Economic Sustainable Development

Earth’s natural resources are limited. Sustainable development revolves around the consuming needs of future generations. The goal of sustainable development is to secure a good living opportunity for present and future generations, that is, we should use natural resources sustainably. A sustainable economy is based on economic decisions made by society (laws and regulations), consumers and businesses. Economic sustainability refers to balanced growth that is not based on the loss of resources or indebtedness. Economic sustainability can be achieved through efficient recycling and the use of renewable resources. In the long term, it is important for the whole world and all generations to consider the carrying capacity of the environment. This section looks at sustainable development from the perspective of each economic decision-maker.

Sustainable economy for society

Society plays an important role in promoting sustainable economic development. It is important to consider the environmental impact in all investments. In order to live and prosper, people need products and services (goods). A person produces the commodities needed through the factors of production. The production factors are natural resources, labor, machinery and equipment (capital). In simple terms, a person (the labor force) produces the goods and services needed from natural resources through capital (accumulated machinery, equipment, and economic capital).

The concept of economy comes from scarce resources. When resources are scarce, they become pricey. Generally, in a scarcity of resources the prices tend to go up and vice versa. For example, in a scarce crop year, the price of blueberries is higher than in the previous year. Summing up the output of the entire nation (goods and services produced) over a year gives the gross domestic product (GDP). Year by year it is possible to compare whether the economy has grown or decreased compared to the previous year. For example, if the output has increased by 2% from the previous year, then we are talking about 2% economic growth. Economic sustainable development is balanced economic growth, free of indebtedness and over-consumption of factors of production, and activities that take into account the carrying capacity of the environment and future generations. (Partially edited from: https://www.ykliitto.fi/yk-teemat/kestava-kehitys) In general, society wants a steady economic growth. There is also much debate about the need for continued economic growth in society when there is concern over the availability of natural resources. In principle, the economy can also grow intangibly or get more advanced products with less use of natural resources. For example, the mobile phone was large and relatively rudimentary in the 1980s and today it is smaller and contains a lot of smart service solutions.

When looking at the economic system from the perspective of sustainable development, it is essential that economic activities do not lead to a reduction in social or ecological capital. A sustainable and stable economy provides the basis for all other sustainable development. Without a solid financial basis there is no way to pay wages, invest in the well-being of employees, or in environmentally friendly development. A sustainable economy will also help to meet new challenges, such as rising social security and health care costs due to aging populations.

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A sustainable economy for the consumer

From the consumer’s point of view, the importance of a sustainable economy is reflected in consumer behavior and choices. All our operations have an impact on the environment. The way we live, move, eat and buy has a significant environmental impact. Household consumption choices play an important role in promoting sustainable economic development.

Each of us can pursue economic sustainability by favoring sustainable products. When consumers want to know about the ethics of products, companies should be obligated to explain and write down the origin of products and the production process. Products and services should be provided with less burden on the environment, natural resources, and energy. Environmental and energy labels tell about the product’s environmental impact and guide consumers towards products that are based on sustainable development policies. It is often assumed that the consumer acts rationally and maximizes the economic benefits that he/she receives. In sustainable consumption, the consumer should take a more holistic view of his or her choices from a sustainable economy perspective, which needs to take into account not only the economic aspect but also the environmental, social and cultural aspects of the consumption decision. Consumers should take into account the environmental friendliness of products and production methods (clean tech, resource consumption and a responsible workforce). Even the good intentions of consumers do not always translate into practical action. Therefore, consideration has been given to identifying and using rational consumer misalignments to find ways to shop around for more sustainable choices (such as advice, manuals, tips, counters, handicaps, or various branding).

Responsible consumption is primarily the responsibility of consumers. Demand creates a supply of sustainable products. Every consumption decision can lead to sustainable economic development. Meeting the goals of a sustainable economy requires responsibility and commitment from all involved: society, businesses and consumers.

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Sustainable economy for companies

Today, the environment is also a matter for every business. An environmentally competent company minimizes its own adverse environmental impacts and provides its stakeholders with solutions that help the customer reduce unnecessary energy and resource consumption. Considering environmental considerations is part of profitable business.

Specialized companies produce most of the products and services. Perhaps a shift is underway towards an industrial revolution based on the principles of low carbon and resource wisdom. In promoting sustainable production, the focus of policy is shifting towards the development of new business that not only operates responsibly, but that focuses on delivering sustainable solutions. It is not just about producing something in a sustainable way, but about the product or service itself acting as a solution to a sustainability challenges. Sustainable production is often viewed from an environmental perspective, looking for solutions such as circular economy, bio economy clean tech or renewable energy. Alongside environmental business, more determined efforts also needed in the
wellbeing business’s ability to produce new types of sustainable solutions.

As a matter of principle, companies must comply with existing legislation that addresses how to deal with different situations. An economically responsible company operates in accordance with laws and regulations, and pays taxes and salaries. The key responsibilities of an entrepreneur from a sustainable economy perspective are:

In addition of being responsible and committed to the pursuit of sustainable economic growth, corporate social responsibility includes transparency. A responsible company publicly reports on its business, for example on its website. By doing so, the company wants to give its stakeholders a responsible picture, also an opportunity to evaluate its performance. For example, a company may prepare an environmental financial statement in which it indicates its contribution to the development of environmental responsibility. Environmental financial statements include the costs, investments, liabilities and income related to the implementation of environmental responsibility.

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