By Joanna Radeke and Jörg Rocholl

There is no universally accepted definition of social sustainability (McGuinn et al., 2020). Nonetheless, within the broader sustainable development framework, it is pragmatically defined as the process of "identifying and managing business impacts, both positive and negative, on people" (UNGC, n.d.), with social equity, human rights, and well-being at its core.

In the book Social Sustainability – Duty or Choice? Success Factors, Experiences, Expectations (orig., Soziale Nachhaltigkeit – Pflicht oder Kür? Erfolgsfaktoren, Erfahrungen, Erwartungen), our chapter delves into the historical evolution of social. We trace its origins back to the labor movements of the late 19th and early 20th centuries, characterized by advocacy for improved working conditions, fair wages, and reduced working hours. 

As business leaders now strive to make meaningful contributions to sustainability, they must glean insights from the past to comprehend the intertwined environmental and social issues emerging as the central challenges of our era.

Conceptual roots

The historical development of sustainability is tied to the broader concept of sustainability. Hans Carl von Carlowitz’s 1713 work Sylvicultura Oeconomica provided an early definition of sustainability in forestry as using natural resources at a rate they can regenerate. Social sustainability principles trace back to the late 19th and early 20th-century labor movements. Workers advocated for better conditions, fair wages, and shorter hours, and some business owners stressed worker productivity and societal contributions (Wren, 2009; Carroll, 2008).

Formal corporate social responsibility definitions emerged later, notably with Howard Bowen’s 1953 book Social Responsibilities of the Businessman. Bowen defined it as the obligation to pursue policies, decisions, or actions desirable for societal objectives and values (Bowen, 1953, p. 6). Milton Friedman and R. Edward “Ed” Freeman further influenced the definition of the social responsibility of business. In 1970, Friedman advocated shareholder primacy, prioritizing profit maximization. Conversely, in 1984, Freeman, a business scholar, detailed stakeholder theory, urging businesses to consider all stakeholders, not just shareholders.

The next phase of sustainability development focused on environmental concerns, influenced by the environmental movement of the 1960s and 1970s. This era saw anti-nuclear and anti-pollution protests, with environmental issues gaining attention. The 1969 Santa Barbara oil spill and the 1986 Sandoz chemical spill further spurred support for environmental protection. Reports such as the 1972 Club of Rome’s “The Limits to Growth” and German politician and environmentalist Herbert Gruhl's 1975 book “A Planet is Plundered” underscored the focus on environmental topics.

Sustainability became more explicit during the late 20th and early 21st century. The term "sustainable development" gained global recognition with the 1987 Brundtland Report. It defined sustainable development as meeting present needs without compromising future generations, highlighting intergenerational justice (United Nations, 1987). It has since been redefined to have three dimensions: environmental, social, and governance (ESG). With companies embracing these dimensions, social sustainability underscores social equity, human rights, and well-being. This encompasses fair labor practices, social inclusion, and the welfare of communities.

The United Nations played a significant role in advancing sustainability in work and social affairs. The 2015 Sustainable Development Goals (SDGs) provide a global framework for addressing sustainability, including decent work, economic growth, reduced inequalities, and well-being. EU sustainability regulations emphasize and social aspects of sustainability. The Corporate Sustainability Reporting Directive (CSRD) and the proposed Corporate Sustainability Due Diligence Directive (CSDD) demonstrate a commitment to social and environmental.

The pioneers

The origins of social sustainability trace to the late 19th and early 20th-century labor movements. During industrialization, poverty, child labor, and poor living and working conditions were prevalent. 

Some visionary examples of business engagement emerged. Some of the early pioneers of social sustainability included:

• William Hesketh Lever (Unilever co-founder) built the Port Sunlight village for workers with housing, schools, and cultural institutions.
• George Cadbury (Cadbury founder) developed Bournville village with affordable housing for employees.
• James Norris Gamble (Procter & Gamble heir) introduced profit-sharing for workers and supported schooling.
• Milton Hershey (Hershey founder) invested in schools and housing.

Robert Bosch (Bosch founder) introduced an eight-hour working day in 1906 and supported health and social causes.

Another compelling example of social sustainability comes from Germany. Otto Schott, a chemist, Ernst Abbe, a physicist, and Carl Zeiss, an optician, founded the Schott glass company in 1884. In 1896, Abbe introduced the Carl Zeiss Foundation charter, granting employees unprecedented rights, including job protection, a minimum wage, paid leave, and pensions. The foundation also prioritized research and education, becoming a leader in both employee welfare and scientific progress. 

Abbe's contributions to social sustainability were summarized in a 1913 article in the Economic Journal, in which the company’s workers were called “the aristocrats of the working class” (Glatzer 1913, p. 336). Abbe’s legacy included:

• advancing the company’s interests while ensuring financial stability;
• supporting scientific developments;
• upholding social responsibility for employees’ economic and social well-being;
• expanding educational opportunities; and
• promoting academic initiatives like founding university chairs and buildings.

Abbe’s leadership not only gave the company a competitive advantage through employee benefits but also had a lasting positive impact by increasing access to education and knowledge.

Paying it forward

The historical evolution of social sustainability transitioned from social issues in the early 20th century to environmental concerns in the late 20th century. Key issues included workers' rights, eradicating child labor, health and education programs, and cooperative production.

Today’s sustainability landscape highlights interconnected issues such as climate change, biodiversity loss, employee rights, health, and well-being. This evolution underscores the need for business leaders to learn from history and adapt to effectively contribute to sustainable corporate and societal development.

Recent studies show employees feel business leaders “lack concern” for environmental and societal issues (Deloitte, 2024; Polman, 2023), underscoring the need for stronger leadership.

A trend among younger talent highlights two concerns: Environmental awareness, exemplified by figures like Greta Thunberg, resonates with Millennials and Generation Z (Deloitte Millennial Survey, 2023). Gender diversity is scrutinized, with 75 percent of younger employees potentially leaving an organization because of a lack of progress (World Economic Forum, 2019).

Young adults acknowledge some positive strides in diversity, equality, inclusion, and work-life balance, but express concerns regarding environmental protection (Deloitte, 2023). Employees of all ages aspire to drive change within their company (Polman, 2023). 

Business must tackle interconnected global challenges to maintain a competitive advantage, meeting expectations from capital, product, and labor markets. Understanding current societal concerns and empowering both companies and employees to address them is crucial to attract top talent in an increasingly competitive market. 

Joanna Radeke
Director, ESMT Institute for Sustainable Transformation

Jörg Rocholl
President, ESMT Berlin

This article was originally published in ESMT Update Winter 2024 (PDF) and is a condensed version of the chapter “The Historical Development of the Concept of Sustainability in the Work and Social Realms: Drawing Lessons from the Past to Address Contemporary Challenges,” published in Soziale Nachhaltigkeit – Pflicht oder Kür? Erfolgsfaktoren, Erfahrungen, Erwartungen (Social Sustainability – Duty or Choice? Success Factors, Experiences, Expectations) by Haufe Publishing.