How Sustainability Can Profit Your Business
Integrating sustainability into your business can make you do a lot of money. And let’s be frank, that’s all companies care about.
If you are the CEO of a company, there are only two things you are going to want to know from your team when they present you a project: How much it costs me and how much money I can make.
Relying on people’s good heart simply doesn’t work when it comes to business. At the end of the day, no one (or almost) is going to jeopardize its profits just to make the world a better place. Sorry Michael. So what if a sustainability driven business model can actually increase your income?
Needless to say, if we want concrete changes to happen fast, we need businesses and governments to be highly involved. Riding your bike to work and eating tofu are not going to get it done, not at this point. We are way beyond that and only an active involvement from all sides will give us a chance.
So what about all the talk on stop buying plastic bottles, choose sustainable conscious brands and turn to a planetary health diet? What for?
Man in the Mirror
We live in a time where the most valuable asset to a business is customer’s data. What, When, Where and Why we buy/eat/love/think/want and are is key to every profitable business as our desires shape their products. Despite all the contorted marketing strategies, we still are the consumers and have the power to influence and request what we want on the market.
A widening consciousness for healthier food and the spreading of veganism, led in 2019 multi billion fast food chains like Burger King, Dunkin and KFC to add plant-based meat alternative products to their menu.
A 2019 Forbes report notes how 62% of Generation Z prefers to buy from sustainable brands and 54% are even willing to pay more for it, followed by Millennials (50%), Generation X (34%) and Baby Boomers (23%). Showing that with every generation the quest for sustainability strengthens.
According to 2018 Linkedin Workplace Culture report, 86% of Millennials would consider taking a paycut to work at a company whose missions and values align with their own (again, Baby Boomers are only 9% here).
Also, as resulted in a Cone research, 64% of Millennials consider a company’s social and environmental commitment when deciding where to work.
Embracing sustainability can have both operational and strategic opportunities for a business. Companies can gain on increased productivity, more control on its supply chain, new sources of income through a closed-loop economic system but also prestige in reputation, motivated teams and the attraction of external valuable profiles.
I wouldn’t miss the chance if I were a CEO of a Company. Would you?
A little help from above
The shift to a sustainability driven business model has to come from both sides.
Take the tobacco industry. Even if you know smoking is bad and it’s killing you we are no superheroes and it sure doesn’t help if every media, social gathering or Hollywood star makes it seem glamorous, cool and innocent. To limit the consume of cigarettes, governments had to step in and ban advertising campaigns along with smoking in public places.
Moreover, tobacco companies were obliged to warn the consumer about the related health risks – often placing disturbing images on the cigarette packs.
Same thing is going on here.
Governments can change our production and consumption habits either through regulatory approaches (command-and-control approaches), or through economic incentives/market-based policies.
This means that they can either discourage/encourage a certain type of consumption (e.g. CarbonTax or Deposit-Refund system) by pushing on our pockets to make us change habits, or they can choose the hard way by introducing policies that command a certain behavior (e.g. NYC Bag Waste Reduction law).
Finally, we should pay more attention not only to what we consume, but also HOW. Recently, companies have been active in encouraging a sustainable consumption of their products.
Unilever estimates that 70% of its greenhouse gas footprint depends on which products consumer choose and how they dispose of them. For example, by conserving water and energy during the laundry or recycling the shampoo bottle properly after use.
Levi’s CEO Chip Bergh received global attention for saying to customers to not wash their jeans unless absolutely necessary (at least that’s what he does).
The North Face launched its Clothes the Loop program which encourages people to recycle unwanted clothing by dropping it off at a North Face store in exchange of a $10 reward towards the next purchase.
How much is sustainability worth (it) ?
In 2015 Accenture estimated the value of implementing a circular economy to be $5.5 trillion globally. As for the implementation of the Paris agreement will unlock at least $13.5 trillion of economic activity in the energy sector alone by 2030 (according to the We Mean Business Coalition).
And if you want more, the Business & Sustainable Development Commission identifies in its 2017 report (Better Business, Better World) at least $12 trillion a year of market opportunities linked to implementing the UN Sustainable Development Goals. At least. According to the Commission, the actual market value could be 2-3 times higher.
Understanding this new customer profile and its strong market demand for sustainable products and companies, is not only a smart investment if you want to be a pioneer and leader in your field, but also fundamental for every business that wants to have a future at all.
And make money while saving the world.