Is sustainability good for business?
If you posed the question of whether sustainability is good for business at Young Folks HQ, you would be hit with a quick-fire, unanimous and enthusiastic ‘hell to the yes’ from the team.
Day in and day out we see the incredible results and success achieved by the beautiful sustainable brands we work with who use business as a force for good.
If you’re looking for reasons to take the necessary steps to build sustainability into your business you’ve come to the right place.
Recent research by Schneider Electric that surveyed executives from some of Australia’s most prominent businesses found that over 70% of businesses believed Australia must commit to net zero emissions by 2050.
A study by Planet Ark and HP found that over 90% of Australians are concerned about the environment and sustainability where 80% hold companies responsible for their environmental impact.
So we know there’s a massive appetite and demand from Australian businesses and consumers alike to do the right thing in terms of action on climate change and becoming more sustainable.
How do sustainability practices benefit businesses specifically? In this article, we’ll dive into exactly why sustainability initiatives are so good for business, what these benefits look like and some ideas to become more sustainable.
What do we mean by sustainability in business?
Harvard Business Review defines sustainable business practices as those that ‘1) at a minimum do not harm people or the planet and at best create value for stakeholders and 2) focus on improving environmental, social, and governance performance in the areas in which the company or brand has a material environmental or social impact (such as in their operations, value chain, or customers)’.
Here at Young Folks, we take our definition of what makes a sustainable business a step further. Inspired by John Elkington’s triple bottom line (aka profits, people and the planet), where sustainable businesses earn profits by being socially responsible and protecting the planet’s resources, we measure the success of a sustainable business through its impact on people, planet, their profits and their overarching purpose to do the right thing in the three aforementioned areas.
The 5 key benefits reaped by sustainable businesses
An awesome by-product of investing in sustainability for businesses is the increased capacity for innovation and the rewards of constantly striving to change things for the better.
Using new technology to minimise waste during production, redesigning a product to incorporate the latest advancements in recycled materials or investing in faster more energy efficient equipment are all examples of the different ways being green drives companies to keep innovating and evolving their product, production methods or service offering.
The legends at Great Wrap recognised the need for food wrap that doesn’t contribute to the plastic pollution crisis. Enter the first compostable cling wrap in the world made from potato waste and biopolymers that break down in a compost pile in 180 days. As such an innovative bunch they continue to strive to improve their product formula and will soon extend their range to include commercial cling wrap and pallet wrap.
This drive to innovate, willingness to experiment, redesign and continually evolve, and expand the product line, will result in a better quality product, more new customers and less microplastic waste. So, it’s a win-win-win in terms of business growth, the planet, and their customers.
Continued innovation driven by sustainability efforts and environmental missions fosters more efficient production, conserves resources and streamlines employee tasks, and by doing so reduces overall running costs and maximises profits.
Investing in environmental initiatives is part of a smart strategy to safeguard a businesses ability to operate long term, particularly if their supply chain relies on natural resources.
This is especially pertinent for businesses in agriculture, textile, food and beverage industries, where the impacts of climate change, like increased natural disasters such as floods, bush fires and drought, have the potential to negatively impact growing conditions and seasons, increase pests and disease, and decrease crop yields.
Flooding in Thailand back in 2011 had a devastating effect on their two primary industrial sectors (automotive and electronics) and the whole economy. The floods led to the shut down of many factories such as Honda Motors, Sony and Western Digital. The finance ministry estimated the cost to Thailand’s economy at around $2.2 billion.
Foster customer acquisition and retention
The growing number of conscious consumers today expect a lot more from brands in terms of transparency, responsibility and sustainability.
Being transparent, sustainable and ethical are such desirable attributes, where research into Australian consumer behaviour shows:
- 55% are ‘conscious consumers’ who make purchase decisions based on their environmental values, ethics or fair trade
- one in ten have boycotted a brand because of their values
- 90% are more likely to purchase ethical and sustainable products
- 85% want retailers and brands to be more transparent about the sustainability of their products
- two in five are willing to pay more for ethical and sustainable products
- 24% find it difficult to identify if a brand operates ethically or sustainability
Regarding their 2019 research, Jess Rix a Shopping Expert from PayPal said, ‘Aussies are putting their money where their mouth is when it comes to environmentally and socially sustainable products. Every buying decision has the power to change the world a little and we’re beginning to see a shift as Australians are increasingly choosing brands that operate ethically and sustainably over those that don’t’.
A similar theme exists worldwide where 73% of global consumers are willing to change consumption habits to lessen their negative impact on the environment.
