Let’s discover what business opportunities sustainability brings
Sustainability as a business opportunity explained. Source: pexels.com
The coronavirus crisis has made some people think that the Earth wants to either clear itself of people or get some rest from their harmful activities. This idea has invigorated debates on sustainable changes required for global economies. The complex and unprecedented social, environmental, market, and technological challenges we are currently facing give humanity a great chance to revive industries with a deeper awareness of environmental and social impacts.
Sustainability means meeting our own needs without compromising the ability of future generations to meet their own needs. In particular, such an ability is compromised if essential resources are depleted. In addition to natural resources, we also need social and economic resources to survive. Thus, sustainability aims to maintain an ecological, social, and economic balance while pursuing our current goals.
Where business is concerned, sustainability presupposes integrating environmental and social concerns into corporate decisions. Although COVID-19 has forced Greta Thunberg out of media headlines, daring climate conditions didn’t go away. Moreover, customers’ awareness of environmental issues has become more acute. People are increasingly looking up to companies and brands that are offsetting their impact on the environment.
As the Kantar agency’s research shows, the number of people demanding that businesses take sustainable actions has grown 19% during the pandemic. Furthermore, more than two-thirds of millennials are ready to pay more for products from sustainable brands, and around 75% of the same generation would appreciate a job that gives a sense of purpose towards people and the planet. As you can see, solving environmental and social problems may bring a company significant profit and attract a wider talent pool.
Examples of sustainable business initiatives
Sustainable-led innovations are applied at every production and distribution stage:
- selection of raw materials and energy sources (utilization of solar & wind energy, biodegradable plastic, ocean plastic waste, recycled cotton, organic hemp)
- production and packaging (vegetable meat-substitutes, faux fur, paper, and plant-based packaging)
- transportation (using biofuel, electric cars, van sharing, bike deliveries)
- retail and back-end operations (in-store recycling schemes; energy-efficient equipment, lights, and appliances at corporate bricks-and-mortar locations; maximum digitization of paper flow)
- money management (donations to non-profit organizations promoting sustainability)
- consumer usage and waste (loop reverse logistics, recycling venues, circular economy initiatives)
For example, luxury lipstick brand Axiology has strict policies against palm oil and animal testing, uses mostly organic ingredients, sources all of the outer packaging from a woman-owned recycled-paper boutique in Indonesia, is certified by PETA as being cruelty-free and completely vegan, and provides financial support to Orangutan Foundation International.
The Ethique brand sells zero-waste solid shampoos, deodorants, and face cleaners in paper packages. Its office is powered by 100% renewable energy. The goods are delivered in bulk sea freight to the warehouse instead of airfreighting where possible. Additionally, the company plants one tree for every online order.
The waste management company TerraCycle and several CPG companies, including Procter & Gamble and Nestlé, have founded Loop – a new reusable packaging system, piloted in Paris and New York. One of the companies that has partnered with Loop on several trials is PepsiCo. The beverage giant created stainless steel decorative Quaker Cruesli containers and glass bottles with side ridging for Tropicana orange juice within the program scope. In late 2020, the Carrefour Group and Loop have also joined forces to offer consumers a “zero waste” experience utilizing reusable and returnable packaging. Tesco has teamed up with Loop as well to bring products to customers in reusable containers.
Teemill is an online shopping platform that allows users to make and sell T-shirts online via social media channels. Products are made in real-time only after customers have placed their orders, eliminating overproduction and waste. Applying the principles of circular economy, the T-shirts can be returned to the factory at any time to be remade from recovered material. The company’s facilities in India and the UK use renewable energy, and their processed water is recovered, cleaned, and reused.
Opportunities behind sustainability
Incorporating some of the innovations mentioned above or creating your own sustainable solution brings businesses many benefits and opportunities. That means, besides the obvious benefit of saving our planet for future generations. Thus,
- A recent World Economic Forum report has indicated that sustainable transformations in food, land, and ocean use; infrastructure, and the built environment; along with energy and extractives can generate an estimated $10T in business value and create 395 million jobs in ten years.
- Another research shows that the circular economy principle based on reuse, repair, remanufacturing, and sharing models offers a $4.5T economic opportunity by reducing waste, stimulating innovation, and creating employment.
- Less plastic waste in the ocean will additionally benefit industries like fishing and tourism, as plastic pollution currently leads to the loss of $13 billion annually.
- Businesses can benefit from sustainable industrial symbiosis (when wastes or by‐products of one industry or industrial process become the raw materials for another). For instance, the partners of Kalundborg Symbiosis save 24 million EUR annually, while reducing their carbon footprint by 635,000 tons of CO2. They also save 87,000 tons of materials and 3,6 million m3 of water each year.
- Transition to sustainable business models will positively impact employees, especially if the management engages staff in the co-creation of sustainable practices. The results will be higher staff motivation, a greater degree of job satisfaction, enhanced employee recruitment, retention, and engagement, as numerous studies suggest. Furthermore, staff actively involved in the co-creation of sustainable practices can generate simple solutions that management may miss. For example, employees at a Unilever tea factory in England saved the company €47,500 and reduced the waste of 9.3 tons of paper by suggesting the company change the size of paper teabags.
- In 2018, Bank of America Merrill Lynch (now BofA Securities, Inc.) found that firms with a better ESG (environment, social, and governance) record produced higher three-year returns, were more likely to become high-quality stocks, less likely to have large price declines, and less likely to go bankrupt.
- Overall, eco-aware companies seem to perform better financially. The 2014 meta-study ‘From the stockholder to the stakeholder’ by Oxford University and Arabesque Partners discovered that companies with solid sustainability practices have better operational performance, stronger cash flows, and positive share performance.
- Sustainability positively influences employees. It has the power to create a better work culture and harmonize work-life balance. A Harvard Business Review survey even found that nine out of 10 workers would choose to earn less money if they do more meaningful work. Firms that had voluntarily adopted sustainable practices also witnessed a 16% boost in employee productivity. Corporate Sustainability Initiatives are not the only chance to show employees you care about nature and the community. Today, the focus of employee benefits has shifted from financial to sustainable, such as offsetting the personal carbon footprint of employees, employer-sponsored savings plans with sustainable investment options, time off to volunteer, and giving them access to sustainable discounts. Those can include energy-efficient appliance rebates, energy-efficient transportation incentives, home energy assessment subsidies.
- Many sustainable businesses engage in a circular economy model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing, and recycling existing materials and products for as long as possible. Thus, they do not only provide products or services but also take care of their maintenance and utilization. This creates an opportunity for additional subscription plans. There are numerous examples of sustainable fashion, vehicle, or appliance rental services with a regular payment scheme.
Achieving all those benefits would require more than a formal “sustainability talk”. It presupposes fundamental changes in the core business model and significant investments. The management must embed societal value into products and services, manage to meet new measures of performance, and reshape whole business ecosystems to support sustainable initiatives. Sustainable business models also require different relationships and new ways of thinking about customers, suppliers, operations, and waste. Perhaps, even the whole leadership model should change to promote better cooperation between all the stakeholders, increase transparency and solidarity.
There are a lot of factors to consider when you try to improve your business’ sustainability such as where and how you get raw materials, what resources you use to produce goods, sell, and deliver them, and many more. Besides, companies aiming to boost their sustainability should make long-term projections instead of focusing on more immediate profits. The transition will likely incur more costs now, but pay off in the future.
SEE ALSO:
