Sustainability and profitability: What’s good for the planet is good for business

Even though organizations recognize the sustainability requirement and most of them even have net zero commitments, they aren’t translating sustainability ambition into action.

Most businesses are holding back because they frequently see sustainability as a cost center rather than a value center. A new report from the Capgemini Research Institute shows that 53% of companies believe that the cost of pursuing eco-friendly initiatives outweighs the potential benefit.

But the truth is that, in today’s business landscape, sustainability and profitability are closely linked, and investing in green initiatives really pays off: Organizations that are prioritizing sustainability are already outperforming organizations that aren’t.

Let’s now explore how sustainability can boost profitability in many various ways.

Catch the eyes of customers and pockets of investors

Environmental, social, and governance (ESG) practices keep gaining immense popularity as the interest in conscious consumerism has skyrocketed—the World Economic Forum calls it an eco-wakening.

For starters, consumers demand businesses become environmental leaders in their waste management and manufacturing process. They can loosen the purse strings—according to a survey, 90% of consumers are willing to pay a premium price if a product meets their sustainability criteria.

Moreover, investors and stakeholders have started to pay closer attention to a company’s stance on socioeconomic factors and its sustainability efforts before investing, making ESG strategies critical for success and business growth.

It’s crucial to acknowledge that if companies pretend to be greener than they are, instead of attracting customers and financial backers, they will face severe consequences: Greenwashing can lead to a 1.34% drop in their American Customer Satisfaction Index (ACSI) score. This number might not seem astronomical, but research shows that even small changes in a firm’s ACSI score can have significant implications for corporate performance.

So what are the best practices to avoid greenwashing? Businesses need to do meaningful research on how to be eco-friendly, evaluate all stages of their operations—and most importantly—have a real social purpose in their sustainability goals.

A prime example of having a real green mindset would be Patagonia, an outdoor gear manufacturer. Aiming to create quality products and minimize the impact of consumerism on the planet has always been at the heart of the company. To protect this legacy, Yvon Chouinard, the founder of Patagonia, recently decided to give away his $3 billion company to fight climate change.

Get green for going green

Since sustainability promotes energy-efficient equipment, water-saving devices, reducing waste, and more, eco-friendly business measures naturally lead to savings.

To illustrate this, companies like Gramener leverage innovative technological tools and empower businesses to create digital replicas, also known as digital twins, of real-life items. The ability to monitor and conduct experiments before launching the product enables manufacturers to improve quality and find the best way to use raw materials. This way, they can reduce waste in production while saving on the expenses of buying raw materials and disposal of waste.

And what’s more, delivering sustained outcomes on climate and net-zero goals has some tax benefits, which can be a crucial part of financial saving strategies. Governments across the world have already begun using green tax incentives to meet their commitments on carbon neutrality, tackle climate change, and encourage projects and investments that reduce environmental damage.

Green taxes and incentives trackers can assist organizations in delving deeper into the environment or carbon-related tax matters in the region where they operate.

Level up your talent acquisition game

The winds of change are blowing through Silicon Valley—engineers and top talent from global behemoths like Google and Apple are quitting their jobs to join climate tech startups. As professionals are becoming more conscious of the environmental and societal consequences of their actions, they’re turning to value-driven companies.

According to a report, when deciding on an employer, 71% of workers consider a company’s environmental record. In Portugal, for example, 37% of employees would decline a job offer if a firm’s environmental, climate control, or sustainability values don’t align with their own—the numbers are even higher in France and Chile, both sitting at 53%.

Hiring talent has been a tough row to hoe over the last four years, and it will likely continue in 2023. That’s why turning their sustainability goals into action can help companies create a positive brand image and stand out from the competition for talent acquisition.

Furthermore, studies highlight that businesses with higher ESG scores have higher employee satisfaction, which leads to an increase in productivity, employee retention rates, and profitability.

Wrapping up, it’s time for a mindset shift: Instead of seeing sustainability as an expensive investment or a nice-to-have, companies must start placing it at the core of their business operations. The result of eco-friendly practices will be rewarding—organizations can improve profitability while reducing their environmental impact on the planet.