Business leaders at even the largest companies often ask me what is the value of a sustainability strategy, and it surprises me for two reasons. Firstly, what leader doesn’t want to ensure the long-term viability of their company? In my view, a strategic approach to sustainability is absolutely necessary to do just that. And secondly, I’m disappointed because it suggests that sustainability professionals like me have not laid out the case clearly and compellingly enough.
In other words, what we have here is a failure to communicate!
So, in this two-part blog, I hope to explain why your company needs a sustainability strategy, no matter how big or small that company may be. In the next post, I’ll provide some tips for how to implement sustainability strategies successfully, based on my experience in doing just that at two major companies.
First though, let’s start with the why.
1. It’s good for the P&L
This point includes a number of insights about how sustainability – properly implemented – can improve financial performance. First of all, sustainability initiatives often cut costs – think energy and transport efficiencies in your offices and operations. Less well-known is that more sustainable companies outperform their peers in terms of return on assets and return on equity, according to the Harvard Business Review. The widespread misconception is that sustainability adds cost and complexity, when in fact it helps make your business more efficient and profitable.
2. It builds employee engagement
Much has been written about the importance to millennials of purpose at work. I happen to believe that all employees prefer to work at a company that actively addresses its environmental and social impacts. And according to SAP’s sustainability report, there’s a quantifiable link between their sustainability strategy and greater employee productivity as well as long-term retention. Engaged, committed employees are not only more productive, but they save money in recruitment and training costs.
3. It’s expected by all your stakeholders
Besides employees, your business has many other stakeholders – from investors, to customers, to government and non-government organizations. All these expect you to operate your business in a sustainable manner, and many will choose to invest, or to purchase your product, based on your sustainability profile. Increasingly, government and NGOs are highlighting – and even shaming – companies that do not meet their standards. Check out the Federal Supplier Greenhouse Gas Management Scorecard, for instance.
4. It helps differentiate your business
Maybe you manage your suppliers with an eye to diversity, or treat employees progressively, or your products are more efficient than the competition. I’ve seen all these factor into tough RFPs, and often provide the tipping point to choose my company’s proposal over another’s. And that drives sales.
5. It’s great for innovation
When sustainability is fully integrated in your business, it helps create insights about new product innovations. I’ve seen this at packaged goods as well as technology companies. You hit the sweet spot when your sustainability strategy is aligned with your customer’s needs – such as providing more energy or material-efficient solutions.
Hopefully, this brief sampler of the primary reasons for creating a sustainability strategy has raised your interest and demonstrated that such strategies can be of benefit to companies of all sizes. The next, logical question is “how do I create and integrate that strategy?” And that will be the subject of the next blog, based on my experience at two major companies.
The most important point is that sustainability initiatives enable new and existing business opportunities, and the team at Sustainabilist and I would love to help get you started on your way toward accelerating your company’s progress.
This is the first in a series of two blog entries on Sustainability Strategy. Part two, How to Create and Integrate a Sustainability Strategy can be found on our blog.