Environment, Social, and Governance (ESG) issues have gained increasing concern from investors, consumers, government, and the general public in the present business environment. Why? The Global Risks Report 2022 highlights societal and environmental risks as the most concerning global risks. Pressure from the different stakeholders including shareholders and clients has increased the demand for companies and organizations to adopt sustainable business practices and hence sustainability, or ESG has become a crucial part of business growth and survival.
In fact, not only do companies create most of the global sustainability challenges through factors such as pollution and emissions, but they also have the potential to deliver solutions to the sustainability challenges mainly through investments and resource mobilization.
Sustainability in business involves minimizing adverse impacts of business operations and adopting business models that create a positive impact on the environment and society. Sustainability strategies incorporate ESG issues in key business decisions and create value for all the stakeholders of the business.
Sustainability strategies provide a roadmap for companies to coordinate and manage the resources of the organization for the benefit of the planet and society. Some of the benefits of arising from having a sustainability strategy include:
Positive environmental impact. Environmental protection through a reduction in pollution, and emissions and improving biodiversity.
Enhanced Social impact. Social benefits and job creation through directing investments and funding to projects with greater and more favorable community impact.
Brand loyalty. Adopting sustainable business practices leads to increased customer support for the company’s products and services.
Improved performance. Sustainability strategies help in cost reduction for businesses and thus improve performance. According to a study by McKinsey, the study discovered a substantial link between a firm’s resource efficiency derived from sustainability initiatives and financial performance. The study findings show that such initiatives can enhance operating profits by as much as 60%.
Increase employee attraction and retention. Employees would prefer to work for companies that have sustainable business practices. Sustainable companies enhance the motivation of employees as they promote purpose and value creation.
Sustainability has become a critical component of companies’ operations as businesses have shifted from pure profit maximization towards adopting the Triple Bottom Line TBL approach which consists of profit, people, and the planet. Ultimately as a Business Owner or stakeholder, having a sustainability strategy for your business, whether small, midsized or otherwise, is proving to be the only path forward you can take.
1 The Global Risks Report 2022. World Economic Forum Global Risks Perception Survey 2021-2022