Necessity shouldn’t be an afterthought, it should be part of the business model. Successful companies don’t add ESG as an afterthought – rather, they work it into the core of their business strategies to drive growth and profit.
Yet, even with greenwashing allegations, more companies are being committed to sustainability and to sustainable business practices. Which begs the question: does a company really find the balance between profit and sustainability?
Increased Reputation
Business sustainability means that a company can take care of its environmental and social footprints without losing money. This isn’t an easy thing to achieve, but companies increasingly are discovering that sustainable methods net higher profits in the long run.
In turn, sustainable business practices can lower operating costs by energy saving, waste and material saving – allowing companies to compete more effectively and drive market value.
Customers will spend more for a product with sustainability certification and therefore businesses will have access to new markets and customers, which in turn increases sales. But sustainability isn’t always easy to deliver; demand is varied and sectoral. The companies should also refrain from “greenwashing”, which means creating the illusion of sustainability (Laufer 2003), as honest stakeholder communication is critical to building trust and maintaining the sustainability of the company’s business.
Increased Profits
Businesses that practice sustainability can reap many benefits that boost their profits, such as using less energy, throwing out less waste, or making products using eco-friendly materials.
Then also, companies with sustainability programmes can find and retain talent that leads to sales growth. It also seems that customers would be prepared to pay more for sustainable goods, thus adding value to the company’s bottom line.
SMEs can be quite costly in implementing sustainability projects and this may discourage some companies from doing sustainability projects. Shared Value posits that you can reconcile profit with sustainability but the risks associated with short-termism might erode those efforts.
Increased Customer Loyalty
We increasingly appreciate businesses whose values align with their own and, in the case of millennials and Gen Zs, consumers who would pay a premium for green products and services. Moreover, sustainability ensures that companies do not take any risks to their reputation or business; by complying with environmental regulations and guidelines, businesses may avoid fines or disruptions that could affect the business negatively.
Some businesses have even embraced the triple bottom line philosophy – people, planet, profit – a successful way to manage profit and sustainability and make the business last. Sustainability programs tend to lead to operational efficiencies, which lower costs associated with operations, such as energy consumption and garbage disposal; businesses stay price competitive in the market.
Increased Employee Engagement
An organization that leads by example on a sustainability front might find investors and customers with a high environmental and moral tolerance for their business more appealing, both as a function of performance and as a means of adapting to the changing marketplace. This can not only boost business effectiveness but it also strengthens the company in the face of sudden market changes.
Those companies that incorporate sustainability into their business generally have better employee engagement. This can come from focusing on people and the environment more, and upgrading communication and employee training.
Workforce augmentation will help a company deliver higher customer satisfaction and smoother operations for its customers; this can decrease inefficiencies in the process, improve delivery time, brand loyalty and be more cost-effective. Sustainability companies must also avoid greenwashing by offering transparent information on their work.
Increased Customer Satisfaction
Sustainability is never straightforward for firms, but there are certainly advantages to it. The Harvard Business School Professor Rebecca Henderson’s three-week online course Sustainable Business Strategy shows exactly this by showing us that a commitment to sustainability leads to success on the people, planet and profit front – and not against it!
Stakeholders demand more sustainable practices as well, through both awareness and stakeholder pressure. companies selling their sustainability efforts have to be real; in order to establish trust among stakeholders, companies need to develop a real conversation. They must ensure disclosure, clarity, consistency review and responsibility (Crane et al. 2021).
And organizations that take sustainability seriously stand a great chance of standing ahead of the pack. That can boost their brand image, decrease costs, raise revenues and even find and keep the best talent while opening up new markets.