Why is Sustainability Important in Business?
Sustainability is becoming more important for businesses across many different industries, and a growing number of organisations are now integrating sustainability into their business strategy.²
A recent survey found 70% of respondents said their companies have a formal governance of sustainability in place.²
What is a sustainable business?
A sustainable business is one that generates profit while improving societal and environmental conditions, and generating strategies for company longevity.¹ This includes what you do (your companies’ product or service) as well as how you do it (the way your business operates). The top five key areas addressed most by businesses are: Energy, Waste, Workplace, Transport and Purchasing.³
Why is sustainability important?
Beyond helping to combat global challenges, sustainability can drive business success. Research shows that companies with high Environmental, Social and Governance (ESG) rating have a lower cost of debt and equity, and that sustainability initiatives can help improve financial performance while fostering public support.² In this case, ‘doing good’ and ‘doing well’ go hand in hand.
How is being sustainable going to benefit my business?
Being a more sustainable business can help you become more efficient, improve your brand value and reputation, provide a platform for innovation, help attract and retain staff, achieve better growth, cut costs and strengthen stakeholder relations.³
Two gaps to be aware of
In order to address sustainability appropriately, companies need to bridge two critical gaps:
‘The knowing – doing gap’: one study found that, whereas 90% of executives find sustainability to be important, only 60% of companies actually incorporate sustainability in their strategy. And only 25% have sustainability incorporated in their business model.¹
‘The compliance – competitive advantage gap’: even though more and more companies are seeing sustainability as an area of competitive advantage, only 24% act on the knowledge. However, all companies need to be compliant, and these topics should be addressed separately.¹
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¹ Haanaes, K. (2016). Why all businesses should embrace sustainability. [online] IMD business school. Available at: https://www.imd.org/research-knowledge/articles/why-all-businesses-should-embrace-sustainability/ [Accessed 15 Jan. 2020].
² Spiliakos, A. (2018). What Is Sustainability in Business? | HBS Online. [online] Harvard Business School Online Blog. Available at: https://online.hbs.edu/blog/post/what-is-sustainability-in-business [Accessed 15 Jan. 2020].
³ Sustainable Business Network. (2020). Why should my business become more sustainable?. [online] Available at: https://sustainable.org.nz/guide-to-sustainability/ [Accessed 15 Jan. 2020].