The benefit of a sustainability strategy is difficult to dispute. According to a Deutsche Bank summary, companies with high ratings for environmental, social, and governance (ESG) factors have a lower cost of debt and equity. 89% of the studies show that such companies out-perform the market in the medium (three to five years) and long (five to ten years) term. Here’s a shining example - Ray Anderson, business tycoon and founder of Interface Inc., adopted a radical sustainability strategy over 12 years resulting in a decrease in emissions of 82% whilst increasing sales by two thirds and doubling profits in the same period.
Despite these obvious perks, a sustainability strategy may still sound like corporate padding and of secondary importance to an organisation that is overstretched. However, the opportunities to create extra value within a business vastly outweigh the initial cost of implementing such changes as many significant brands (including Nike, Coca-Cola, BMW) have demonstrated.
Here are 3 reasons why companies should embrace sustainability:
A sustainable strategy helps protect a business from the risks of today whilst enabling it to respond to the challenges and opportunities of tomorrow. Sustainability, by its very nature, encourages a long-term perspective. Corporations must invest in longer-term initiatives and push their entire supply chain towards reimagining how to explore, manufacture, and source products. With sustainability issues becoming more prominent in the public eye, companies must adapt to the ‘new normal’ (a more efficient and streamlined approach) that is now a necessity if a business is to survive.
Stakeholders will naturally be drawn to a more sustainable business as they recognise the value in a company that is proactively managing and assessing the risks to its operations. Likewise, a company can use their ‘sustainable story’ as a marketing tool which in turn reflects a company’s ability to be transparent.
Consumers are showing themselves to be willing to pay more for ethically and sustainably produced products. Society continues to be shaped by a growing sense of universal responsibility and a desire to feel good about what it purchases. By becoming more sustainable, companies can begin to differentiate themselves from their competition and increase customer loyalty.
We’ll leave you with a thought. Cheeky panda, an innovative company offering the loo roll market a sustainable alternative, makes all its products from virgin bamboo and has embedded sustainability in its core. Although it’s still small, Cheeky Panda is growing fast – it turns over £2m annually and was recently valued at £20m.. Who would have thought a husband and wife team could launch a brand-new toilet paper brand to compete with the largest manufacturers in the world and succeed. A sustainability strategy may just be the answer.