The Significance of Sustainable Business

What is a sustainable business?

The concept of sustainable business as we know it now stemmed from The Brundtland report in 1987 which defined sustainable development as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

Through the 1980s and 90s businesses incorporated sustainability into their existing business models to respond to market shifts and remain competitive. However, this has reversed and businesses are now transforming the market themselves, creating the shifts rather than waiting for them and thereby enabling new forms of business sustainability.

Forward-thinking businesses now have an opportunity to do the right thing by adopting long-term sustainable practices which positively impact both the environment and society.

What does it mean to be sustainable?

 To be considered "sustainable” businesses need to consider many more factors than just their own bottom lines and financial remuneration. It means addressing social and environmental issues alongside organisational objectives and incorporating corporate social responsibility throughout the business, promoting equality, and providing assistance in the community and country where businesses operate. This can take many forms, including donating to local charities and working alongside sustainable accreditation programs to ensure the company’s negative impact on the environment and the planet is minimised.

It is no longer enough to simply label a company as eco-friendly without the relevant changes being made and verified. Products need to be sustainable and sourced ethically, manufacturing and production methods must be environmentally friendly, and companies need to work to protect the environment by advocating for sustainable policies.

Harvard Business School lists four examples of sustainable business practices:

Partnering With Non-profit Organisations

Companies can provide support to a non-profit which aligns with their business goals, and some non-profits may have the resources to help companies develop and implement their sustainable business policies.

Educating employees

By ensuring employees are aware of the organisations goals and including them in the process, a company can boost morale and is more likely to achieve success in attaining sustainability.

Encouraging Volunteerism

One way of involving employees in the sustainability process is to encourage them to volunteer for a charity they care about, giving them volunteer time off (VTO) to support a cause they are passionate about.

Rethinking the Supply Chain

A company’s sustainable policy should not be limited to their own organisation. It should also ensure the materials used by the business are sourced responsibly and that their suppliers incorporate fair labour practices.

Further opportunities to find more sustainable ways for a company to operate can include: reviewing the consumption of natural resources; reducing carbon emissions; using green cleaning and non-chemical products or developing an in-house program for recyclable products.

There are numerous opportunities for a company to become more socially and environmentally friendly and whichever is chosen will depend on the organisation size and structure and what its goals are. The important issue is that companies are intentional about sustainability, that it is incorporated into their strategies and reflected in their business goals, that accountability is assigned and results are measured.

Why be a sustainable business?

 In 2019 research conducted by the Harvard Business Review revealed consumers have become more focussed on buying sustainable brands, with products advertised as” sustainable” growing five times faster than others that were not. It is not only customers who are influenced by a company’s sustainability programme, a survey by clean energy company Swytch found almost 70 percent of employees said a company’s stance on sustainability will impact whether they remain with an employer long term. Support for sustainability is an increasing trend and is set to continue as the number of millennials and generation Z grows.

In investment terms, sustainability is creating huge opportunities. In China, an initiative to fight air pollution created investment opportunities of over $3 trillion. Last year US financial institutions committed from $1 trillion to $2.5 trillion to invest in clean technologies and sustainable development.

A 2020 report by the United States Forum for Sustainable and Responsible Investment showed an increase in sustainable investing in the US of 42 percent between 2018 and 2020. A poll carried out by Morgan Stanley which included financial institutions, insurers, and pensions in North America, Europe, and Asia Pacific revealed that 80 percent of participants believed that companies with strong ESG practices may make better long-term investments.

Implementing a sustainable policy can also be a cost-cutting exercise, take 3M which launched their “pollution prevention pays” programme in 1975 and have saved $2.2 billion dollars. FedEx has converted 20 percent of its vehicles to electric or hybrid engines, reducing their fuel consumption by over 50 million gallons.

Examples of successful sustainable businesses

 Lego

Lego is committed to building a sustainable future for children to inherit and is the only toy company the WWF has named as one of their Climate Savers Partners. In 2021 it revealed its newest development, a recycled plastics brick, the latest in its bid to make its products more sustainable.

Cisco Systems Inc

One of the world’s leading developers and manufacturers of networking hardware, software, and telecommunication equipment, Cisco is also one of the most environmentally friendly. Their products are designed so their life can be extended through maintenance and upgrades. They advocate reuse, refurbish, reselling, and recycling of returned products, having made it easy for their customers to return products instead of disposing of them. They are energy efficient across their supply chain, claim that 80 percent of their electricity (operations only) is clean, and empower their employees to take part in sustainability efforts.

Ikea

Ikea’s goal is to inspire and enable 1 billion people to live a better everyday life within the limits of the planet by 2030. Some of their sustainable initiatives include:

Supporting the transition to net-zero - Ikea is making it easier for their customers to produce renewable energy by offering a home solar service, including solar panels and battery storage systems and they offer an electricity subscription service using solar and wind.

Ikea is also exploring ways to prolong the life of their products and give their customers access to furniture without having to own it and they are testing an Ikea second-hand store idea.

As one of the largest food businesses in the world, they are promoting plant-based food options to provide healthier and more sustainable food.

 Gail’s Bakery

Now operating over 50 stores in the UK since it first opened in 2005, Gail’s has focussed on eco-friendly initiatives and is committed to supporting the local community. Leftover food is donated to charities and made from sugarcane waste, their takeaway cups are biodegradable and compostable. They are also looking to expand their line of products made from waste food after the success of Waste Bread, launched in 2018 which uses yesterday’s unsold loaves to make an eco-conscious sourdough, in the UK alone over 24 million slices of bread are thrown out every day.

Patagonia

Outdoor clothing and gear company, Patagonia, is a global leader in sustainability. Nearly 70 percent of their products are made from recycled materials. In 2021, 100 percent of their electricity needs in the US were met with renewable energy, and 85 percent of their line are Fair Trade Certified sewn. Their goal is to use 100 percent renewable or recycled materials by 2025.

&Sisters

Feminine products company &Sisters supply tampons, pads, and liners that are 100 percent plastic-free, vegan, cruelty-free and toxin-free. The manufacturing process results in the use of 91 percent less water, 62 percent less energy, 70 percent reduction in acidification of land and water, and 46 percent reduction in the contribution to global warming versus conventional cotton. All their products and packaging are 100 percent biodegradable and their period cups save over 2000 period products going to landfill. Their use of organic cotton promotes safe and better livelihoods for farmers and their families as they are not exposed to toxic chemicals and benefit from extra income derived from additional crop diversity. Fairtrade, gender equality, female participation, and responsible work policies are built into the core of their supply chain.

More than ever, customers, employees, and investors are demanding that businesses implement environmentally friendly goals to have a positive impact on the triple-bottom-line of people, planet, and profit. The time is now to take action to create a more sustainable future by adopting sustainable policies and committing to making a positive impact on the environment and the planet.