveless, Mueller, Lockshin, & Corsi, 2010; Nowak & Washburn, 2002; Zucca, Smith, & Mitry, 2009). In their review of wine business literature published since 2003, Lockshin and Corsi (2012) also found that there has been considerable focus on the value of sustainable or ‘green’ wine practices to consumers.

There is considerably less literature, to date, that has examined the social dimension with respect to the wine industry. One example is a case study of a single New Zealand winery; their implemented social practices included treating staff as stakeholders in the business and establishing information-sharing networks for wine producers in the local region (Thompson & Forbes, 2011). Dodds, Graci, Ko, and Walker (2013) found that although wineries’ sustainable practices are heavily focused on environmental initiatives, more than half of their participants claimed that they contribute to the community by donating to charities and sharing resources with other wineries, and they also train employees in the area of sustainability considerations and awareness. Research with wine producers in the USA, France, Spain, Italy, Germany, Hungary and Greece (Szolnoki, 2013) reported that most interviewed producers primarily associated the term sustainability solely with the environmental dimension. It was reported that small wineries think first and foremost about the environmental dimension of sustainability, while cooperatives or larger companies include economic and social dimensions. The most important principles of the social dimension were responsibility, respect for the next generation, fulfilling the demands of the consumers and the needs of the employees (Szolnoki, 2013).

Conclusions

This chapter has introduced the concept of sustainability and discussed the both traditional and new pillars or dimensions. This chapter mostly focused on social sustainability since it has been identified as the least investigated pillar and is the focus of this book. Some key social sustainability areas in research and practice were briefly introduced, while the remaining chapters of this book will explore these areas in a global wine context, using different research methods.