Three Reasons Why Business & Personal Sustainability Matters
Posted on February 20, 2015
Sustainability is an important term, but it seems to mean something different to everyone. It matters to individual people and it also matters to businesses. Companies who invest in sustainable innovation tend to experience benefits from this expression of their socially-conscious values in three key areas:
1. Business Performance
2. Employee Retention
3. Risk Mitigation
Sustainability has an unrecognized ability to drive business performance—mostly due to the common perception of the penalties to profitability associated with sustainability efforts. In reality, sustainability is a powerful tool that has the ability to push big business to new heights. The 2014 S&P 500 Climate Change Report from the Carbon Disclosure Project (CDP) showed that fiscal performance of S&P 500 companies with sustainability as a core strategy were outperforming those who weren’t proactively managing their sustainability efforts. The study showed that companies who participate in reporting their sustainability metrics through the CDP were found to have a 67% higher ROE and 18% higher ROI than companies who don’t participate. Those numbers are hard to ignore!
In addition to boosting the bottom line, a sustainable business might be your path to employee retention and happiness. A report by the nonprofit organization Net Impact titled “What Workers Want in 2012” showed that having a job which makes a social impact was important to most people, coming in third place behind financial security and marriage. The report also stated that 51% of surveyed workers and 65% of students identified “make a better world” as very important or essential to their ideal job. With numbers like that, employers can no longer ignore that sustainability is more than just hippie talk.
While some business leaders argue that sustainability issues are a distant, negligible, or even non-existent problem, the risk is still there. With changing climates, supply chain complications, and labor movements there is an increasing pressure for businesses to become more resilient to change. In the previously mentioned study by the CDP, it was found that CDP-reporting companies experienced 50% lower volatility of earnings over the past decade. Using sustainability to tackle risk mitigation has many forms—sourcing resources from fair trade programs, choosing environmentally friendly components for products, and investing in renewable energy can all decrease external uncertainties. This can lead to lower energy costs, fewer spikes in commodity prices, and even avoiding legal responsibilities for products at their end-of-life.
It’s up to individuals and companies to minimize environmental risks and gain visibility through monitoring performance. Sustainability has gone from a formality to an expectation. We all need to make the commitment, and live happily (and sustainably) ever after.