COP 26 was an event of global significance and it brought the topic of sustainability to the front of everyone’s minds.
What is clear is that governments, people and businesses can’t help with climate change on their own. Instead, we all need to do our bit and that is the inspiration behind this post.
We’re looking at the issue of sustainability from the business angle and how we can make positive changes to the way we work.
We are looking at;
What does sustainability in business mean?
So what do we actually mean when we use the word ‘sustainability’?
Sustainability relates to a business creating long term value using methods that aren’t going to negatively impact the environment or use up resources that cannot be replaced.
Sustainability means not polluting the environment, not adding to greenhouse gasses and not destroying the natural world.
In short, it means being a good corporate citizen.
Why is sustainability important in business?
Sustainability forms a key part of the ESG criteria that underpin ethical investing.
If you want to receive investment from ethical institutional investors then you’ll have to have a sustainable operation.
But it is clear that today more than ever that customers are very keen on understanding the impact that their suppliers have on the environment.
Ethical companies have sprung up in sectors as diverse as energy, food and banking. In fact, it is harder to find a sector that doesn’t have companies that practice ethical, sustainable business.
There is, of course, a fundamental reason why sustainability is important in business and that is that if we continue to use up the earth’s resources then eventually there will be no business left.
Over 1 million professionals worldwide are using Rydoo.
Benefits of sustainability in business
As we have already noted, customers are looking more and more for companies that match their values.
This means that companies that comply with the ESG criteria are more likely to attract customers who are environmentally aware. Conversely, companies that carry out operations that negatively affect the environment are likely to experience a reduction in trade and even being called out by activists.
In the past, executives have been guilty of assuming that sustainable business practices cost money and by extension reduce company performance but academic research calls that view into question.
In fact, a recent McKinsey report highlighted five ways that sustainability can actually drive added value by;
- Reducing costs – through lower use of resources such as water and power
- Growing the top line – by attracting new customers who are environmentally conscious
- Reducing regulatory fines – and attracting government grants
- Greater productivity – improving employee morale and attracting talent
- Asset optimization – using assets more effectively and increasing their life
Research has shown that 80% of companies practising sustainability have seen an increase in value and 90% experience a lower cost of capital.
How can I make my business more sustainable?
The first step in making your business sustainable is to adopt a sustainability mindset. Simply changing one aspect of your operations isn’t enough, we need to look at every part of what we do and understand its impact.
Once you have a clear view of your environmental impact you can then start to make changes that will mitigate and hopeful eliminate any negative effects your company may be having.
We’re not saying that this is easy by any means. It takes a real commitment and an understanding that we may well have to change the way we do business in the future.
As a travel expenses company, you wouldn’t expect us to suggest that people travel less but that is exactly what we are saying. At Rydoo a large part of our workforce is remote and so we live on Zoom and Teams, only travelling when we really need to.
Although much of the noise around sustainability focuses on big initiatives, actually small changes can really help too. Printing out reports only when you need to and having lights that automatically switch off when nobody is in the room are tiny changes but they all add up.
It’s clear that the future of sustainability isn’t all about one single technology but involves a variety of different fuels and changes to behaviour to get us to our goals.
Above all the best way to become a truly sustainable business is to harness the creativity of your people and look at how you do business. You may be surprised at what ideas people come up with.
Challenges to Improving Sustainability in Business
Of course, nobody would argue that there aren’t some challenges in becoming a truly sustainable business.
Possibly the first challenge is to actually convince the more traditional members of the board or senior management team that sustainability is the way to go.
If you really want to make the initiative work, then everyone has to buy in and so a company-wide communication exercise will be needed.
Some services cost more money and some investment will undoubtedly be needed, so this isn’t a cost-free exercise, at least initially.
Sustainability is a long-term project and moving away from short-termism can be a real challenge for every business, especially where they are reporting to active shareholders.
It’s also true that as you move to a sustainable future, some assets may become redundant. The issue of so-called ‘stranded assets’ is a big one in the oil and gas sector and it may affect your business too. It’s all too tempting to use non-sustainable processes just to justify a recent spend on new machinery for example.
Of course, there is also the fear that competitors who aren’t so socially responsible may have lower costs and thus will retain a competitive advantage although this may be more of a perception than a real effect.
What is Environmental, Social and Corporate Governance (ESG)?
Sustainability in business - we have no choice
Following the commitments given to COP26 it is likely that businesses will face more regulatory pressure to operate sustainably meaning that they will have to make the change whether they like it or not.
It’s true also that society is changing its attitudes and unsustainable business practices may become a serious negative when consumers are choosing who to buy from.
But the most compelling argument must surely be that if we don’t alter the way that we work very quickly, we may all end up being the richest people on a dead planet.