In today’s rapidly evolving world, considering sustainability when making business decisions is becoming essential. Likewise, maintaining a values-driven approach when developing business strategies is vital to long-term success.
According to Gartner’s survey of CEO priorities, the number of owners and investors listing environmental sustainability as a top 5 strategic business strategy is skyrocketing – from <2% in 2012, to a staggering 20% in 2022. In this research, Gartner also noted that sustainability seems to be a competitive differentiator for CEOs in 2022 and 2023, and sits at the same level as brand trust.
Business leaders are feeling the crunch as key stakeholders are calling upon them to start acting in more environmentally sustainable ways. As a result, they are evolving to meet these growing demands and recognising them as a chance to drive business efficiency and revenue growth.
Regardless of whether a company focuses on savings through optimisation, growth through scale, or transformation through pioneering – they all need good design with significant consideration for sustainability, in addition to the traditional pillars of People, Process, Data and Technology.
ESG and the role of sustainability
83% of C-suite executives and professionals in the investment field believe that Environmental, Social and Governance (ESG) programs are set to generate significantly more value for shareholders in the next five years than they currently do, according to a recent McKinsey Global Survey.
In addition, it was found that businesses with high ratings for ESG performance had average operating margins that were 3.7 times higher than lower ESG performers in Accenture’s research on responsible leadership. This research also uncovered the fact that shareholders received better annual returns, outperforming lower ESG businesses by 2.6 times.
This signifies that sustainability is quickly becoming a necessary approach to future business prosperity, with long-term value being created by considering how businesses operate in social, ecological and economic environments.
Good intentions coupled with professional, well-branded communications are no longer considered good enough. Instead, developing better, sustainable business strategies equates to greater corporate responsibility, and strengthens company longevity.
Business leaders in sustainability design
The following business organisations are leading the way when it comes to the development of sustainability initiatives:
Schneider Electric
Offering technology and energy solutions for more than two decades, Schneider Electric is known as a green leader and is one of the world’s most sustainable businesses in 2022. In recent years, they have quickened up their own significant climate commitments, generating 80% green revenues by 2025, with the aim of helping their customers reduce up to 800 million metric tonnes worth of climate emissions.
JetBlue
As a green leader in the airline industry, JetBlue aims to achieve carbon neutrality by offsetting emissions and instead focus their investments on solar, wind, forestry and landfill gas capture projects. The business has aligned itself with the United Nations’ Sustainable Development Goal 13 (Climate Action), while continuing to discover new renewable aviation fuel options for its entire fleet.
Netafim
Closer to home, agricultural irrigation supplier Netafim has run a sustainability initiative since 2006 that not only keeps their product out of landfill (an incredible 912 tonnes of dripline reclaimed and recycled between June 2021 to September 2022 alone) – it also introduces a very successful secondary revenue stream. The used dripline is collected, recycled into polypipe and sold to consumers through the hardware market.
In fact, our very own CEO Shane Jones developed and introduced this ReCoil Recycling initiative during his tenure at Netafim! This initiative proves that sustainability initiatives need not come at the expense of business – indeed, they can create highly valuable new markets and revenue streams.
Business sustainability design recommendations
As it is with any business strategy, there’s no silver bullet or ‘one-size-fits-all’ approach to sustainability design. Ultimately, it will depend on the requirements, needs and ambitions of each business.
Below are some actions that can be taken to get started on the right foot, helping your management team significantly improve its sustainability design.
1. Ensure alignment between sustainability and strategy
Your management team should ensure that your business strategy is well-aligned with any sustainability efforts before anything else. Divergence can be quite common at the beginning, especially when there’s a lack of commitment from an executive level, or when sustainability takes a backseat to other priorities.
2. Keep compliance front-of-mind
As an issue that is always a primary concern for investors, your company must address compliance; especially in regards to pollution, waste management regulation, energy efficiency and labour regulations.
For example, a recent EY survey found that investors are increasingly avoiding risks to do with compliance. The research found that 74% of institutional investors were more likely to avoid dealing with companies with little-to-no sustainability performance.
Alternatively, 90% of respondents said they now give more attention to a business’s sustainability practices before making investment decisions.
3. Make sustainability part of your company’s DNA
It is essential to engage your entire organisation on sustainability best-practice, from the board down. For example, Salesforce is a company with net-zero residual emissions and has achieved 100% renewable energy for their operations. To do this, they have had to embed sustainability into their core values, keeping each department and employee accountable and aware of its importance.
In 2021, Salesforce developed a Climate Action Plan to document their journey to net-zero.
Get started with sustainability design
Sustainability in business is a significant challenge for companies of all sizes. If you’re looking to incorporate it into your business and technology strategies but don’t know where to begin, contact our team to get started.
