A successful business doesn’t run in isolation. It is attuned to the needs and beliefs of all its stakeholders, not just its bottom line. Today, a business needs to listen and respond to the world around it.
That brings us to sustainability: a crucial element for any organization that wants to succeed in the long term. Most business leaders know that their customers are highly aware of how their products impact the environment.
But how does a business define sustainability? By looking at how their practices and products impact the ESG factors (Environmental, Social and Governmental). These could include energy efficiency, carbon footprint, worker safety, waste disposal and more. By keeping these factors and sustainability in mind, organizations can ensure their long-term viability.
And the evidence supports sustainable businesses. According to a study by McKinsey, organizations with high ESG ratings were consistently among the best performers in the market. In 2020, a study by Accenture showed that companies with high ESG ratings had an average operating margin nearly four times that of their competition.
If you’re a leader at an organization or an entrepreneur looking to start a business, making sustainability a priority at your workplace has major benefits for your brand, retention and finances.
Increase brand value and gain competitive advantage
Millennials and Generation Z make up a large portion of today’s customers. And they have no problem switching brands to those they believe partake in more sustainable business practices. Businesses can set themselves apart from the competition by taking steps like committing to reduce their carbon footprint or using recycled materials.
Research shows that modern consumers are willing to pay more for products that have social responsibility claims. If your business can alter or adapt its business practices to incorporate sustainable materials and practices, you could enter a whole new market to boost overall sales.
Sustainability can increase business efficiency by driving down operating costs. This can be done by reducing material wastage, electricity consumption, water wastage, transportation costs and more.
Take advantage of federal incentives
The government frequently launches new programs and incentive plans for compliant organizations to encourage sustainable business practices. These could include rebates, tax credits, awards and savings that could have a big positive impact on a business’s bottom line and brand.
Acquire new talent
A majority of the younger workforce is passionate about working for companies whose business practices align with their principles. Millennials want to work with a company they believe in and feel like they are making a positive impact on the world.
It’s a common misnomer that sustainability requires putting profits on the back burner, which is why many in management are resistant to these efforts. But we now know that sustainability can, in fact, positively impact numerous areas like growth, profitability and employee retention. It just needs the foresight of an informed business leader to see how sustainability can be brought into the workplace. Learn more about the significance of sustainability in business in the York University School of Continuing Studies Certificate in Business Administration.