Why is business sustainability so important?

In addition to driving social and environmental change, sustainability initiatives can contribute to an organization’s overall success. It may seem counter-intuitive that spending more money on sustainable business practices can boost a company’s profitability, but studies show that the most sustainable companies are also the most profitable.

solar technicians holding solar panel
Photo by Los Muertos Crew on Pexels.com

Environmental, social, and governance (ESG) metrics are often used to determine how ethical and sustainable an organization is. According to McKinsey, companies with high ESG ratings consistently outperform the market in both the medium and long term. While sustainability strategies might be an investment in the short term, they can lead to long-term benefits.


1. You’ll Protect Your Brand and Mitigate Risks

Ending up on the front page because of a scandal is a CEO’s worst nightmare. Not only do improper practices damage an organization’s reputation and cost it customers, but dealing with a public relations disaster can divert valuable human and financial resources from the core business.

You don’t want to become the company that allowed an oil spill or forced employees to work in unsafe conditions. By instituting a sustainable strategy that protects the environment and your workers, you also protect yourself from any damaging incidents.

2. Being Purpose-Driven Is a Competitive Advantage

Sustainability doesn’t detract from business goals, and infusing your company with purpose can help attract a motivated, skilled workforce that drives financial success. In a Facebook Live discussion, Henderson noted a recent study showing that 89 percent of executives believe an organization with shared purpose will have greater employee satisfaction. Additionally, 85 percent say they’re more likely to recommend a company with strong purpose to others.

Making your company an organization that does good in the world—rather than just a place that provides a paycheck—can be a competitive advantage when attracting the best talent.


3. There’s a Growing Market for Sustainable Goods

2019 study found that 73 percent of global consumers are willing to change their consumption habits to lessen their negative impact on the environment, and sustainable product sales have grown by nearly 20 percent since 2014. Millennials in particular are more willing to pay more for products that contain sustainable ingredients or products that have social responsibility claims. If your organization commits to sustainable products and practices, it could gain market share by converting sustainability-minded customers and increasing sales.

4. Cooperative Action Can Drive Change

As an individual, it can feel overwhelming, isolating, or simply impossible to effect change in a meaningful way. That’s not the case when the most innovative, successful, and powerful companies are collaborating to solve some of the world’s most pressing problems. While governments struggle to address public goods problems, purpose-driven companies working together to address these issues have experienced great success.

For example, palm oil is cheap, versatile, and found in about half of all packaged products, including soap, lipstick, and ice cream. But palm oil production (pdf) has resulted in record greenhouse gas emissions and contributed to climate change.

In light of this, consumer goods producer Unilever committed to only using palm oil from certified sustainable sources in 2008. The organization cooperated with its competitors—as well as governments, NGOs, and indigenous peoples’ organizations—to lead an industry-wide adoption of sustainable palm oil. As a result, Unilever continues to be a thriving organization, and the world has reaped the environmental benefits of sustainable palm oil harvesting practices.

One thought on “Why is business sustainability so important?