People prefer firms that have an environmental and human-centric orientation over firms that have an orientaton to merely make profits. Firms with an ecological and people-first orientation gain a competitive advantage over firms seeking narrowly profit-oriented goals.
Bringing sustainability to your business can provide employees, customers, the community and the environment with all kinds of tangible benefits. Let’s take a close look at each of the four pillars of sustainability in turn: People (P), Planet (P), Purpose (P) and Profit (P).
Environmental Impact
Modern sustainable business practies discourage impact on our planet. There is an attempt to preserve our resouces by becoming cautious about using nautural resources and about creating electrical grid that works on renewable energey sources and becoming zero waste by recylcing staff and encourages consumership that promotes sustainiability of our resources.
One pillar of environmental sustainability consists in ensuring what has been called ‘ecosystem services’ such as biodiversity, fertile soils and climate-regulation systems. For some, the provision of such basic features of human life might appear a bit exaggerated.
Firms practising green business want to make sure there are enough raw materials and other resources for them to use tomorrow: they, for instance, won’t contribute to depleting supplies to recycling materials such as metals or promote ‘unfair trade’.
Sustainability has started to become a factor in people’s investment decisions: By choosing companies that are environmentally-friendly, showing social responsibility and decreasing greenhouse gas emissions, investors can lower the operational costs of companies and improve their brand image. Companies that are good for the environment are also good for investors . Investors will feel more confident supporting companies who will remain sustainable for a long time and will attract customers who are willing to spend more on ‘socially-conscious’ products.
Economic Impact
Economic sustainability depends not just on generating profit, but on doing so in ways that allow the environmental and social contexts to be maintained and enhanced – whether through assessing and mitigating risks and creating resilience to shocks, or in complying with external regulations and development goals.
For instance, a company that installs solar panels or wind turbines to power a manufacturing plant will emit less greenhouse gases into the air – this mitigates global warming and climate change, while generating savings that enhance economic development.
Nowadays, companies are creating greater awareness of these issues to influence customer choices, and some even incorporate charitable and sustainability missions in their corporate mission statement.
Consumers are also willing to buy products from businesses that have an ethos that they can identify with. Furthermore, if those businesses are sustainable, this will contribute to innovation helping the business to grow in the marketplace, so contributing to jobs. Finally, some sustainable businesses can save energy costs because they are shifting away from the linear model that we have currently to the circular one where products can be recycled into new ones.
Social Impact
The social pillar concerns sustainable business relations to workers and local communities: in general, most questions can be addressed by asking whether businesses manage to avoid over-charging workers or marginalised groups, as well as whether they invest in fair trade that improves local economies.
Such initiatives help companies build stronger ties with various stakeholders which boost brand loyalty and customer retention, and create innovation that leads to market expansion and increasingly more jobs.
Firms with green manufacturing designs would have much lower energy costs and fuel efficiencies, and firms with electronic workflows would reduce the amount of space they occupy.
Sustainability brings many economic advantages. Lower energy usage from greater energy efficiency, reduced quantities of waste for disposal and better management of resources all result in a healthier bottom line for the business. Secondly, greater supply chain diversification delivers greater resilience against geopolitical conflict, the effects of climate change, or a scarcity of essential resources in a particular geographic area – these are the kinds of risks that, if not anticipated, can derail a business or industry.
Measuring Impact
Sustainable business practices can also be hard to understand, and very hard to measure – not just because it is hard to compare you are doing versus your competitor, but also because randomly assigning groups for a comparative study is difficult, and because it is often costly to generate high-quality data. This means it’s hard to build an investment case.
Many sustainable schemes start to pay off only after years of investing workers, resources and capital into them, a reality that many companies struggle to explain to shareholders. The inability of many businesses to truly integrate these initiatives into their public image adds to the tension. Sustainability, after all, may still be considered a nice-to-have rather than a must-have. For companies that do prioritise environmental considerations, the inability to publicise their good deeds creates an exclusive club dominated by a few big brands. But increasingly, large companies cannot afford to simply pretend to be green. Younger consumers expect their favourite brands to reflect the values they care about. The newly wealthy in emerging markets flaunt their success on social media and are often drawn to brands that evangelise on behalf of those in need. The online landscape provides countless opportunities for transparent communication, despite the fact that corporations struggle to measure the value of tinkering with their Facebook page. The most forward-thinking companies are embracing a media and communications-led strategy that sidesteps some of the pitfalls posed by Big Green. The most successful brands reflect their audiences. Apple, for example, has cultivated a unique culture symbolising intelligence, independence and connectedness. Vodafone’s commitment to its brand extends to highlighting its contribution to the humanitarian community; it funded humanitarian journalist Helder Pereira’s book, Texting Revolution and Volunteerism. Gap’s Reboot the Label campaign asked customers and bloggers to suggest new logo ideas, enabling the clothing brand to engage with a community whilst prioritising collaboration. Longterm investments and lower returns are challenging for companies to justify to their shareholders.
The good news is that customers, especially high-end consumers, are increasingly willing to pay more for the products and services of sustainable companies. This trend is particularly marked among brands with strong social missions or philanthropic connections: such brands tend to be more successful at engaging customers on a long-term basis than their competitors. Any strategies for business sustainability need to be balanced between environmental, economic and social considerations.
