Sustainability and profitability may seem difficult to balance in business, but ESG efforts often result in improved employee morale and healthier financial results. But succeeding in doing well by doing good means sharing a well-communicated plan with the entire company. If you need to start incorporating sustainable and responsible business practices, here are some places to start.
In the past 20 years, sustainability has become a major focus in the broader business conversation, and for good reason. New technologies, corporate responsibility mandates and a more informed workforce are all leading us to new opportunities in how we structure our practices and our benefits to last.
Although “sustainable” and “profitable” may seem like difficult concepts to balance, the effort to do so is increasingly rewarded in today’s economy. In the era of ESG mandates and the Great Resignation, the sustainable thing often translates into the right thing, both in terms of financial gain and staff longevity.
When it comes to making sustainability profitable, a well-communicated plan and details on how that plan will benefit your business are imperative. Here are some starting points:
- Deal proactively with upcoming ESG mandates.
Generating profits through sustainable practices means being proactive. ESG mandates are growing in volume and scope every year, and Deloitte predictsthat ESG-mandated assets will account for half of all professionally managed investments globally by 2024. Proactively focusing on sustainable efforts will not only help meet these standards before they become requirements, but it will also avoid overloading your team at critical moments in the mandate and keep meeting ever-increasing demands.
Developing a strategic plan and communicating that plan to employees and investors before changes occur can further prevent any potential tension or adjustment time when new ESG mandates are rolled out. Joining the global conversation on corporate responsibility, in today’s rapidly changing economy, can only serve to increase the competitiveness of your industry. It is no coincidence that companies with high ESG scorestend to outperform those that don’t.
- Boost morale – and hire – by being eco-friendly.
Profitable sustainability also means tapping into a younger workforce that cares deeply about corporate responsibility. Almost two-thirds of Millennials, the fastest growing demographic in the workforce, say a strong corporate responsibility ethic is a primary factor in deciding where to work, and a WeSpire study described Gen Z as “the first generation to prioritize goal over salary.”
“A strong ESG proposition can help companies attract and retain quality employees, boost employee motivation by instilling a sense of purpose in them, and increase overall productivity,” McKinsey Research by Witold Henisz, Tim Koller and Robin Nuttall found.
Morale is 55% higher in companies focused on sustainable development, and 83% of Millennials say they are more loyal to companies that defend social and environmental issues. As companies fight for employees amid the great resignation, it pays to look to the future and champion sustainability in the here and now. Simply put, you can boost morale, loyalty — and even hiring — by being eco-friendly.
- Show investors that you can make a profit by doing the right thing.
Gallup discovered that almost half of investors are interested in ESG-focused companies, but most need more education and contacts to get ahead. Sustainable investments affected records in 2020 – and showed good returns. Investors and other stakeholders need you to show them how your sustainable efforts are getting you from A to B (profits).
Developing a strategic sustainability plan and goals, communicating this plan early and often to employees and investors, and providing clear metrics to measure the success of these initiatives, are essential to show investors how powerful social and environmental responsibility can be in terms of revenue. On the consumer side, well-communicated corporate responsibility plans have been shown to provide a “halo effect“ that works to increase a customer’s familiarity and positive associations with a brand.
- Put the board on your side.
Companies are largely “scored” based on their returns on investment, and these metrics cannot be ignored when considering lasting change. It is therefore imperative to ensure that the company’s board of directors understands your vision of sustainability as a driver of profit.
“Problems arise when sustainability goes against maximum profitability or return on investment. Many companies view this as an either/or scenario,” says Larry Clarke, CEO of Nanoguard Technologies. “The ability to find a more sustainable path is sometimes due to ingrained thinking or older technology. This is usually the reason why the board needs to “inspire” management to find new ways of doing business that have minimal negative impact on results or, as in many cases, improve results. »
Therefore, according to Clarke, the key is to involve the directors of the company in the plan: “The board of directors has the unique power to provide the incentive or to remove the obstacles.” Communicating that a company-wide surge is happening beforehand is a way to avoid any tension between sustainability and profitability goals, he adds. And, of course, the plan should be clear with metrics and metrics that the employee should understand and communicate just as clearly.
Creating sustainable and responsible workplace processes is not easy: it takes time, attention, focus and a tight-knit management team, which tend to be valuable resources. But evidence shows that the effort to launch sustainable and responsible business practices early is not wasted. Over the past two years, sustainable investing assets have increased by 42% here in the United Statesand that growth is observed in almost all regions of the world.
As ESG mandates increase and the Great Resignation continues, sustainability is not just a lofty concept; it is a real opportunity for growth, profitability and sustainability, an opportunity not to be missed.
Written by Rhett Power.
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