“Nine Reasons Why Sustainability Should be a Key Focus for Corporate Strategies”
In the modern world, sustainability is rapidly becoming one of the most important factors for companies to take into consideration across all industries. As a result of the increasing amount of pressure that businesses are under to lessen the impact that they have on the environment and the social footprint that they leave behind, many of these businesses are looking to sustainable practices as a way to improve their corporate image, attract and keep customers, and increase their bottom line. The following are some of the reasons why sustainability should be the primary focus of corporate strategies:
- Competitive Advantage: Advantage in the Market: Businesses can gain a competitive advantage by differentiating themselves from their rivals through the implementation of sustainable practices. For instance, a study conducted by Cone Communications discovered that 87 percent of consumers would purchase a product simply because a company advocated for a cause that was important to them. Additionally, businesses have the potential to lessen their expenses and increase their profits by cutting down on waste, increasing their efficiency, and making use of alternative or renewable forms of energy. For instance, the company saves more than one billion dollars in annual costs thanks to the sustainability initiatives it has implemented.
- Reputation and brand: Businesses can build a positive image for themselves as socially responsible and environmentally conscious by implementing sustainable business practices. This positive image has the potential to bring in new customers, investors, and employees, as well as to keep the ones you have. According to the findings of a survey conducted by Nielsen, 81 percent of respondents from around the world strongly believe that businesses should contribute to the improvement of the environment. For instance, Patagonia has been able to cultivate a reputation for being a socially responsible company as a result of its dedication to sustainability. This has enabled the company to attract customers and employees who place a high value on sustainability.
- Compliance with the Law: Businesses that implement sustainable practices are typically more likely to be in compliance with the laws and regulations that are related to sustainability. Laws and regulations concerning emissions standards, waste disposal, and labor laws can be found in many different countries around the world. Companies can avoid the fines and penalties associated with non-compliance with regulations by adopting sustainable business practices. As an illustration, Coca-Cola has made investments in water stewardship initiatives in order to assist with ensuring compliance with local water regulations.
- Risk Management: Companies that implement sustainable business practices are in a better position to manage the risks associated with environmental and social factors. Businesses are able to lessen their susceptibility to disruptions brought on by environmental or social factors if they implement renewable energy sources and sustainable supply chain practices. For instance, General Motors has invested in electric vehicles and fuel-efficient engines to reduce its reliance on fossil fuels and manage the risk of fuel price fluctuations.
- Innovation: Sustainability can inspire innovation and new business models. Companies have the opportunity to discover new products and services that address environmental and social issues, as well as new business models that promote sustainable practices, if they shift their attention to sustainability. The automotive and energy industries, for instance, have been shaken up by Tesla’s electric vehicles and solar panels, which have also aided in hastening the transition to an economy with lower levels of carbon emissions.
- Employee Engagement: Adopting sustainable practices can improve employee engagement and attract and retain top talent. According to the findings of a survey conducted by Glassdoor, 64% of millennials base their decision about where to work on the social and environmental commitments of an employer. Companies have the ability to give their employees a sense of purpose and increase their level of engagement through the promotion of sustainability initiatives. For instance, the sustainability initiatives that Timberland has implemented have assisted the company in attracting and retaining employees who share the same values as the company.
- Investor Relations: Investors are increasingly prioritizing sustainability in their investment decisions. A poll conducted by BlackRock found that 88 percent of investors believe that it is important for them to engage in sustainable investing. Companies have the opportunity to attract investors who are looking for socially responsible investments by implementing sustainable business practices. For instance, Unilever’s sustainability initiatives have assisted the company in attracting investors who place a premium on businesses that have demonstrated a strong commitment to both the environment and society.
- Stakeholder Engagement: Sustainability practices can improve engagement with stakeholders, including customers, employees, investors, and communities. Companies are able to demonstrate their commitment to sustainability and build trust with various stakeholders if they communicate the sustainability initiatives and outcomes they have achieved. For instance, among Starbucks’ sustainability initiatives has been the reduction of waste and carbon emissions, as well as the sourcing of sustainable coffee. These efforts have contributed to the company’s success in building customer and stakeholder loyalty.
- Positive Impact: Adopting sustainable practices can have a positive impact on society and the environment. It is possible for businesses to make a positive impact on the environment and contribute to a more sustainable future by reducing the amount of waste they produce, conserving the resources they use, and promoting sustainable business practices. For instance, The Body Shop has made a public commitment to transitioning into a business that is more sustainable and ethical, and as part of this effort, it has established programs to lessen its impact on the environment, promote community trade, and source sustainably sourced ingredients.
“Sustainability reduces costs and can affect operating profits by up to 60%, according to McKinsey & Company. Being sustainable also increases productivity as a Deloitte study shows that companies with an inclusive culture have a 27% higher profitability and a 22% greater productivity.” Source: ClimateChampions
In conclusion, there are many compelling reasons why corporate strategies should focus on sustainability. Sustainability practices can help businesses in many ways, such as by giving them a competitive edge, building a good reputation, following laws and rules, and managing risks. Companies can help move the world toward a more sustainable future by encouraging new ideas, getting employees, investors, and other stakeholders involved, and having a positive effect on society and the environment. As such, sustainability should be a key focus for businesses looking to thrive in the 21st century.