It’s likely you’ve heard the word “sustainability” more than once in recent years. More than just a buzzword, companies across the United States and the world have begun integrating sustainable practices into their business models, implementing new consumption and production practices and environmental engineering to reduce their carbon footprint.
But what exactly does it mean to be sustainable?
Sustainability describes a company’s strategy for reducing the environmental impact in its industry. When referring to sustainability in business practices, we’re referring to the strategies and processes that a business might use reduce their environmental impact and increase their positive social impact, while creating long-term value for their stakeholders simultaneously.
But why is it important? And what role should companies play in reducing the affect they have on the environment now and in the future?
Let’s take a look.
Investing in ESG: Environmental, Social, Governance
It can be hard to know where to begin – and easy to feel powerless when looking at the seemingly insurmountable task of addressing climate change and the continued pollution caused by many of the world’s largest corporations.
It is also daunting to consider the necessary changes needed to achieve sustainability. A common concern when considering sustainable business practices is the costs these changes can incur. The concern that ethically sourced supplies and switching to greener energy and more efficient waste management will lead to higher expenditure has kept a lot of companies from committing.
A good place to start is to consider your ESG practices – environmental, social, and governance.
- Environmental, as you might be able to guess, breaks down how a business impacts the environment.
- Social refers to company culture, i.e., the way company treats its team members, as well as its customers, distributors and supplies, and surrounding communities.
- Governance is conversely a discussion of leadership and shareholder rights.
A growing number of investors are considering ESG standard in valuing a company. A survey from EY’s Global Private Equity showed that two-thirds of investors consider ESG factors when considering companies to back. Investors from prominent firms often must comply with environmentally friendly practices and policies already. Thus, the small and medium-sized enterprises (SMEs) they invest in should share similar values and sustainable strategies.
The vast majority of businesses around the world are SMEs. By making sustainable business practices a part of their business model from the start, smaller, independent companies can attain ESG investment and find themselves positioned ahead of their rivals.
The Appeal of Sustainability
This is in large part a result of a shift in consumer values. The new generation of consumers is increasingly conscious of what they buy – and who they buy it from. A report from First Insight shows that 62% of Generation Z and Millennials support sustainable brands, and are more likely to focus on company values before making any purchasing decisions.
As consumers care more about helping the environment, as well as the working conditions and other social factors of the companies they buy from, being at the forefront can gain you access to new, loyal audiences. Similarly, customers look to share ethically shopping practices on social media and other avenues online, helping boost a company’s visibility and image.
Conversely, customers are increasingly apt to call out and hold accountable companies they feel are not living up to these values, which can create a negative image for a brand from which it is often hard to recover.
By creating an environment that makes sustainability seem not only possible but necessary, consumers will come to expect it from the brands they spend their money on. If large companies then see consumers making eco-friendly purchases and demanding accountability, they too will optimize processes to keeping environmental and social impact in mind.
The Advantages of Sustainability
There are many positives to considering ESG practices and going “green” as a company. It is important to consider the positive impact the integration of the values can have on your company both internally and externally.
- Structural advantages: Sustainability leads to improved working conditions, safety, and efficiency.
- Financial advantages: Sustainability can garner tax incentives, government funding and grants, as well as the ESG investor dollars we discussed above.
- Team advantages: Sustainability in the workplace leads to improved ethics, inspiration, and motivation in your team.
- Commercial advantages: Sustainable practices allow for a boost in marketing and a growing attraction for the increasing number of consumers who care about sustainability.
- Environmental advantages: Reduce carbon emissions and help provide a more sustainable future for coming generations.
- Communication advantages: A “green” image positions your company as one to support, helping grow your customer and supplier base.
Starting Your Sustainable Journey
Incorporating sustainable business practices into your organization can lead to an increase in investments, growth in brand recognition and respect, positive impact on your community, and a healthier, more productive workplace.
Defining the mission for your brand is the best place to begin. Your goals should be established with clear intent the whole team can follow. As the actual process of incorporating sustainability will vary company to company, working closely with your team to discover what works best for you is the key to success.
Even small steps – e.g., cutting back on plastic packaging, incentivizing the use of public transit or biking to work, partnering with local charities and nonprofits committed to sustainable goals – can make a difference. Here are a few other ideas to get you started:
- Work from home/hybrid work model: A report fromGreen Journal found that that working from home four days a week can reduce nitrogen dioxide emissions by up to 10%.
- Use Less Paper: Reducing paper plays a large part in reducing carbon emissions, waste management, and unethical deforestation practices. Here are a few ways to cut back:
- Sign documents digitally
- Use Online calendars and cloud storage
- Email invoices and receipts
- Provide reusable coffee cups
- Engage in digital marketing instead of paper marketing
- Find local charities to partner with: Look for local or national nonprofits and charities with similar sustainability goals that can help you with achieve your own.
There is no need to strive for perfection. We can’t know everything or get it all right straight out of the gate, and finding what works best for your business might take some time. But by incorporating sustainable practices, you can help build a brighter future for your business, and for future generations as well.