Having well publicised and documented sustainable practices is key for businesses to get a competitive advantage, attract new customers and keep existing customers coming back.
Businesses need sustainable practices to not only take responsibility for their environmental footprint but to respond to what conscious consumers want and demand in the companies they choose to back with their custom, cash and advocacy, or they risk missing out on 55% of the market.
Talent attraction and staff retention
It makes sense that team members feel proud, engaged and are more likely to stick around when they are working for a company that is proactive in terms of a sustainability strategy to protect people and the planet.
This report by the Society for Human Resource Management found that companies that implement sustainability programs have 55% higher employee morale, 43% more efficient business processes and 38% improved employee loyalty.
Staff enjoy being involved in sustainability initiatives, training sessions and activities and they help galvanise team relationships and culture. When staff are asked for their input on what areas could be improved upon, amazing insights and huge value can be gained.
In 2016 after being inspired by Unilever’s sustainability slogan, ‘Small actions can make a big difference,’ employees at an English Unilever-owned tea factory suggested the size of their paper tea bags could be reduced. The move saved the company just shy of $75,000 in the process and reduced their paper waste by 9,300 kilograms.
As employees work with the product and customers every day they are the first to have bright ideas and identify clever and sustainable opportunities that can save businesses a fortune in the long run.
A survey by Swytch found that 75% of millennials would take a pay cut if it meant working at an environmentally responsible business and 40% would select one job over another because of a company’s sustainability practices.
During the recruitment process, you’re more likely to attract like-minded environmental innovators if you make your commitment to sustainability widely known. Having a reputation as a green business shows you have a bigger purpose beyond making a profit. This is extremely attractive to job hunters wanting to work somewhere value-aligned and contribute to something that’s having a positive impact and doing good in the world.
While rolling out a bunch of green initiatives comes at an initial outlay, long term you’ll save money by putting sustainable processes into play.
Examples of this could be installing solar panels to power the office or factory space, exploring creative ways to put waste products or offcuts to good use or investing in the development of more environmentally friendly materials.
The latest figures show that Australian businesses using rooftop solar save up to 31% off their energy costs compared to businesses without solar.
Nike Flyknit has generated the sportswear giant over $2 billion revenue since its launch in 2012. Shoes made with the innovative Flyknit technology create 60% less scrap waste, require minimal labour, have reduced waste by 3.5 million pounds and transitioned from yarn to 90% recycled polyester (that’s the equivalent of 182 million bottles diverted from landfill – nice!).
Being a sustainable business also opens you up to a whole world of investors, as well as government grants and funding to help businesses become more sustainable.
Businesses can improve their bottom line by becoming more sustainable. Greater innovation, better risk management, the increased attraction and loyalty of conscious customers, lower staff turnover and reduced business costs all work together to significantly boost the revenue and success of sustainable companies.
Ways businesses can become more sustainable
There are so many things companies can put in place to make their operations and offering more sustainable and to lessen negative environmental impacts. Here are our ideas for upping your sustainability initiatives:
- offer remote work and consider a four day work week to reduce employees’ carbon footprints
- opt for virtual meetings instead of travelling to meetings
- reduce air travel where possible to lessen emissions associated with doing business
- encourage green commuting options among employees such as carpooling, biking and public transport
- introduce composting and improve recycling at the office and during manufacturing (if a product-based business)
- make your workplace completely paperless – think paperless billing, receipts and keep all company docs in the cloud
- opt for recycled office supplies like toilet paper, green cleaning products, tissues, pens and bin liners
- create a sustainability task force to come up with new green initiatives and hold the business accountable
- offer team volunteer opportunities and days for environmental causes
- run regular sustainability surveys and forums where employees can share observations, ideas and thoughts on where the business can be more sustainable
- consider passive solar design for premises to reduce heating and cooling costs
- invest in renewable energy or shift to a green power option
- switch to a bank that doesn’t invest in fossil fuel projects
- assess and offset carbon emissions
- donate to environmental organisations
- choose green hosting for your website
- delete old emails and unneeded files – you’d be shocked by the amount of carbon required to store old emails
- opt for plant-based or recycled materials for production and packaging where possible
- if manufacturing, seek out an iSO 14000 certified factory
- consider product end of life and build circularity into your offering i.e. offer lifetime free repairs or a recycling program.
At the end of the day, businesses stand to benefit in numerous ways by investing in sustainability processes. It may take dedication, drive and a willingness to evolve to go green but the rewards in terms of business growth, productivity, staff morale and longevity are well worth the effort.