Sustainability is more important now than ever, what with the recent emergence of extreme observed temperature changes and the UK’s Net Zero initiative. Despite this, many businesses are struggling to get to grips with implementing environmentally conscious strategies. Despite their promises, several organisations have not followed through with their transition from being a spectator to being an active participant.
But what many don’t seem to consider is that leading a complete transformation journey through this lens of sustainability will reap great benefits for the future of your business. Those companies that invest in sustainability have noticed an improvement in resilience, success flow, and operational performances.
Why should businesses transform to become more sustainable?
After COVID exposed how vulnerable many companies are to global risks, it was sustainable organisations that were found to have a better risk-adjusted performance than their unsustainable counterparts. Forum’s Global Risks Report in 2021 found that climate action failure poses the second most imminent threat to society. As a result, companies need to improve their readiness, and to do this, capital should be redirected to sustainable leadership, as well as sustainable activities and products.
Though, many CEOs are struggling to balance meeting their quarterly expectations whilst also grappling with the uncertainty that business transformation entails. The low effort solution to this is pointing to ESG targets and net-zero statements as a type of evidence that their company is a front-runner in this race. When used in isolation, this can be perceived as a superficial response, and there’s more that can be done when it comes to seizing an advantage against competitors.
Entering the race to a sustainable future
Senior leaders need to approach these challenges from a productive and strategic vantage point, so that their organisations act on sustainability in a more aligned way. This means ensuring everyone is involved, from boards, to stakeholders, to investors, so that the business is prepared.
Unfortunately, adopting a wait and see approach isn’t the best course of action here, as stalling on making sustainable changes in your business could have serious consequences. Comparing investments in sustainability transitions to the current performance baseline of a business doesn’t consider the growing risks that the existing business model has. Organisations have to learn to adapt and get ahead of the race.
As competitors begin sustainability transitions, not only will there be a scarcity of resources and infrastructure, but they’ll also be more expensive as a result. While it may be tempting to watch and learn from others in your market, moving with the pack can leave your business competitively disadvantaged.
Many companies also face challenges when it comes to meeting ESG expectations, from measuring carbon emissions, to maintaining safe working conditions, and incorporating diversity in the workplace. Instead, it should be seen for what it is – a new way of operating that ensures that every business function caters to both people and the planet.
Successful businesses are taking a holistic approach, considering every topic, from water usage to employee wellbeing. It’s important to view them in relationship to each other, recognising how they impact every level of the business, rather than observing them in isolation.
Building a strategy
To start this business transformation, companies should formulate a plan, with the starting point being the recognition that sustainability is a source of competitive advantage. The strategy must connect to the company’s purpose, focus on long-term significance and be driven from the top of the business.
To do this, firms should start by looking at their current performance in all ESG areas, and then work from there to see which ones matter the most to stakeholders. This should be looked at from a future perspective, focusing on the elements that will contribute the most to long-term business success. It’s critical to look at this prioritisation first as it will help to avoid that all too common pitfall of creating initiatives that don’t have a big enough impact.
Companies should also reassess their existing business model, looking at it through the lens of sustainability. This will reveal opportunities where it’s possible to enhance the environmental and societal benefits that the company receives, whilst also strengthening the company’s competitiveness by improving the resilience of its business model.
What businesses can do
We all have a general idea of what can be done to combat the sustainability problem, from reducing energy consumption, to limiting waste and recycling, but below is some advice on what specific industries can do to reduce their carbon footprint.
Supermarkets produce 810,000 tonnes of throwaway packaging a year. Introducing reusable options can do wonders for businesses’ contribution to sustainability. Not only does this benefit the planet, but it can also serve to attract new business.
52% of shoppers, globally, have said that sustainability has become more important to them as a result of the pandemic. As things are now, consumers want to play more of a part in a sustainable future, so brands now have the opportunity to rise up to this challenge and help meet their customers’ desires.
Adding to this, an overwhelming 65% of global consumers have noted that they actively try to buy products that are packaged more sustainably. At this point, it would be highly disadvantageous for brands to reject the notion of implementing more sustainable retail behaviour to close this gap, when they could be making more profit in the process.
Just look at Nestle, who had a 2015 zero-waste goal for 10% of their factories. They went above and beyond, reaching their goal for 22% of their sites and continuing on their journey to go even further in the future. If other companies were to invest in similar practices, there is scope to join Nestle as industry-leaders in the race to sustainability.
Construction and Property
Protecting natural habitats is a great way for those in the construction industry to practice sustainability, through preserving wildlife to maintain healthy populations. As an added bonus, companies can also gain corporate social responsibility benefits, and it can have a long-term reputational impact too. The same is achieved through reducing on-site waste and using renewable materials.
Take Mace for example, a construction company that is also a member of the RE100 Commitment: the global initiative to encourage companies to use 100% renewable energy. Mace has piloted more than 20 diesel-alternatives and energy-saving digital solutions, with the aim to reach net zero carbon emissions this year. On top of this, their team has also implemented a strategy to help employees achieve this goal by working towards ‘reduce, transform, investigate and influence’ principles.
Organisations can also work towards manufacturing more green buildings, as they come with lower operating costs, and sustainable construction processes could deliver up to £350 billion a year in global energy cost savings. By simply reducing waste, the construction industry could save a lot of money on the fees that they are charged by waste management companies.
Implementing sustainability within the technology industry is not as straightforward, as it consists mostly of online challenges. Though, there are still things that can be done, such as encouraging employees to engage in sustainable practices on a personal level, and taking the responsibility to educate them about their contribution.
There is also the opportunity to develop more green products in the future, and implementing more environmentally friendly energy sources, such as solar panels. Embedding these practices, where possible, has the capacity to improve product design and performance, through this new evaluation of the manufacturing process.
Samsung is a great example of this, having released the NC215 – a solar-powered laptop that doesn’t need electrical charging. On top of this, it also made three environmentally friendly mobile phones, made from corn starch and bioplastic, with energy-efficient chargers and fully recyclable packaging.
Of course, there is also the reduction in business expenses that comes with this. But since green tech is designed to use energy more efficiently, it does end up saving companies a lot of money in the long run. Hopefully, others will follow in the footsteps of Samsung, and this will lead to the development of more green tech products in the future.
What does the future hold?
The effects of climate change show no signs of slowing down, and all businesses will be left with no choice but to become more sustainable, one way or another. At this stage, it becomes a matter of who will lead the charge towards a more sustainable future and who will be left behind the curve. Companies have a tough road ahead and industries will need to transform their businesses as soon as they can to get ahead of things.
It’s time for corporations to tackle these problems and do their part for a sustainable future. Becoming sustainable is possible, no matter your size or sector, and the benefits in the long-term will be worth the short-term disruption.
If you’re looking for the type of visionary leadership and practical thinking required to spearhead your organisation’s sustainability initiatives, why not speak to our team about growing your business transformation function.
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