There is growing evidence that corporate sustainability is creating a significant competitive advantage and higher profits for organizations willing to modify their mindset and corporate culture to the realization that doing the right thing for the environment and society makes good business sense. Climate change, the global economic crisis, geopolitical instability, national security, and socially unfair trade and labour practices are all prominent issues that continue to fuel the global drive toward sustainability. Stakeholders, including customers, investors, financial institutions, employees, communities, NGOs, regulators and the media all have growing expectations for companies to examine and address the broader impacts their businesses have on the environment and community.
Whether your stance is based on ideological beliefs and values or on improving bottom-line numbers it can be difficult to get internal and external buy-in for the benefits of developing and implementing a corporate sustainability strategy. Many still believe that there must be a trade-off between business profitability and environmental and social responsibility--- this is false. Here are just five of the many reasons why an effective corporate sustainability strategy should be part of every organization's drive to deliver higher value to all stakeholders:
1. Retain Top Talent and Increase Employee SatisfactionWell-developed and visible corporate sustainability initiatives are extremely appealing criteria for attracting and retaining the best employees. Today's workers increasingly expect more than just a safe workplace, competitive salaries and job security; the overwhelming majority of candidates prefer to be part of a company that has a positive impact on the environment and society. Human capital is critical to business success and it is relatively easy to quantify the value of attracting and retaining top talent, along with achieving high employee motivation, productivity and satisfaction.
2. Better Management of Business Risks
In an attempt to remain competitive in an ever-changing global marketplace, many companies are realizing the value of proactively anticipating, managing and responding to business risks. With a corporate sustainability strategy as the guide, a company can be ready for changing expectations, trends, drivers and regulations in their industry. This helps to ensure that potential risks and liabilities are accounted for along the company's entire value chain, decreasing the severity of those risks and even achieving preferred status for financing and insurance in the process. This can mean the difference between maintaining and increasing profitability or going out of business.
3. Product/Service Differentiation
Companies that offer environmentally and socially responsible products or services can gain an entire new class of loyal customers, thereby increasing market share and tapping new markets. People want to feel good about what they are buying, so it is no longer enough to simply deliver high-quality products and services at fair and competitive prices. To adapt to this change in customer expectations, companies must innovate to create new products and re-engineer old ones to reposition themselves as leading the way in sustainable practices. Although complete redesign will require an initial investment, the resultant savings and profits can far outweigh the costs of incremental improvements to old products and processes. The environmentally and socially responsible nature of these new products and services can differentiate companies from their competition, command higher selling prices, increase customer loyalty and market share, to produce a high return on investment.
4. Reduce Operating and Manufacturing Costs
Reducing energy, water and materials consumption, and decreasing emissions and waste generation contributes to lower operating and manufacturing costs, directly improving a company's bottom line. Energy and water-efficient appliances and equipment, waste reduction and recycling programs and other simple cost-reduction techniques are immediately quantifiable and can motivate the company to pursue further cost-saving practices. Furthermore, forward-thinking companies not only optimize efficiencies in their operating and manufacturing facilities but they redesign products and processes to be eco-efficient, which will lessen future costs and have a positive impact on customer and shareholder value.
5. Enhance Image, Reputation and Brand RecognitionA successfully implemented corporate sustainability strategy positively impacts a company's reputation and brand image by demonstrating that the company is taking responsibility for its actions and embracing change for the greater good. In fact, an essential part of a company's success is the engagement and development of strong relationships with internal and external stakeholders based on trust, respect, and cooperation. Nike's experience is a perfect example of this. Do you remember how badly tarnished the reputation of Nike became in the 1990's with accusations of the poor working conditions of their suppliers? Since then, Nike has made efforts to ensure that their own and their suppliers' operations have a positive impact on the community and environment, and have demonstrated greater accountability to their stakeholders. Their hard work has helped them regain the trust and respect of millions of customers around the world, while achieving even greater profits than before through the development, implementation and enforcement of their corporate sustainability strategy.
Step one of the journey toward corporate sustainability is comprehending and communicating the immense benefits of implementing an effective corporate sustainability strategy built on a foundation of enhancing business growth and profitability. Demonstrating a business case tailored to your organization's needs, issues and challenges that clearly shows the financial benefits of addressing environmental and societal impacts is essential. It is critical to understand the elements of an effective, integrated corporate sustainability strategy and the structured processes involved in order to derive the greatest value for all stakeholders.
Jabeen Quadir is founder of Sustainability Edge Solutions, a sustainability consulting firm offering services, resources and tools for small and medium sized enterprises looking to embark on the rewarding journey of developing and implementing a corporate sustainability strategy.
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