Oct 15, 2021
Why you need to incorporate sustainability into your business strategy, and fast!
With more and more sustainability-related developments, reports, and headlines dominating mass media, the message should be really clear by now — sustainability is crucial. Another message that should be crystal clear by now? Companies play a big role.
The good news is that 90% of executives acknowledge the importance of sustainability.
The bad news? Acknowledgement is not quite the same as taking action. Despite the large percentage of executives who think sustainability is important, only 60% of companies actually have a sustainability strategy — that’s a pretty obvious value-action gap right there. Why? Maybe some just don’t see the full spectrum of benefits — yet.
If your company is still undecided about integrating sustainability into its business strategy, or if you need more convincing, the short answer is: Incorporating sustainability into your business strategy will not only benefit the planet, but also it will definitely benefit your business (and we’re talking financial success). The long answer? Keep reading!
Here are 7 reasons why you need to incorporate sustainability in your business strategy, and fast!
1. Innovation and top-line growth
Whether you’re a B2B or a B2C company, this should be one of the most compelling reasons for you to put sustainability at the core of your business.
Taking action to really include sustainability in your business gives you a chance to question the way your organization operates, explore new ideas, and move away from a mindset of ‘this is how we’ve always done it.’ And of course, we’re not talking about small, incremental changes that are easy and convenient, nor are we talking aboutgreenwashing activities. We’re talking about actions that actually make a difference, like setting ambitious targets or changing your business strategy.
The reward? Innovative ideas and novel business models and strategies that will make you stand out from competitors, gain new business opportunities, and open up new horizons.
Outdoor fashion company Patagonia has definitely stood to gain from embracing sustainability in its business strategy: The brand’s sustainable,impact-driven business and operating models have captured the loyalty of many environmentally-conscious consumers, allowing the company to quadruple its turnover in the last decade to around $1 billion.
You might’ve also heard of their ‘Don’t Buy This Jacket’ Anti-Black Friday Campaign in 2011, where they published a full-page ad telling viewers not to buy their jacket, as a way to address the issue of overconsumption. The irony? Patagonia saw a 30% increase in sales following the campaign.
Patagonia's 'Don't Buy This Jacket' campaign. Source: Patagonia.
It doesn’t end here: being a credible, sustainable business doesn’t just attract consumers, it also attracts governing authorities who could grant you the access, approvals, and licenses you need for growth opportunities.
Simply put? Sustainability and financial success definitely go hand-in-hand if you take the right action.
2. Brand value and competitive advantage
A survey by Nielsen shows that millennials, the largest generation by population, are twice as likely as baby boomers to say that they are changing their habits to reduce their environmental impact.
Forbes also noted that Generation Z, the next largest generation, is equally (if not more) concerned about sustainability than millennials.
An increasingly large proportion of the global population caring more about the environment means that by incorporating sustainability into your business strategy (and therefore aligning your company’s values with those of the growing majority), you can significantly increase your brand value, brand equity and competitive advantage.
A strong sustainability strategy could also be a deciding factor in consumers choosing to buy your products or engage in your services over your competitors.
3. Meeting increasing consumer demands
We’ve already established that a large portion of the global population increasingly cares about sustainability, but it goes beyond that. Conscious consumers don’t just care about the environment — they care that companies and large corporations are doing their part by incorporating meaningful sustainability action into their business strategy.
81% of global consumersfeel strongly that companies should help tackle climate change and improve the environment. There is also a rapidly increasing trend of consumers who wish to only support and champion brands that incorporate sustainability strategies into their business, with at least 65% of consumers who are willing to pay extra for products produced in an environmentally and socially responsible way.
4. Attracting and retaining talent
Being a sustainable business is a huge way to attract and retain talent. Not convinced? Here are some statistics:
76% of millennials consider a company’s social and environmental commitments when deciding where to work.
40% of millennialshave taken a job because of the company’s strong sustainability practices.
75% of millennialsare willing to take a pay cut if it meant working for an environmentally responsible company.
64% would turn down a jobif the potential employer doesn’t have strong sustainability practices.
