Businesses have a key role to play in the fight against climate change, as they are collectively responsible for a significant proportion of the world’s emissions.
This is why new legislation is coming into force across the UK and EU, which will require companies of all sizes to make more thorough and detailed disclosures about their carbon emissions and what they are doing to reduce them. But while there’s no doubt that taking climate action as a business is good for the planet, there is also another significant benefit — and that’s sustainability’s contribution to business growth.
More and more companies are deciding to implement the triple bottom line approach, which means that they’re focusing on more than just profits (i.e. the traditional “bottom-line”) — they’re also measuring and addressing their environmental and societal impact. These are sometimes referred to as the ‘Three Ps’: people, planet, and profit. The triple bottom line was first introduced by entrepreneur and business writer John Elkington in 1994 while at the think tank SustainAbility. Companies which embraced the approach soon began to notice an increase in new business opportunities.
Sustainability has a direct, positive impact on the reputation of many businesses and is therefore a key contributor to their growth. Studies have shown that consumers have become more conscious about the type of products that they buy and the way in which respective sellers operate. The Global Sustainability Study 2021, conducted by Simon-Kucher & Partners, reveals that 85% of people globally have shifted their purchase behaviour towards being more sustainable in the past five years. This has in turn put pressure on retailers to evaluate their supply chains to ensure that they are offering more sustainable delivery options. It’s why an increasing number of logistics tenders now include demand for emissions data.
A good example of a company which is widely recognised for its sustainability efforts is Lego. Lego runs the Engage-to-Reduce program which aims to lower its suppliers’ carbon emissions. The program helps suppliers report data and identify carbon reduction projects specific to their business. Following the announcement of the program, the company’s reputation has grown exponentially, leading to new business which has also benefited its suppliers.
Effective partnerships are a key driver of business growth and they have been a core part of many organisations’ sustainability strategies for a number of years. A strong partnership can mean access to new customers and an opportunity to reach new markets. And if the partnership is underpinned by the common goal of sustainability, it makes it all the more likely that these companies will invest in long-term growth and development together.
The UN’s Sustainable Development Goals (SDGs), are currently adopted by almost 2,000 companies through the UN Global Compact alone, and they are all underpinned by the 17th Goal — ‘Partnerships for the Goals.’ There are certain measures that should be put in place to ensure that partnerships are effective in delivering on the sustainability goals that they promise — and in doing so benefit the businesses involved. This includes ensuring that all businesses in the partnership are aligned on commonly-agreed targets, and that these targets are measurable and relevant to their key stakeholders. It’s also vital that stakeholders are provided with consistent updates on progress against these targets, and businesses respond accordingly when progress is off track.
According to a study by Charles Schwab, which surveyed 1,000 individual investors, as many as 71% thought that companies with good sustainability strategies make good investments. In addition, 44% of respondents said that they consider ESG factors when making a new investment.
The number of investors looking to put their money into sustainable companies has grown significantly over the past 10 years. The creation of the Principles of Responsible Investment (PRI) supports this upward trend. The PRI is the world’s leading proponent of responsible investment, bringing together 2,300 institutional investors and managing more than US$80t in assets. It encourages investors to use responsible investment to enhance returns and better manage risks, and is supported by the United Nations.
Companies which measure their carbon footprint are able to identify their top emitters and take the appropriate climate action. Often, this activity has a direct positive impact on profit margins due to the increased efficiencies that it generates. They result in fewer wasted miles, and fewer routes with empty or partially empty loads, leading to significant cost savings.
In addition, using green vehicles lowers the amount of money spent on fuel in the long run, which is particularly beneficial to those companies operating in regions where fuel costs are high. A study from the US Department of Energy has revealed that by 2030, nearly half of electric medium- and heavy-duty trucks will be cheaper to buy, operate, and maintain than diesel trucks. Companies such as Ford and Rivian are already paving the way for mass scale electric truck production.
Sustainability doesn’t mean sacrificing profits or putting success on the backburner. Instead, it has become a crucial element of any organisation’s successful strategy. It enables companies of all sizes to build competitive advantage, meet their customers’ demands, win over investors and improve profit margins. If you’re looking to get started on your sustainability journey, take a look at what Pledge can offer.
