Sustainability is at the forefront of most business discussions. It has gone beyond being a buzzword in this sense. Awareness of it is at an all-time high and talked about from boardroom to water-cooler.
In what sense can it positively impact your bottom line?
Everything from IT provision to fleet vehicle emissions are included in the scope of sustainability conversations. There can be a sense that it will cost a company and that a sacrifice of some sort is hinted at.
There must be changes made to become sustainable, of that there is no doubt, but not necessarily to the detriment of profitability.
How can sustainability initiatives improve the bottom line?
An engaged workforce
We can define sustainable practices as those that do not harm people or the planet and at best create value for stakeholders, and secondly focus on improving environmental, social, and governance (ESG) performance in the areas in which the company or brand has a material, environmental or social impact (such as in their company operation, value chain, or customers).
Sustainable businesses often offer stakeholders the chance to be part of a shared vision, for example a company who addresses social or environmental issues as part of its core values.
This can translate into a working culture where staff are engaged and thus happier and more productive.
Sustainability innovation leads to profitability
Also, with sustainability innovation can be greatly inspired, redesigning products to suit the needs of sustainability.
If we look at Nike, they embedded sustainability into their innovation process and created the $1 billion-plus Flyknit line, which uses a specialised yarn system, requiring minimal labour and which generated large profit margins. Flyknit reduces waste by 80% compared with other methods of production.
Since its launch in 2012, Flyknit has reduced 3.5 million pounds of waste and fully transitioned from yarn to recycled polyester, diverting 182 million bottles from landfills. A clear exemplar of sustainability innovation leading to profitability. The bottom line has far from suffered in this case.
Modern consumers are often conscience-led and have a greater awareness of such processes and are thus driven towards purchasing such products at Nike’s. This too is a cause for celebration in embracing sustainable processes.
Profit and sustainability are no longer mutually exclusive as can be seen in this vivid case. Customers additionally tend to be loyal to brands that follow their ethical framework and leads to repeat purchases.
Improved efficiencies lower carbon emissions and costs
The Harvard Business Review cites two very clear benefits to sustainability in business, around waste minimisation to quote:
‘Significant cost reduction can result from improving operational efficiency through better management of natural resources like water and energy, as well as minimising waste. It is estimated that companies experience an average internal rate of return of 27% to 80% on their low carbon investments. Since 1994, Dow has invested nearly $2 billion in improving resource efficiency and has saved $9.8 billion from reduced energy and wastewater consumption in manufacturing. In 2013, General Electric had reduced greenhouse gas emissions by 32% and water use by 45% compared to 2004 and 2006 baselines, respectively, resulting in $300 million in savings.’
This evidence above speaks volumes about the synergy between sustainability, profitability and the positives on the journey to it. It is no longer a binary choice for businesses. It is both compelling and rewarding to be able to marry sound environmental and social choices with an increased bottom line.
The mainstream is sustainable: Good PR
Being part of sustainability ensures PR goodwill, which is invaluable as it is generated simply by becoming part of the process and sharing this fact. It is rather a rare gift as it can be utilised in press releases, social media stories as well as featuring in internal communications within your company.
This goodwill will radiate throughoutyour company, bringing your staff the secure knowledge that your business activities are furthering positive environmental gains. This is the less tangible effect of sustainability, one the unexpected benefits and one which also raises the prospect of increased revenue. Sustainability is firmly in the mainstream of business life and almost essential to be a part of, thus this spin-off PR makes perfect sense.
Sustainability in the UK: IT provision
To use a powerful UK business model, you need look no further than Circular Computing™. We remanufacture and thus repurpose IT.
To quote Steve Haskew, Head of Sustainability and Social Leadership at Circular Computing™:
“Every day some 160,000 laptops are disposed of in the EU alone, creating a worsening e-waste crisis. Our laptops haven’t had to be manufactured from scratch, with many materials reused, so they are much more environmentally friendly than buying new devices. There are also seismic sustainability savings.”
Steve elegantly sums up the intrinsic benefits of sustainable laptops: “I’d encourage all organisations looking to reduce their environmental impact to interrogate their IT procurement and see if they can make it more sustainable, because IT shouldn’t cost the earth.”
This is further encouragement from our thriving, sustainable business sector.
To save 40% per laptop unit, which is a fact in the case of Circular Computing™, is a very significant factor in procurement choice. The further reality that it is supplied by a carbon neutral company completes the sustainability picture.
The two areas; savings and sustainability provide a tangible business combination, and this is just one UK example.
A summary of positives gains all round
In conclusion, as can be seen in the cases of Nike and Circular Computing™, sustainability is more than just a positive boon for the planet.
Drilling down into the detail, there is much to recommend a sustainable course of action, economically. No longer is it the business of companies to just do business, but rather a holistic approach which is forward-thinking, pragmatic and profitable.
We can leave the last words to the Harvard Business Review to sum up the current situation: ‘Mounting evidence shows that sustainable companies deliver significant positive financial performance, and investors are beginning to value them more highly. Arabesque and University of Oxford reviewed the academic literature on sustainability and corporate performance and found that 90% of 200 studies analysed conclude that good ESG standards lower the cost of capital; 88% show that good ESG practices result in better operational performance; and 80% show that stock price performance is positively correlated with good sustainability practices.’
There is no doubt that sustainability and the bottom line can be the perfect modern economic partnership.
Written by Sean Urquhart – Lead Copywriter at Circular Computing™