Business Case for Sustainability: New Hope or Smokescreen?

Is sustainability really changing the way that people do business? Or are Sustainable Development Goals (SDGs) a little more than a new wave of corporate PR spin—focused on appearances than true commitment to the cause?

Here’s a fact: The battle to get companies invested in sustainability is over. No large company seriously debates whether environmental and social issues affect the company’s bottom line. Executives recognise that key stakeholders, like their customers and employees, care about these issues. Sustainability is on the strategic agenda to stay.

But how close are we to seeing business leaders take sustainability seriously as a critical driver of profit and resilience? We delve into the top 5 questions that come up in conversations with executives when it comes to demonstrating tangible business value from investing in sustainability.

Why should leadership care about sustainability when they have to worry about profits?

Leaders have little choice. The world’s megatrends—like climate change, the rise of clean technology and renewable energy, supply chain transparency, and rising expectations of purpose-driven operations—are already affecting organisations directly. Extreme weather threatens supply chains and operations. Global action on climate change is shifting regulatory landscapes and markets. Rising expectations from customers (especially millennials and Gen-Z) require companies to tell a better story about their products and services. And with new technologies creating radical transparency, companies had better back up their stories with data.

Companies operating more sustainably slash costs, manage risks better, drive innovation, and build brand value. They’re more profitable. And on the specific issue of carbon footprint, the rapid and dramatic improvement in the economics of clean technology means companies can reduce their emissions and energy use, and make money doing it. In short, sustainability isn’t remotely at odds with profits.

Since investing in sustainability always cost money, isn’t it hard to get business leaders to go along?

Good question. But it’s a strange myth that managing environmental or social issues always, or even mostly, costs money.

Many initiatives under the banner of “sustainability” save money quickly—for example, projects that improve efficiency, save energy, or reduce waste. Of course, sourcing sustainability or improving the lives and wages of workers in the supply chain might cost more. But these initiatives, whether offering a quick payback or longer-term value, are investments, not costs. They’re no different than the investment choices we make in marketing, R&D, or other areas of the business that require strategic thinking.

Investing in sustainability is not only a risk management tool; it can also drive innovation.

Coca-Cola, for example, faced a water shortage in India that forced it to shut down one of its plants in 2004. As the 24th biggest industrial consumer of water, Coca Cola has now invested $2 billion to reduce water use and improve water quality in the communities in which it operates. 

Again, why should businesses make the change?

Well, it’s good for business. Viewing your business through a sustainability lens helps create a better company—one that’s resilient and responsive to employees, customers, and society in general. People want to work for an organization that shares their values. Companies that innovate to solve environmental and social challenges create products and services that customers want and feel good about. None of what I’m talking about is philanthropic—it’s all about business value.

Ultimately, is there business value in sustainability?

Yes! Sustainability creates business value. Some things we do will pay back more quickly than others, but yes, it’s about business value—lower costs and risks, more innovation and enhanced brand value. But really, it’s about building better organisations.

As a partner to the United Nations Global Compact Network Malaysia (GCMY), Engage Southeast Asia (SEA) empowers organisations and the C-suite to tailor their purpose-driven communications. Purpose informs business decisions, corporate culture and deepens credibility. Contact us today to customise effective sustainability communications for tangible business value.

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