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Why Sustainable Businesses are More Profitable & How to Be One

Today where the world is recovering at a snailed pace from the global pandemic, many investors are betting their money by taking a closer look at sustainability factors of the companies they are investing in. Factors like the company´s carbon footprint, social impact, community development efforts, employee inclusion and diversity, and a non-biased brand voice are all that form part of the new decision-making process of investors.

Even consumer´s buying decisions today are highly influenced by the sustainability practices adopted by the brand. Be it a traveler looking to book an accommodation or an experience, or a young millennial browsing for a new pair of shoes. A recent survey shows that 88% of consumers prefer purchasing from companies that are environmentally and ethically conscious and practice sustainability.

What is a Sustainable Business anyways?

A business is considered sustainable when its focus is not just on the economic or financial aspect of the company, but also on the measurement of its positive social and environmental impact equally.

Sustainable business leadership is derived through an equal harmony of profitability, positive social impact, and strong environmental and climate resilience. Sustainable development and growth are about meeting current needs without compromising the ability of future generations to meet theirs. Adopting the sustainability approach means using own resources economically and reducing any negative environmental impact.

According to research by Deutsche Bank, which evaluated 56 academic studies, companies with high ratings for environmental, social, and governance (ESG) factors have a lower cost of debt and equity. Additionally, the research asserted that 89 percent of the studies show that companies with high ESG ratings outperform the market and their non-sustainable competitors in the medium (three to five years) and long (five to ten years) term. 

With increasing environmental consciousness, the changing global conditions, and proven success models to learn from, how does one ensure one´s business is sustainable? Where does one start when running and managing operations and keeping the company afloat in these trying times can itself be overwhelming for entrepreneurs struggling to take off.

Starting with A Conscious Leadership

A 2019 global survey of 350 business leaders conducted by Deloitte and Forbes Insights reveals that 93% of business leaders and CEOs wholeheartedly believe that companies are stewards of society and more than just a profitable organization or employer. 60% of them devoted between one percent and five percent of their revenues to programs with a purpose, with two-thirds recording increases in budgets devoted to these programs over the last two years. This evolution is happening because the leaders of the companies believe it is necessary. The survey also asserts that 46% of employees believe the CEO is the main driving force for corporate social responsibility programs, and their views along with other top executives, play the biggest role in driving positive social impact. 

With the focus on leadership at the top to drive decisions, it is evident that to make a business sustainable, the efforts need to start from the top executives, the CEOs, the founders, and directors. You can read in our recent article about how future entrepreneurs can make socially impactful profitable businesses with empathy and collective good at the core.

Companies that are sustainable or paving their road to sustainability, widen their vision when measuring the factors that define the success of their business social impact. A conscious leader measures the success of her sustainable business by analyzing a variety of factors. Let us take an example of what the CEOS surveyed by Deloitte had to share.

A conscious leader weighs the effect of initiatives on their businesses almost the same degree as the impact on the beneficiaries. By learning from these initiatives and taking a value-based business approach, you can help your organization thrive and grow, even when faced with global challenges.

With the climate at dire crises with temperatures rising, the global fear of pandemics, plus the rising social movements across the world be it for #BlackLivesMatter or #MeToo, are a loud outcry of humanity for a better, more just, and empathic world. It is the responsibility of conscious leaders who make these services, companies, and countries to listen to them and take necessary actions before it’s too late.

 

 

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