Having a successful sustainable business does not happen by accident. It takes a lot of work and planning, but a company can connect financial health to green policies with the right sustainable strategy. Furthermore, it is a proven fact that sustainable business practices can positively impact a business profit margin. Sustainability strategies can even be seen as corporate growth mechanisms – Tesla, Nike, and IKEA are all excellent examples.
With this in mind, it is surprising that only a third of CEOs report that their sustainability strategy improves the profitability of their business. This contradiction is often due to the business model and quality of sustainability strategy. In terms of profitable sustainability, some industries perform better than others. For example, for many years, the technology industry has been seen as the future of sustainable business as their environmental footprints are often small in comparison to traditional companies of similar size and revenue.
The reason for technology companies doing so well on the sustainability front is primarily due to the function of their business model and not sincere compassion for environmental issues. When it comes to employment practices, many businesses in the technology world have been highlighted as having toxic work cultures and even data misuse. This shows that it is clear several technology employers have a lot to do before they become genuinely responsible businesses.
A genuine, sustainable business is one that is willing to adapt its model to benefit the environment and social ends, not just rely on inherent strengths. It is easy for sustainability strategies to impact business costs – higher welfare meat is more expensive, sourcing segregated sustainable palm oil takes time, and costs money, and increasing staff salaries is also costly. On the other hand, many sustainable practices help with profit, such as saving energy, reducing costs, reducing waste, lowering costs, and a safer work environment decreasing insurance premiums. There is also the option to save money by switching electric companies to one which is renewable.
A high-quality sustainability strategy is one that does not purely focus on costs. Instead, it also considers the whole of the business – its place within the economy and its place in the world. Short-sightedness and hunger for monetary success is often the downfall of sustainability strategies.
Below is a short introduction to help with the long term success of sustainability strategy for a business. By considering these steps, positive changes can occur across all industries to help protect the environment while protecting and even improving profitability.
Reflect on how the business makes money
Many sustainability professionals do not stop to take a moment to think about how their business actually makes money. Linking the strategy to revenue entails an understanding of how the company generates cash and the cost of sustainability activities. This can result in identifying opportunities to reduce costs and grow revenues.
Keep making business cases
A sustainability strategy should not be something that is created once and signed off by management. There should be business cases submitted on a regular basis so that sustainability practices can be constantly improved. A sustainability strategy is not a singular act.
Actively engage with customers and suppliers
People that are passionate about sustainability gravitate towards people that share their green values. Make customers and suppliers aware of sustainable company practices as they are the people who make a business possible.
Get all levels of an organisation involved
It is, of course, essential to have the senior decision-makers on board involved in the sustainability strategy – however, too often, the colleagues that are not within the management team get overlooked. If the entire company is included, it will help strategic thinking be translated and delivered more effectively.
Keep the sustainability strategy simple
Many sustainability strategies are too complex, and a lot of time is wasted on setting up intricate systems – resulting in the need to change the strategy frequently. It can also leave colleagues confused, creating an unnecessary gap between the sustainability strategy and the people within the business.
Have a sustainability representative present in the workplace
It helps to have influence in sustainability practises if someone is there helping to implement the strategy into practice. They will also then be able to identify more ways to improve green initiatives, which could help save money and boost turnover.
The fear of climate change is enormous and has even been given its own term known as eco-anxiety. The concern of climate change can be a powerful motivator, but it needs immediacy, which appears to be lacking in many corporate sustainability risks. There is the risk that the facts found in sustainability strategies can cause despair instead of inspiring people to take action. An excellent sustainability strategy provides a positive vision of action and group motivation.
Include innovative ideas
The heart of the sustainability strategy should have a call to positive change. There are many businesses that are not used to change, and any sustainability strategy will most likely struggle to make an impact. By providing innovative ideas which help inspire, it can advocate change to benefit the business, as well as social and environmental effects.
Show the impact of sustainable practices
Capturing and sharing the impact businesses have on the environment can have a powerful effect. One of the best ways to track and identify change is through reporting. Impact reporting is a fantastic tool for supporting sustainable initiatives and helping businesses make positive changes. The reports should focus on the impact internally and externally – equipping the company to make smarter, sustainable decisions.
A business becoming sustainable does not mean it has to sacrifice profits or put growth and success on the backburner. Instead, sustainability strategy should be seen as a crucial element to all successful organisations. After all, a business that does not factor in sustainability risks is less successful in several measures, including profitability, growth, and employee retention. By integrating sustainability into the business model, more businesses will improve their profits rather than a loss due to sustainability measures.