The Perks of Corporate Sustainability

Sustainability is an important and successful long-term business strategy that a steadily increasing number of companies are becoming involved in. There are many benefits that explain why investment in corporate sustainability spending is on the rise. According to the Harvard Business Review, “Sustainable businesses are redefining the corporate ecosystem by designing models that create value for all stakeholders, including employees, shareholders, supply chains, civil society, and the planet…a company with a sustainability agenda is better positioned to anticipate and react to economic, social, environmental, and regulatory changes as they arise.”

Risk Mitigation
Many corporations have discovered that being proactive for the future is in their best interest. With social and environmental risks, decisions need to be made today to protect and further the company in the long-term.
Climate change is one of the variables companies are planning for in the manufacturing of goods. “In the largest study on climate change data and corporations, 8,000 supplier companies (that sell to 75 multinationals) reported on their level of climate risk. Of the respondents, 72% said that climate change presents risks that could significantly impact their operations, revenue, or expenditures.” (Source) Ikea is an example of one company committed to investing in sustainability to improve their brand and their future. The materials most used in their products are wood and cotton. To combat the issue of deforestation and ensure they have the resources needed to sustain their business, Ikea is investing heavily in forests. They, along with other companies, can ensure that the forests are managed responsibly, and keep their supply chain accessible.

Ability to Operate
The conditions a business needs to meet before it can even begin to operate can be greatly influenced by stakeholders in the area. From permits to taxation and other regulatory issues, a company cannot begin in a timely manner if they have any kind of opposition stalling them. “Whether you define it as enhanced goodwill or reduced opposition, sustainability programs that position the company as a positive corporate citizen can impact the speed with which the company enters or grows within a market.”

Innovation Support
The redesign of products to meet the sustainability strategies of a company can have remarkably innovative results. There is a continual need to satisfy new regulations or environmental concerns, as well as the consumers who will ultimately purchase the products or services.
When the original energy efficient lightbulbs were developed, they had a fluorescent color that didn’t satisfy consumers. “Today’s bulb not only provide the same light spectrum as classic incandescent bulbs, they use 75 percent or 80 percent less electricity to do so — paying for themselves in about half a year in energy savings.” (Source) The environment benefits from a reduction in energy use, the customer benefits with cost savings, and the bulb companies themselves benefit from increased sales.

Customer Loyalty
Today’s consumers have a different mindset than in the past. They’re no longer looking for the lowest cost product. Customers want to know what a company is doing to produce high quality, competitively priced products that are environmentally and socially responsible. According to one study, nearly two-thirds of consumers believe they “‘have a responsibility to purchase products that are good for the environment and society’ — 82% in emerging markets and 42% in developed markets.” (Source) Corporate responsibility practices have even been shown to increase overall sales revenues by up to 20%.

Financial Performance
Not only are companies seeing increases in innovative sales and customer satisfaction, but improving the operational efficiencies in a business can result in substantial cost reductions.
Wal-Mart decided to focus efforts on improving their fleet efficiency through better routes, truck loading, training for their drivers, and advanced technologies. After a few years, their fuel efficiency had improved approximately 87% which saved them nearly $11 million and reduced CO2 emissions by 15,000 metric tons. (Source)
Investors are adding their dollars to the financial mix with one in every eight dollars under professional management in the United States involved in socially responsible investing. That comes to a total of $3.07 trillion being invested in companies that are sustainable.

Attracting and Engaging Employees
Employees are a company’s most valuable asset. Many business recognize this, yet fail to recognize the true power of employee engagement. Harvard Business Review states that, “Research is finding that 21st century employees are focusing more on mission, purpose, and work-life balance. Companies that invest in sustainability initiatives tend to create sought-after culture and engagement due to company strategy focusing more on purpose and providing value to society.” Employees want to feel part of a greater good and proud of their place of employment. One study even found that employee morale was 55% better in companies with strong sustainability programs. (Source)

Sustainability is not only providing companies with substantial cost savings, it is improving their business practices in a multitude of areas. Companies that are considering their impact and looking to take innovative sustainability initiatives are those that will come out far ahead of the competition.

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