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Why is Sustainability Important for Companies? Is it Really Helpful?
In business, sustainability refers to a company’s goal to limit the negative environmental effect of its activities on a certain market. Environmental, social, and governance (ESG) indicators are often used to assess an organization’s sustainability efforts, and it has become increasingly important for businesses to show intent in this area through sustainable business strategies. Sustainability is supported by three pillars—economic, environmental, and social—and can be described as meeting current demands without jeopardizing future generations’ capacity to fulfill their own. Let’s take a look at how sustainable companies progress.
What Makes a Company Sustainable?
A company’s activities must be able to ‘maintain at a specific rate or level’ in order to be sustainable. They must operate with the true aim of improving the planet, communities, people, and stakeholders they come into contact with as a result of their presence. Profit and the bottom line have always been prioritized by businesses. Sustainable businesses view their influence on the community and the environment as essential success indicators. They use a triple bottom line approach, which takes into account people, the environment, and profit.
The desire for sustainability is key here. Conscientious clients are increasingly looking for sustainability. According to recent data, nearly 50% of customers are willing to spend more on eco-friendly, sustainably created items. However, the fallout can be pretty severe if a brand advertises itself as ‘green’ but fails to live up to its claims. Here’s what you should look for to test the brand advertising itself as ‘green’.
- Material sourcing that is transparent and ethical
- Manufacturing techniques that are environmentally conscious
- Eco-friendly packaging
- Shipping solutions with no carbon footprint
- Diverting landfill garbage at the end of the product life cycle.
Why Should Companies be Sustainable?
Increase Brand Value and Gain a Competitive Advantage
The majority of the population consists of millennials. According to a Nielsen poll, millennials are twice as likely as baby boomers to claim they are modifying their habits to decrease negative environmental effects. The same goes for Generation Z. This indicates that corporate brands can significantly boost their values by concentrating on sustainability, and many of the world’s top companies are doing exactly that. For example, Apple has pledged to become carbon-neutral by 2030.
Satisfy Consumer Needs
According to Nielsen research, 66% of customers would pay extra for a product if it came from a sustainable brand, and 81% of global consumers firmly believe that businesses should protect the environment. There is a growing consumer trend toward supporting sustainability, and it will only get stronger as the number of millennials and generation Z grows.
According to McKinsey, a sustainability plan can significantly cut expenses and increase operational profits by up to 60%. It also reduces energy and water use. Incorporating sustainability into business divisions increases an organization’s chances of benefitting from its sustainability initiatives. It is also beneficial to be open about environmental efforts. When Puma released statistics on the amount of water used and carbon emissions throughout their supply chain, it assisted in identifying methods to cut water, energy, and fuel use by 60%. Being environmentally friendly may help enhance relationships with the government and the local community, and obtain tax breaks and subsidies for the company.
Make New Possibilities
A solid sustainability proposal can assist businesses in entering new markets and expanding existing ones. For example, China’s program to combat air pollution is expected to generate more than $3 trillion in investment possibilities by 2030. As a result, corporations prioritizing sustainability will be best positioned to capitalize on lucrative new business prospects.
Top 13 Sustainable Companies Examples
- Patagonia: It is one of the first companies to introduce a self-imposed 1% Earth tax; the proceeds go to environmental nonprofits.
- IKEA: IKEA uses 99.5% of Forest Stewardship Council-certified (FSC) or recycled wood in its products.
- Lush: Lush made shampoo bars a ‘thing’; this helped it save nearly 6 million plastic bottles globally.
- IBM: The IBM Sustainability Accelerator has been IBM’s guiding light for reducing data center emissions and E-waste.
- Google: The tech giant has been carbon neutral since 2007. It has also stopped funding think tanks and politicians opposed to climate-change action.
- Adidas: The shoe and apparel maker is nearing its 2024 goal of using 100% recycled polyester wherever possible.
- Adobe: Fifty percent of Adobe’s energy is currently renewable-driven and it is on track to achieve 100% renewable energy by 2035.
- Nike: Nearly half of Nike’s shoes and content are made from low-carbon alternatives.
- West Paw: The pet care company uses 88% zero-waste Zogoflex and 12% reclaimed ocean-bound plastic in its product line.
- New Belgium Brewing: The company’s green initiatives include using solar panels, wastewater-generated electricity, and reusing heat from its brewing process.
- Seventh Generation: It’s been using biodegradable, plant-based phosphate- and chlorine-free ingredients in its products.
- United by Blue: For every product sold, it removes one pound of trash from oceans and waterways.
- Biogen: The first life sciences company to go carbon neutral, Biogen uses green chemistry to make medicines.
How Can a Company be More Sustainable?
Collaboration with Nonprofit Organizations
Corporations new to sustainability should attempt to develop relationships with nonprofit groups in their field of interest. Several organizations have the resources and knowledge to assist you in getting your efforts off the ground.
Educating Your Employees
Businesses with successful sustainability programs educate and include their staff in the process. This is significant as training your staff promotes buy-in across the firm, making it less likely that you’ll revert to previous habits. Moreover, it allows your staff to perform their part, thus increasing morale and making everyone understand they have a role to play.
Volunteerism Should be Encouraged
Encouraging volunteerism is another great way to include your staff in the sustainability process. There are many ways you can reach this goal. For example, you may offer paid time off to workers—volunteer time off (VTO)—who want to volunteer. Similarly, you can organize a company-wide volunteer drive and encourage your workers to serve at local charities or for causes that are important to them.
Rethinking Your Supply Chain
If your company manufactures and sells tangible goods, examining your supply chain could reveal a major opportunity for you to adopt sustainability.
How to Know If a Company is Sustainable?
A look at the following aspects can help you identify sustainable companies from those that aren’t:
- Working conditions
- Social responsibility
To summarize, many big corporations are establishing innovative environmental practices that create a sustainable bubble for themselves. But, at the same time, it is becoming increasingly evident that sustainability is more of a megatrend. To learn more about sustainable companies, explore these online courses offered by Emeritus and go green.
By Siddhesh Shinde
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