Working for a top-10 fastest growing German startup is certainly a challenge as well as it is a source of inspiration. I decided to write a brief article about sustainable business practices as the company is keen on efficiency and sustainability. Nevertheless, sustainable practices in general are not mainstream yet.
Common misconceptions when discussing this topic are: “No, we don’t have time for that—later.” “CSR, this is when you donate to a charity.” “We’re a startup and don’t have funding for that”.
The strategies or methods I’m talking about are not just a deed of goodwill or an activity that can be applied like an add-on but it is a way to consciously do the work. It actually means to look at the business model and processes of the company, and adapt the strategy by asking questions such as “are we treating our employees fairly?”, “are we wasting valuable resources in our operational processes” and “are we purchasing our resources from sustainable sources?”.
In any case, all actions taken should lead to the economic prosperity of a company, also known as the Triple Bottom Line (TBL). TBL is a sustainability framework that examines a company’s social, environment, and economic impact. However, one challenge with the TBL is that the three separate accounts cannot easily be added up. It is difficult to measure the planet and people accounts in the same terms as profits (cash). This leads to another misconception—that sustainability is an additional source of costs but I’ll come back to that in a sec.
I believe that a well-considered sustainable approach benefits companies of all sizes and types. Here is a selection of five good reasons why it should be your business.
Improving the environment—and sales growth
There is evidence that companies that embrace sustainability actually perform better financially than those that do not. A 2014 research study by the Carbon Disclosure Project found that companies that are actively managing and planning for climate change achieve an 18 percent higher return on investment than companies that aren’t planning for climate change.
This shows that taking environmental aspects into consideration leads to a direct measurable benefit. In fact, by implementing effective measurements significant costs saving can be achieved (here I refer to my comment on costs) by using fewer resources. A win-win.
Sustainable business builds sustainable customers.
It would be all but impossible to miss the growing demand for greater sustainability on the consumers side. More and more corporations, SME’s as well as startups have fortunately noticed that public demand for sustainable products has made their indifference unsustainable. They have jumped on the sustainability bandwagon with various degrees of sincerity.
A 2015 Nielsen survey (Green generation: Millennials say sustainability is a shopping priority) found that 66 percent of respondents would pay more for a product or service if the company was committed to positive social and environmental change. That is up from 50 percent in the same survey two years before.
Improving your brand
Greenwashing, also called ‘green sheen’ (deceptive marketing used to promote the perception that an organization’s products, aims or policies are environmentally friendly), was yesterday. Today it is important for a company to honestly market its sustainability efforts. We put the stress on honestly because increased attention on a company’s performance, promotional activities and so forth can quickly backfire.
A 2017 Corporate Social Responsibility (CSR) study of Boston-based Cone Communications examined consumer attitudes, perceptions and behaviors around CSR, as well as if and how companies should stand up for social injustices.
The study, which utilized benchmark data dating back to 1993, revealed that 87 percent of consumers said they’d purchase a product because a company advocated for an issue they cared about and more than 75 percent would refuse to purchase a product if they found out a company supported an issue contrary to their beliefs. Knowing this could give your business another competitive edge. Businesses that are managing to achieve the best ratio between price, quality and sustainability will become the most competitive in the market.
Better competitive advantage—also for startups
Taking the above-mentioned points into account, the conclusion that an integrated sustainability strategy creates competitive advantage for enterprises should not come by surprise. It is important to add, however, that this advantage is visible for companies independent from their size.
Furthermore, as a matter of concern for startup ventures, being more agile than a large corporation, it should be better manageable to develop sustainable processes from scratch than to slowly change an existing one, which also requires a change in corporate values and culture. Nevertheless, multinational corporations like for example Adidas are very serious about this topic as they vow to use only recycled plastics in their supply chain by 2024.
As we speak conscious entrepreneurs of startups obviously contemplate if the investment required to develop sustainable business strategies, and whether they are even capable of exhausting that amount on a strategy that may or may not, give the expected return. In case you are dealing with the same dilemma—in another post I will share steps to take (roadmap) to ensure that your business practises sustainability without losing its grip.
Create an engaged workplace
Engagement as well as commitment of your team is essential in transforming your business’s sustainability goals into reality. Taking the first steps are simple, by properly educating and engaging, you can build a sustainable culture in your workplace.
Besides the financial benefits as mentioned before, studies from Wharton University have found that employee retention, productivity, and overall engagement all go up. It appears to give employees a sense of larger purpose.
As Paul Polman (CEO Unilever) puts it; “The key to creating a vibrant and sustainable company is to find ways to get all employees, from top executives to assembly workers, personally engaged in day-to-day corporate sustainability efforts.” After all, small actions can make a big difference.