How To Make A Business Case For Sustainability
The nature of shareholder capitalism ensures businesses rarely serve 100% of the interests of founders, consumers, people and planet simultaneously. Under this model, making a business case for sustainability can be challenging.
Measuring green impact in line with growth strategy is tough because growth doesn’t always equal green. However, recent studies have shown that in the short term, while sustainable policies might have been seen to hinder business growth, long term sustainable strategies pay off.
The International Finance Corporation assessed the performance of 656 companies in its portfolio and found that companies with good environmental and social performance tend to outperform clients with worse performance by 210 basis point (BPS) on return on equity (ROE) and by 110 bps on return on assets (ROA.) In addition, a deterioration in E&S performance resulted in worse financial performance.
Return on investment
Becoming a well-known name in E&S and CSR drives three key returns – making a clear case business case for sustainability in the long term.
Revenue and cost savings
Turning responsible business data into actionable solutions creates revenue for businesses at every level. There is a case for sustainability in businesses of any size. With corporates, investors and consumers favouring sustainable practices, adapting to a new market standard is essential for relevance.
Businesses that fail to innovate risk losing customers, buyers and even licenses to operate. Waiting to be pulled up before innovating is also a financial risk – rectifying issues rapidly and at scale can be incredibly costly, whereas making them incrementally in line with your business’ resources, measurements and capacity is a far more financially rewarding option.
Improved brand reputation drives consumer preference, increases customer loyalty and increases conversion. B-Lab at B-Corp and ReGenerate reported this year that 72% of UK consumers believe businesses should have a legal responsibility to people and planet alongside maximising profits. Data from Mintel suggests that 57% of British shoppers say they are trying to make more ethical fashion purchases now than they did in the last 12 months.
Employee satisfaction and employee engagement builds brand champions. Ask anyone where they’d like to work and they’re unlikely to say ‘for Amazon or for Boohoo’. Worker support and satisfaction at every stage of the supply chain is essential.
How to measure sustainability
What gets measured gets done so look at your supply chain, every link. Collect your baseline metrics for energy, material and natural resource usage. Hidden carbon cost has loomed over businesses for decades – being able to measure it means you can manage it. Accountability is everything so having these metrics at your disposal will support your pledges and long-term strategies and solutions in line with growing regulation.
Now using this supply-chain information – successes and shortcomings – to establish your short and long-term goals. Use your green analytics to determine where your business impact potential lies. Drill down on areas for improvement, assign sustainability leads and invest time in research.
Use the tools available to you and your industry too. We use third-party data and sustainable algorithms to verify sustainability at every stage of the supply chain. You can read more about how we support brands and retailers in acknowledging sustainable development and achieving responsible business goals here.
How to make the business case for sustainability in your company
Broaden your goals
Establish small-scale and short-term goals under the umbrella of larger, full-scale goals that intersect with your industry as a whole. Consider additional markets and how your positive results and metrics can be leveraged.
Clearly communicate and share hare the results and impact of your sustainability initiatives and projects internally and with your supply chain so that your network is able to support you on a practical level. Transparency increases employee trust and support, stakeholder buy-in and increasingly shareholder buy-in also.
Engage the entire supply chain
Once your business has established return on investment, has gathered data and communicated its long and short-term goals, consider applying sustainable initiatives across your supply chain. Verify each link, assess vendors, check compliance standards, reduce duplications and blockages and prioritise people and planet alongside profit at every stage.
If you’re interested in learning more about how to trace and track your green business data and how to make a strong business case for sustainability, contact us using the form below.