Sustainability
The concept
Sustainability means meeting present needs without compromising the ability of future generations to meet theirs (Brundtland definition). It rests on three pillars - environmental, social, and economic - and is often framed by the UN Sustainable Development Goals (SDGs). Candidates must distinguish sustainability (a goal/state) from sustainable development (the process).
Planetary boundaries and limits
Rockström's planetary boundaries framework identifies Earth-system thresholds (climate, biosphere integrity, freshwater, land-system change, biogeochemical flows, ocean acidification, ozone, novel entities, atmospheric aerosol). Crossing a boundary raises risk of abrupt, non-linear change - a key link between sustainability and financial risk.
Corporate framing: ESG and materiality
ESG (environmental, social, governance) is a lens for assessing corporate performance, not a synonym for sustainability. Double materiality captures both how sustainability issues affect the company (financial materiality) and how the company affects people and the environment (impact materiality). Single materiality is investor-focused only. Traps: treating ESG scores as measures of real-world impact, or assuming high ESG equals low carbon.
Worked example
A utility emits heavily but funds community programmes. Under double materiality it is material on both impact (emissions) and financial (transition risk) dimensions; a high social score does not offset climate impact.
Traps
- Conflating ESG ratings with sustainability outcomes.
- Assuming sustainability is purely environmental.
- Ignoring that materiality differs by sector and jurisdiction.