Why Should I Bother Being Sustainable?
Even way back in 2010, more than 50 percent of executives thought sustainability was “very” or “extremely” important for doing business. Thirteen years later and executives are determined to include it in key areas such as product development, reputation building, and corporate strategy. While the number of companies investing in sustainability is increasing, we’re still not at full adoption. According to a KPMG report from 2020, 80% of companies report on sustainability and only 40% acknowledge the financial risks of climate change in their reporting.
Let's dive into 6 reasons why investing in sustainability is a smart move.
1. It’s good for your reputation
Over the last few years the term “greenwashing” has begun to spring up. Examples like VW in 2015, H&M in 2019, and accusations against Delta just this year highlight how consumers are paying more and more attention to the sustainability practices of the companies they do business with. Strangely enough, there are a lot of companies with sustainability goals and practices that refuse to publicize those goals and efforts for fear of being hit with that greenwashing label. These companies are now being accused of “greenhushing”, which is the idea that if you don’t talk about your sustainability strategy, then you can’t be hit with a greenwashing label. What this really shows, though, is that consumers are becoming more and more passionate every year about sustainability, corporate responsibility, and climate change. It’s impossible to escape the fact that consumers are sophisticated and have access to a wealth of data and information through the internet, and it’s easier than ever for consumers to “vote with their wallet” and make decisions based on what’s most important to them.
2. It makes financial sense
According to a McKinsey report from 2020, focus on sustainable practices and operations can reduce operational costs by as much as 60%. Cost reductions of any size are great for business, but imagine also doing the right thing while seeing such a huge increase to your bottom line.
3. Customers care
Research shows that consumers are willing to pay more and are happier when buying products or services that can ensure their social and environmental sustainability. When you are a sustainable brand, it’s easier to attract new customers, and even easier to increase customer loyalty. A Capterra survey found that 53% of surveyed consumers are moderately to significantly influenced by a company’s sustainability actions while shopping. What’s more, in each of the product categories surveyed, 75-80% of consumers say that they’re willing to pay higher prices, ranging from a little more to significantly more, for sustainable products in comparison to unsustainable products. A survey conducted in 2021 among people from 16 to 25 years old showed that 59% of them were very or extremely worried and 84% were at least moderately worried about climate change. People are increasingly caring about the environment.
4. Employees care
For very similar reasons, 63% of employees want their employer to provide more opportunities for purpose in work. McKinsey also found that a positive employee experience makes staff members eight times more likely to stick with a role. 75% of millennials would take a decrease in salary to work for an environmentally responsible company. An amplified feeling of motivation and pride in the company they work for makes people work better and creates a conducive work environment. However, empty claims and promises are simply not enough. While 82% of employees affirmed the importance of purpose, only 42% reported that their company’s stated purpose had much effect.
5. You can mitigate future risk
As mentioned above, only 40% of companies cite climate change as a potential threat to business operations. We’ve seen the headlines about insurance companies refusing to write new policies for specific areas prone to climate disasters. Climate change and its effects only get worse every year that we don't do enough.
There is no way to reverse things overnight. It will take time to see the positive effects of decarbonization and sequestration projects, but that is no reason to sit back and take it slow. If you want to make sure you’re doing everything you can to mitigate future risk to yourself and your business, it’s high time you put a larger emphasis on sustainability practices, and encourage everyone you know to do the same.
6. It’s our future
Buying carbon offsets and disclosing ESG strategies might be voluntary now, but it’s going to be more and more widely required in the future. US and international financial reporting boards are already working on ways to reach a reliable, diffuse, and consistent disclosure of ESG efforts by companies. Investing in sustainability now means having a long-term view and staying ahead of the game. Companies that are investing in carbon markets and embedding sustainability in their strategies are making immediate progress on their net zero agenda. Carbon neutrality will continue to gain increased relevance and momentum.
In summary, investing in sustainability is good for business. At the same time, it’s important to be extremely careful when doing so. A market in expansion lends itself to manipulations, and some actors don’t deliver as much climate action as they declare. Greenwashing has the potential to undo years, or even decades, of hard work and resources devoted to fighting climate change. Even when people and organizations act in good faith, there is the potential for greenwashing, either through bad actors or simply not knowing what to avoid. Sometimes it’s as simple as the fact that bureaucracy moves slow and standards have not kept up with science and technology.
Investing in sustainability benefits the planet and businesses, and helps you be on the right side of history, but it’s vitally important that everyone put in the effort to go above and beyond. It’s no longer about simply checking a box, but actually ensuring that your investments are effective.
