Sustainability was once considered a burden on companies’ time and resources - but this has changed. Industry leaders now recognize the financial benefits, and competitive advantages, that can be gained by improving social and environmental performance. Focusing on sustainability encourages innovation, strengthens risk management, increases efficiency, and facilitates growth – all of which help businesses improve their bottom line. There are countless examples that demonstrate the value sustainability brings in these four areas - here are some notable ones:
1. Opening doors to impressive innovative potential
Focusing on sustainability prompts companies to think up creative new ways to solve problems. For example:
The American retail giant Target recently introduced its sustainable “Made to Matter” line of products and, after one year, reports profits of up to $1 billion.
General Electric reports up to $200 billion in revenues from its “Ecomagination” program- an innovation project with a $15 billion investment in R&D.
2. Tackling risk head-on
Risk management is a key issue for any large-scale corporation - and sustainability is a hidden, unaddressed, risk for many businesses. Infact, a 2015 EY Global Institutional investor survey found that the failure to adapt to, and mitigate climate change, is the number one risk investors are concerned about for 2016. Failure to address these risks is already impacting corporations and driving companies to adapt to secure their bottom lines
Project ROI identified that 4% of systemic risk can be offset by improving sustainability - a sizeable but achievable goal.
Munich Re, one of the world’s largest reinsurance companies, reports that it lost $97 billion in weather-related losses in 2014 alone, about 30% of this one hundred year-old company’s assets. Building resilient businesses and supply chains is vital in the face of changing weather patterns and worsening natural disasters.
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3. Increasing efficiency means expanding profits
When companies measure and manage their sustainability performance, they significantly improve their overall efficiency - saving millions of dollars.
Unilever reports that it has saved $395 million since 2008 by cutting 1 million tons of carbon dioxide emissions from its manufacturing and logistics operations.
On the other hand, efficiency “laggards” in the beverage industry faced 83% additional solid waste costs as a result of failing to implement more efficient waste management policies.
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4. Sustainability is synonymous with growth
Consumers and industries are driving companies to a build responsible products. Companies that manage their sustainability are capitalizing on these trends - and achieving dramatic results.
Project ROI found that sustainability leaders increase their market value by 4-6% as they improve performance.
The global management consulting firm Boston Consulting Group reports that 15% of consumer money in the food, home goods, and personal care sectors was on responsible consumption (RC) products in the US in 2013. RC products are growing at about 9% a year. This represents 70% of all growth in the grocery sector alone.
On the other hand, “Laggard” companies like Volkswagen that recently experienced a greenwashing scandal have seen equity losses of up to $35 billion since news of the scandal broke—almost twice the company’s net income in 2014.
How to become a sustainability leader:
The advantages to sustainability leadership are clear - but the big question is, how do companies actually achieve these gains? Where should companies start? ecoOS, a sustainability software company, has made it its mission to deliver this solution. ecoOS provides visibility into, and context for, environmental performance for business impact. With a rigorous focus on competition and business metrics, ecoOS provides the necessary data and tools for companies to realize the value of sustainability leadership.
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Maya Yarowsky is pursuing her Masters in Environmental Studies at Tel Aviv University and is a Marketing & Business Development Intern at ecoOS.