Why it pays for businesses to boost sustainability
Those who act too late will be left behind.
Earlier in 2019, almost 200 CEOs of huge multinationals declared an end to a decades-long fixation with growth and profit. The Business Roundtable behind this pledge includes many of the world's most known companies, such as Amazon, The Coca-Cola Company, and United Airlines. They stated that the purpose of a corporation is “to create value for all our stakeholders.”
For the longest time, business leaders have been obsessed with ways of maximizing revenue for their shareholders. However, in today’s crumbling world, profits and growth numbers are not the only yardstick to measure performance.
The 2019 UN report on sustainability states that “sustainable business practices” are significantly more on the agenda of forward-thinking business leaders. Sustainability is going mainstream.
So why are we still discussing the importance of incorporating sustainability into business goals?
Do more than just “the right thing”
Good business leaders know they should “do the right thing”. Great ones know that they need to incorporate broader principles of sustainability in everyday decisions. They realize that they are operating in a world where everything you do will be communicated worldwide in a matter of seconds.
Taking a broader meaning of a sustainable business is important because it is not only the right thing to do, it also serves the business’ long-term commercial interests.
The effects of global warming have created serious doubts over the existence of humans in the future. Innovative tech companies are, as a result trying to develop metrics and standards to help apply these new ways of thinking, maximize opportunities, and minimize the negative effect corporates have on communities and the environment.
Sustainability marrying profitability
The obsessions with accelerating growth and profits have created a huge imbalance in the ecosystem. So much so that our earth is now at stake. Taking into account the seriousness of the matter, there is an urgent need for companies to go beyond minimum efforts and pursue a more stakeholder centric approach.
Essentially, as a business, you need to look beyond the bottom line and focus on environmental, social, and corporate governance.
Businesses have the responsibility to lead the conversation and translate sustainability into value. Sustainable initiatives, including carbon offsetting and investment in green tech solutions, can all create more value for stakeholders, beyond just profits.
Preparing for the future
Companies that do already embrace sustainability as part of their core operations will be better prepared for the future. Here’s how.
- Carbon pricing
Those who track their carbon emissions and implement a carbon-neutral policy are already better prepared for a regulatory future where carbon will be priced.
- More investment opportunities
The new trend in investing focuses on issues that can impact a company’s valuation, other than just profits and growth. Today’s innovative investors look for clear evidence in reporting to ensure that the business is focused on sustainability.
- Higher returns
According to 2018 research by the Bank of America Merrill Lynch, businesses that focus on their ESG (Environmental, Social, and Governance) scores produce higher returns, are more likely to become high-quality stocks, and are less likely to go bankrupt.
Businesses with sustainable principles built into their long-term growth strategy can mitigate risk and drive profitable growth by investing in sustainable innovations that positively impact the world. Additionally, they will attract the best talent out there and run the most effective marketing campaigns.
You have an opportunity
Building a profitable business is a challenge, and pursuing to be a sustainable business can be too. But rethinking possibilities can have an incredibly positive effect on businesses and the planet. We need to transform profitability into a view of a broader impact.
As a business leader, you have the opportunity to act now and tie sustainability into your strategy. If not now, then when?
Proof of Impact unites businesses that fund impact with organizations that create impact. Contact us via Proofofimpact.com for more information and solutions.
