Sustainability in business refers to a company’s efforts to lessen the harmful effects that the operations, products, services, and corporate culture have on the environment. An organization’s sustainability action is often measured by an environmental, social, and governance (ESG) score. As the threat of climate change looms, business leaders are responsible for examining their organization’s impact on global systems and communities.
The threat of climate change has reached a critical point that is too urgent to ignore. In 2015, the United Nations General Assembly launched the 2030 Agenda for Sustainable Development and outlined 17 Sustainable Development Goals (SDGs). The UN designed the development plan to encourage global partnership in a mission to end poverty, improve healthcare and education, promote climate action, support equality, and create a better world for everyone. In 2023, worldwide leaders will continue reconfiguring business strategies to minimize risks and capitalize on opportunities. The SDGs provide a business sustainability roadmap and allow leaders to align their efforts and outcomes to a tangible timeline.
As sustainability conversations move beyond the boardroom and extend into operations and ESG scores, discover why business leaders must push sustainability to the top of their priority list and how to get started.
The Benefits of Sustainability in Business
Sustainability will redefine the world we live in, and efforts to act sustainably have the power to shape the future of our planet and generations to come. Sustainability is also important for businesses because it promises to change how organizations operate across all industries, from manufacturing and supply chains to healthcare and financial services.
Organizations see benefits from acting on business sustainability strategies, including attracting employees, stakeholders, and customers, meeting emerging regulations, gaining a competitive advantage, improving longevity, supporting revenue growth, and, most importantly, positively impacting the environment and global populations.
Attract and Retain Talent
One of the primary benefits of sustainability in business is the ability to attract and retain employees who are passionate about purpose-led companies with sustainability initiatives. According to a recent survey by Deloitte, 49% of Gen Zs and 44% of Millennials report making career decisions based on their personal values. Additionally, studies show that nearly 40% of Millennials have chosen a role due to the company’s sustainability commitments, compared to less than 25% of Gen X and 17% of Baby Boomers. These surveys show a generational shift in prioritizing and demanding more sustainable organizations. Therefore, companies that want to stay competitive in any industry must consider their sustainability efforts and overall company mission statement and values to attract new talent.
Appeal to Investors
The next group driving demand for sustainability action is an investor revolution. Investors hold much power to direct business decisions and reports expect that sustainability investing will become the new normal. According to Gartner, 85% of today’s investors examine ESG factors before making their investments, and more than 91% of banks monitor the ESG performance of their ongoing investments. Investors recognize that sustainable companies will generate sustainable profits, and companies that fail to adjust ESG scores will see fines, difficulty in the regulatory landscape, and reputational damage.
Grow Customer Loyalty
Customer loyalty is essential for business. Like Gen Z and Millennial employees, younger generations are leading the charge in the consumer pressure for more sustainable products and services. According to surveys, 73% of Gen Z consumers are willing to spend more money on sustainable companies. Not only are younger consumers demanding the companies they shop with to be more sustainable, but they also expect products that reduce environmental harm. More than 60% of consumers in the UK have already reduced their use of single-use plastics, and 32% are buying less no-recyclable goods. It’s apparent that consumers are becoming increasingly conscious of the impact of their purchasing behaviours and looking for companies that align with their values. Purpose-led organizations with environmentally-friendly products and services will gain favour in the market and attract and keep conscious consumers.
Meet Regulatory Demands
Often, businesses only prioritize significant changes if they experience serious consequences. Regulations are changing to encourage companies to prioritize sustainability. For example, the 2050 net zero commitment impacts Canada, the UK, Japan, and others to enter binding targets for the next several decades. Additionally, the Paris Climate Agreement has come down harder on governments to adjust sustainability objectives for imminent change. In the United States, the U.S. Sustainability Alliance introduced the Clean Water Act, Clean Air Act, Endangered Species Act, and others, forcing organizational leaders to rethink the potentially harmful practices that used to fly under the radar. Soon, the regulatory landscape will make sustainability table stakes for large companies, and those who fail to comply will be unable to pay the fines or hold influence in the market.
Remain Competitive in the Market
Companies capable of attracting top talent, building a loyal customer base, meeting regulations, and appealing to investors will leapfrog competitors and gain favour in current and future markets. As discussed, sustainability initiatives and environmental responsibility are essential to consumers and give organizations a competitive advantage. As a result, leaders who prioritize sustainability can keep up with competitors who do the same. Conversely, the leaders who prioritize profits over purpose-driven initiatives will likely lose support from their once loyal customers and investors, falling behind and out of business.
Experience Revenue Growth
Placing revenue above the environment, customer experiences, and your company mission statement can backfire. However, leaders who commit to promoting meaningful change often see financial returns. For example, sustainability can reduce operating costs by up to 60%. Additionally, having a strong environmental sustainability strategy and execution is correlated with top-line growth, better employee productivity, and greater investment and asset optimization. Finally, if leaders receive pushback when advocating for ESG action, they can point to these results to demonstrate that sustainability creates business value and long-term profitability.
Make a Positive Difference in the World
The final and most crucial benefit of making sustainability commitments is the ability to positively impact employees, consumers, local communities, and the environment. For example, Apple committed to transforming its supply chain and products to be 100% carbon-neutral by 2030, Patagonia has a self-appointed 1% tax to all profits that goes towards environmental non-profits, and Amazon launched a $2 billion Climate Pledge Fund to decarbonize the economy. These companies use their influence, popularity, and resources to help fight climate change and raise the bar for competitors. Funding non-profits, reducing carbon emissions, and creating buzz around the sustainability movement all help push the needle in the mission to build a better future.
How Can Leaders Start Implementing Business Sustainability Strategies?
Before leaders can implement business sustainability strategies, they must learn competencies, including how to design and manage business operations, systems, and processes, make decisions in the global economic landscape, craft an organizational strategy, deliver customer value, and more. Aston University’s online MBA program teaches students how to think like leaders and execute strategies in a real-world setting.
Aston University also developed the Aston Edge modules as a critical part of the online MBA program to bridge the gap between the classroom and the job market. The Aston Edge modules include the Aston Edge Futures, Aston Edge Reflections and Growth, and Aston Edge Project. Each module is founded in behavioural science and designed to help students develop their skills portfolio, think like leaders, and solve real-world business challenges.
Students interested in sustainability can use their final research project to investigate business sustainability and work with an appointed expert to develop hands-on solutions to specific sustainability challenges. Additionally, students can select an MBA pathway, such as entrepreneurship, finance, global business, or digital transformation, to tailor their program to build skills for their desired career path.
Learn more about how Aston University’s online MBA can prepare you to become a better leader.