With sustainability being one of the most prominent topics in business discussion today, you might be forgiven for thinking that investing in sustainability, sustainable development and changes to the way businesses handle themselves has been a slow and involved process that has seen a slow-take up and rollout.
In some respects, you’d be right – championing sustainability, and pushing for more eco-friendly solutions has been around for a long time, but the driving force and need to become sustainable has only more recently become more of a priority; even as close as 2021, only 12% of businesses saw sustainability as a significant priority – yet by 2022, 80% of corporate businesses have said they do have established internal environmental sustainability goals for energy evolution and efficiency.
Most of the world’s largest companies are now reporting their sustainable efforts with Environmental, Social, Governance (ESG) reports on a regular basis, with more than 2,000 companies setting science-based carbon targets too; and financial institutions (such as JPMorgan Chase, Citi, Morgan Stanley, and Bank of America) have committed from $1 trillion to $2.5 trillion to invest in climate action and sustainable development.
So why the rush? Why are more businesses suddenly investing in sustainability? What has changed that has redetermined how executives and business owners see sustainability, and why is it now such a priority?
The Driving Factors Behind Sustainable Business
The increase in the number of businesses investing in sustainability has a number of different factors influencing it, but unsurprisingly the main reason lies with consumer behaviour.
A Deloitte 2021 report found that 32% of consumers said that they were ‘highly engaged’ with adopting a more sustainable lifestyle, with 64% wanting brands to reduce their packaging, 50% asking for more information on how to recycle, and 46% saying they want more clarity on sourcing sustainable products.
Customers are becoming more eco-conscious and expect the businesses and brands they support to do the same; and these customers aren’t just saying this is what they want – they’re acting on it, with 73% of Gen Z consumers going so far to agree that they are willing to spend more for sustainable products.
Of course, consumer drive isn’t the only reason businesses are taking a green approach – there’s also the cost savings that can be made with effective sustainable business practices. It has been estimated that sustainability can reduce costs and affect operating profits by up to 60%, and that companies who have an inclusive culture show 27% higher profitability with 22% greater productivity.
Businesses are also finding that potential employees are interested in how sustainable businesses are, and are actively seeking out companies who align with their own ideals – even at the cost of their own wages, with 51% of US business students stating that they would take lower pay if the company was environmentally responsible.
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How Many More Businesses Will Focus on Sustainability?
The focus on sustainability is only going to continue to grow and become more important, and as regulations and consumer interest lay out clear expectations and timescales, businesses will find that sustainable actions become more and more normalised within the company.
Sustainable businesses are not only attractive to consumers – they also draw the attention of investors as well for both privately and publicly owned businesses.
For those doing global trading, being sustainable is going to become more necessary as legal obligations for various countries become more defined. For example, companies in the EU, from 2024 they will be required to disclose the data on the impact of their activities; and it is likely that importing and exporting businesses are going to be held to local standards.
With targets set for 2030 and 2050 for sustainable goals, and more businesses taking on sustainable approaches, it won’t be long before being a sustainable business is considered to be ‘normal’ and those that aren’t, will stand out for the wrong reasons.
Investing in sustainability and adopting these practices can take time, careful planning, and a need for budgeting, but the benefits of being sustainable make the effort worthwhile, and help companies to develop and grow, and evolve in a way that is relevant and relatively future proof, keeping them up-to-date with the wants and needs of their consumers, attractive to their investors, and relevant as industry leaders.