Sustainability the key to long term business health

There is a growing realisation that humans’ success cannot be left unchecked- for the reason that we will ultimately impact on our ability to prosper.

There is a growing realisation that humans' success cannot be left unchecked- for the reason that we will ultimately impact on our ability to prosper.Action is needed, and it falls to business, along with society at large and the political establishment, to drive this change.

And change is already afoot. A growing number of businesses, both big and small, new economy and old, are embracing the sustainable agenda.

If nothing else, the economic cost of inaction is simply too great. Indeed, a recent study backed by the United Nations put the cost to the global economy of the damage done to the natural world by humans at between £2 trillion-£4.5 trillion a year.

And these costs will increasingly fall to companies, and of course their customers, as they are forced to pay to protect or replace the natural resources upon which their business depends.

Trailblazers such as consumer goods giant Unilever and retailer Kingfisher were driven by visionary bosses, in this case Paul Polman and Ian Cheshire, who believed embracing sustainability was not just the right thing to do but was in the best long-term interests of the company.

Reducing costs is an obvious start, such as implementing energy efficiencies. Many have gone a step further, with established giants such BMW, Coca-Cola, Goldman Sachs, Google, H&M, Ikea, Nike and Walmart among many others that have committed to 100% renewable energy.

Equally, relying on finite and dwindling resources that will inevitably become more expensive is no recipe for long term success. Identifying these risks in the supply chain early is key to securing the long-term sustainability of the business itself.

Some companies, such as sportswear group Puma and its owner Kering, are pioneering so-called environmental profit and loss accounting, where the business’s environmental impact is costed precisely throughout its entire supply chain.

Increasing regulation is also forcing change, as governments use instruments such as pollution taxes and a meaningful carbon price, which is inevitable given the need to cut emissions from fossil fuels, to help achieve ambitious climate-change targets.

But it’s not just about avoiding business risks, it’s about embracing opportunity – the benefits of enhancing brand reputation in a world where consumers are becoming increasingly environmentally aware may be harder to quantify, but are no less rewarding long term.

In this way, more and more companies are finding that sustainability can be a key driver of revenue growth.

Indeed, many are engaging increasingly with both the sharing economy, where swapping, renting and sharing replace ownership of goods and services, and the so-called circular economy, where one company’s waste is another’s resource and where products are designed to be repurposed once their natural life comes to an end.

The financial community is also waking up to the sustainable agenda, with an increasing number of fund managers and pension funds engaging with companies to highlight the risks of inaction.

As long as company boards focus on short term profit and shareholder returns, the longer-term demands of a more sustainable business will suffer.

And despite widespread change in public attitudes, consumer inertia remains an issue, as value understandably remains a key priority in times of economic stress.

The long term health of their businesses, and the health of the planet that ultimately sustains us all, depends upon it.

July 19, 2016  Tags: , , , ,   Posted in: Building Businesses, Business Growth, Business Win, Green Businesses, Uncategorized, Winning Businesses

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