As a business leader, you want your company to grow; but is it possible to grow your business sustainably? A sustainable business performs its business operations without negatively impacting the environment, community, or society as a whole. To successfully achieve sustainable business status, businesses require sustainable innovations that strategically reduce the negative environmental impact related to their business operations, which begs the question, can innovation and sustainability co-exist?
Innovation vs. Sustainability
We’re used to thinking of innovation and sustainability as being in conflict: some believe that we need to invest in sustainable practices, while others adopt the “whatever it takes at all costs” mentality. By definition, innovation refers to bringing new and/or improved versions of products or processes to market. Overall, a positive perception follows innovation, generating an ongoing high market demand for innovation. Nonetheless, businesses face difficulty when it comes to meeting these demands resulting in unsustainable business practices.
Unsustainable Business Practices
When we think of unsustainability, what may come to mind is packaging designed for landfills. However, unsustainability takes many shapes and forms in businesses. Three categories can describe unsustainable business practices: technical, organizational, and social.
Some examples include (Ritala et al. (2018) and Bocken et al. (2014)):
- Technical: Use of fossil fuels, high waste and emission production, unused production of by-products, and use of polluting processes
- Organizational: Disconnecting consumers from production and consumption impact, businesses operating solely for economic profit, and ignoring concepts that may attract funding
- Social: Poor asset utilization, businesses built on exploitation, single-use products, excessive packaging, and advertising activities that promote unnecessary use and overconsumption.
Sustainable Business Practices
As mentioned above, the concept of sustainability presents differently depending on your business. Sustainable businesses utilize strategies that align with their organizational goals and values. Within their strategy, actions per category may include:
- Technical: Maximizing materials and energy efficiency, substitute with sustainable materials and processes, and closing resource loops.
- Organizational: Connect consumers with production impacts, sponsoring education that benefits the community, and adopting concepts that attract funding.
- Social: Transparent environmental impact reporting, improve functionality of single-use products, and eliminating excessive packaging.
Benefits of a Sustainable Business
Sustainability is an economic advantage as well as an ethical one. Although, you might assume that the only benefit of converting to sustainable practices is directly environmental, sustainable business models may:
- Attract more customers & Increased R.O.I : A recent report revealed that 85% of consumers’ purchasing has become “greener”. The study revealed that sustainability is becoming increasingly important in influencing purchasing decisions across a variety of demographics. Researchers correlated this shift to a wide-spreading internal belief that consumers can generate positive environmental impact through their purchasing. Not only are more consumers than ever before choosing sustainable products, but they are also willing to pay more for this feature.
- Attracting & Retaining talent: A recent trend reported in the 2021 Deloitte report illustrated that Millennials and Gen Z populations hold businesses accountable for their environmental impact, and activism or lack thereof. More importantly, almost half of both Millennials and Gen Z participants stated that a businesses’ environmental activism has influenced their decision on employment. Additionally, green initiatives have shown to restore employees’ interest whilst working with the company.
- Reduced Costs & Increased Funding: Unsustainable and wasteful business models go hand-in-hand with additional costs. Companies that have adopted green business models have reported millions of dollars in savings with modest adjustments. Moreover, sustainability is a magnet for investors. Investors today are turning to the environmental, social, and governance metrics (ESG) to determine which companies to invest in. The ESG metric provides a rating based on many aspects of sustainability including a company’s carbon footprint, waste production, and community development efforts to name a few. According to research by Sheila Bonini and Steven Swartz, investors are more likely to invest in companies with a good ESG rating as there is less risk attached.
Getting You Started on Your Transition to a Sustainable Business
As mentioned above, sustainability looks different for everyone. To transition to a sustainable business you’ll need to create a sustainable business strategy. Depending on where you are on your business journey, you may not be able to commit to making grand changes to your business model, which is why we present to you, an easy and low-risk green initiative that can result in high reward: acknowledging all the practices and or concepts that may attract funding.
If one or two things popped into your mind immediately, you are well on your way to begin your transition! Our experts at Leyton have the expertise to guide you in your sustainability transition and discuss your eligibility for the many funding programs available. From government grants to tax credits, your business is able to transition with minimal disruption and sufficient cash flow! Speak to one of our experts today to get started!
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