Again, with millennials being the largest workforce, not having a strong sustainability strategy can mean losing out on a lot of good talent! On the flip side, a strong commitment to sustainability can help your business attract employees who share similar values.
The more strongly your employees align with your values, and the more they are able to see how work in your company can generate a positive impact on the environment, the greater their motivation to act in a way that benefits other people or society as a whole.
5. Reduced regulatory and legal interventions
As it is, a plethora of sustainability-related regulations and legislation have already been passed. Therefore a big benefit of constantly striving to be a more sustainable company (and keeping up with your sustainability reporting) is staying compliant with standards and legislation, and therefore reducing the risk of regulatory and legal interventions.
As climate change becomes more dire, and politicians have more promises to fulfil, more regulations will go into effect to meet different environmental goals and targets.
For example, since the announcement of the European Green Deal in 2019, the European Commission has been working hard at introducing and enacting policies that strive towards achieving a climate-neutral EU by 2050. This includes the Commission’s proposal for a Corporate Sustainability Reporting Directive (CSRD), which will act as an extension to the existing requirements of the Non-Financial Reporting Directive (NFRD).
Why does this matter? While the NFRD currently legally binds about 11,000 companies to report on their sustainability practices in accordance with EU sustainability reporting standards, the upcoming CSRD will increase the number of companies that are legally obliged to report to approximately 49,000 companies!
The bottom line? Preemptively becoming more sustainable than what current regulations require means that when future environmental regulations get even stricter, your company is more than prepared.
6. Increase efficiency and save costs
This one should be a no-brainer. A sustainability strategy can help your company reduce costs substantially and can affect your operating profits by as much as 60%.
When you take the time to re-examine the way your organization operates, the potential inefficiencies in your production process, and whether there are alternatives to how you currently source production materials, you’ll find that the sustainable alternatives can not only help you reduce production costs, but also increase your organization’s chance of profiting from being more sustainable.
American conglomerate 3M has saved US$2.2 billionsince introducing its ‘pollution prevention pays’ (3Ps) program in 1975, which prevents pollution by reformulating products, improving manufacturing processes, redesigning equipment, and making other changes to its production line.
7. Meeting increasing investor demands
Another reason to be more committed to sustainability? Global capital and investments are increasingly being redirected towards sustainable companies (hint: that means a decreasing percentage of total investments going towards non-sustainable businesses!)
In 2020, the Global Sustainable Investment Alliance (GSIA) released their biennial reviewwhich revealed a growing prevalence of sustainable investments across the global investment industry, with assets reaching US$35.3 trillion — a 55% increase in the past four years!
There’s also been an overall increase in the proportion of sustainable investments relative to total managed assets from 2014 to 2020.
Proportion of sustainable investing assets relative to total managed assets from 2014 to 2020, by region. Source: GSIR 2020.
There’s no denying that investors are increasingly recognising the benefits of having sustainability at the core of the business strategy, and using that as an indicator of a company’s higher chance at long-term success.
We’ve given you 7 reasons as to why you need to incorporate sustainability in your business strategy for better business and a better planet.
Many businesses are already putting sustainability first, and many more who have enjoyed successes from involving sustainability in their strategies. There’s also been an increase in companies doing sustainability reporting. Step up your game today and become a leader in sustainability ― or risk falling behind!
And take it from someone who's actively put sustainability at the core of their business and has succeeded because of it: "I know it sounds crazy, but every time I’ve made a decision that’s best for the planet, I’ve made money."―Yvon Chouinard, Founder of Patagonia.
Convinced but not sure where to begin? We’re here to help. At SustainLab our mission is to enable decision-makers to achieve impactful sustainability results with the help of data and automation.
Our platform makes it easy for you to collect and track data more frequently, giving you more accurate data insights, as well as the option to visualize them in a way that helps strengthen your sustainability agenda and strategy. We help you take care of your data-handling so you can focus on taking action.
Contact usfor a free demo to see how our platform can help you kickstart a rewarding sustainability journey!
Follow us on LinkedIn for more sustainability insights and industry news.