Is sustainability a good business strategy? The answer to this question is: Yes! In fact, in the Harvard Business Review, Tensie Whelan writes that sustainability is now no longer a “nice to have” but part of core business operations, and a driver of customer, employer and investor loyalty.
The benefits of a sustainable business strategy
In addition to helping combat the effects of climate change, there are a number of economic benefits for businesses in going green. In an article for the World Economic Forum, C.P. Gurnani, CEO of Tech Mahindra highlights that an Environmental, Social and Governance (ESG) strategy helps businesses:
- mitigate risk;
- create profitable growth through investment in sustainable innovation;
- attract skilled employees; and
- build more effective marketing campaigns.
Let’s take a look at the business benefits of sustainability in more detail.
Lower operating costs
Reducing energy usage and finding ways to be more eco-friendly can help your business cut back on monthly overhead costs. The City of Seattle saved $2 million in fuel savings and cut carbon emissions with electric vehicles, telematics and sustainable fleet management practices.
From utilities to office supplies, there are many ways to save money.
- Replace incandescent bulbs with long-lasting LEDs
- Use energy efficiency appliances and repairing plumbing to reduce water usage
- Buy from local suppliers to reduce shipping costs
- Eliminate printing on paper and go digital
- Hold meetings and training online to eliminate travel costs
- Switch to low-or zero-emission vehicles
Qualify for tax incentives
Depending on what region you live in, there may be tax incentives or rebates for making energy efficient upgrades. You may also find incentives or loans for using alternative vehicles or renewable energy like wind or solar. As well, look for funding offered for energy reduction or research and development of clean technology.
Customers want and are demanding eco-friendly products and services.
- A global consumer confidence survey by the Conference Board® found that 81% of respondents felt it was “extremely or very important that companies implement programs to improve the environment.” The sentiment spanned all age groups, from Generation Z (15-20) all the way to those over the age of 65.
- 72% of consumers think about their environmental footprint and 79% are changing their buying habits based on the “social responsibility, inclusiveness or environmental impact of their purchases,” according to the Capgemini Research Institute.
The demand for greener options doesn’t need to be perceived as a business challenge to be solved on its own. Creating a sustainability strategy is an opportunity to build the value of your brand and customer loyalty at the same time.
Increase employee satisfaction
People seek new jobs as a way to earn a living, but also to find personal fulfillment. Harvard Business School Online notes that working towards sustainability as a “shared purpose” can support employee satisfaction. An eco-friendly track record may even boost employee productivity. If your company has a strong mission that is tied sustainability, it can become an attractive selling point for job seekers.
Interface Carpet doubled profit with aggressive sustainability plan
The commercial flooring company Interface Carpet is one example of a company found success after making radical changes by setting a goal of zero environmental impact.
In his TED Talk, “The business logic of sustainability,” Interface Carpet Founder and Chairman Ray Anderson — who has also been called “America’s Greenest CEO” — describes the positive results of his sustainable business plan. In 12 years, Interface Carpet cut net greenhouse gas emissions by 82% (in absolute tonnage), reduced water usage by 75%, diverted 148 million pounds (74,000 tons) of used carpet from landfills, and increased sales by two-thirds and doubled profits. As of 2018, Interface uses 99% renewably sourced energy for manufacturing in the U.S. and Europe.
The key takeaway is that businesses don’t have to choose between the environment or the economy.
Research also highlights the connection between corporate sustainability and financial performance. A meta-study from the University of Oxford and Arabesque Partners showed that companies with strong sustainability practices had better operational performance, and that it had a positive impact on stock price.
Learn more about Corporate Social Responsibility at Geotab and our fleet sustainability solutions for businesses, including Electric Vehicle Suitability Assessment and EV fleet management.