Like all businesses, commercial businesses should pursue sustainability strategies because they enable them to respond to rapidly growing market interests. It’s not just the right thing to do, it’s smart business. The future of our planet, our society, and our people depend on all of us being good stewards of our environment.
There are five main reasons why sustainability strategies make good business sense that we will dive into:
- Consumers prefer sustainable brands.
- Sustainability reduces costs.
- Employees prefer sustainability companies.
- Sustainability strategies reduce risk.
- Investors look for sustainability.
Consumers prefer sustainable brands
Nearly 70 percent of US and Canadian consumers think it is important for a brand to be sustainable. Sixty-nine percent of these consumers are willing to pay a premium for recycled products. Over half are ready to change shopping habits to reduce their negative impact on the environment. And the younger the consumer, the more strongly the preference for sustainability is felt.
Sustainability reduces costs
Reducing cost doesn´t always mean elimination. One airline carrier focused on increasing resource use efficiency, and specifically around water. They started filling potable water tanks three-quarters full, lightening water weight on planes, reducing fuel consumption, and cutting 2,700 metric tons of CO2 from their emissions. It also saved nearly a million dollars a year.
Similarly, they bought 33 million gallons of renewable blended jet fuel at the same price as standard jet fuel, reducing the volatility of a significant cost component.
These sustainability programs were great innovations for the organization and the airline industry. Innovation with reporting and insights gives quantitative sustainability results and ultimately tied them to financial performance. Their sustainability efforts were delivering long-term economic and environmental payoffs.
Employees prefer green companies
The same preferences we carry as consumers remain when we go to work. Our values and desire to support organizations with genuine and effective sustainability strategies span the different roles and spaces we occupy.
A recent survey showed that nearly 50 percent of all respondents, and 75 percent of all millennials, are willing to take a lower salary from a company with a strong sustainability strategy. Companies with sustainable business practices will see more successful recruiting efforts.
The halo effect of sustainability practices on employees extends to morale, productivity, and retention. It only helps companies to have an effective sustainability strategy, complete with actions, metrics, and reporting transparency. These practices directly support hiring and sustaining employee productivity and loyalty.
Sustainability strategies reduce risk
The World Economic Forum ranks water crisis as a top global risk, while the World Resources Institute projects a growing gap between global water supply and demand by 2030. About 2.2 billion people globally lacked access to safe drinking water in 2019, and COVID-19 only exacerbated the issue.
Organizations each have an opportunity to lead change in their industry. One leading company chose to become a leader in water stewardship when confronted with water scarcity and environmental issues. As water is the number one ingredient in beverages, it only made sense to become a leader in water stewardship.
Through these efforts, they have already replenished more than 1.75 trillion liters of water worldwide. Their conscientious practices also reduce risk to their primary production resource, which brings benefits to the planet, society, and all people.
Investors look for sustainability
Investors increasingly look for companies with strong sustainability strategies. They see them as hedges against risk, as indications that management is taking a long-term view, as trustworthiness attested to by transparent reporting of progress on sustainability metrics.
This serves as an opportunity to deeper align with investors on missions and goals, with many top investors publicly advocating that they only do business with companies committed to sustainable practices. This means that not only must investment management be sustainable, but stewardship of the planet must also be sustainable.
Companies already have sustainability programs in place throughout their organizations. The first step in managing sustainability for competitive advantage is to inventory these programs to find strengths to build on.
Next, companies need to benchmark best practices to find gaps to fill and places to upgrade and then automate with scalable cloud and AI based solutions. With this fact-based in place, combined with innovative technology solutions, they can identify ways to differentiate their brands for competitive advantage.
With that, I’m excited about the latest announcements from Microsoft delivering the Cloud for Sustainability for our customers. This new platform offering gives organizations an accurate, comprehensive, and increasingly real-time view of their environmental footprint across all their emissions. This allows organizations to track and report emissions across the value chain and use insights to find the most impactful and efficient reduction strategies to drive real change.
A firm doesn’t need global reach and deep pockets to make an impact. There are many opportunities right in their backyard. By following the sustainability giants and listening to the customer, firms can find ways to make a difference and build sustainability for their businesses and the world at large.