How sustainability can boost your bottom line
18th August 2020
Recent research carried out by Opus Energy shows that sustainability matters more to businesses than before the coronavirus pandemic.
More and more companies are leaning on sustainability, both to reach new customers and to increase their profitability. This approach has been a big part of business for the last decade. In 2010, Unilever launched its Sustainable Living Plan. This set out their goal “to become the world’s most sustainable business. To prove that growth doesn’t have to come at the expense of people and planet.”
Ten years later, Unilever now put sustainable living at the very heart of their organisation’s purpose. Going forward, everything all Unilever brands do will be guided by how they contribute to making “sustainable living commonplace”.
This is a huge commitment and requires huge investment. But don’t get the idea that it’s costing Unilever money. According to Environmental Leader, sustainability is now driving profitability. In fact, results from Unilever’s 26 Sustainable Living brands have grown 46% faster than their other brands and are responsible for 70% of the multinational’s growth.
It’s not just Unilever; Ikea has launched a Sustainable Home product range, and General Electric’s Ecoimagination range makes a huge contribution to their bottom line.
Companies in the RE100 – a consortium of companies committed to using 100% renewable energy across their operations – also out-perform their competitors by two financial indicators - net profit margin and Earnings Before Interest and Taxes (EBIT) - by as much as 7.7%. Increased customer demand for sustainability is driving this profitability.
While most companies won’t have the scale or capital of an RE100 member, that doesn’t mean SMEs can’t reap the benefits of sustainability. Even small businesses can capitalise on their green credentials.
The Harvard Business Review has outlined three key approaches that businesses can adopt to make sustainability profitable:
1. Taking a systems approach
This is essentially what Unilever have done. It will challenge you to put sustainability at the very heart of your business and use it to guide all your decision-making. It is the approach adopted by one of the companies in the world that is “doing the most to embrace sustainable business practices” Denmark-based bioscience company Chr. Hansen Holding, who use ‘good’ bacteria to make sure food stays fresh on the way to market.
2. Taking the low-tech road
Sustainability improvements don’t have to come from using cutting-edge technology that requires huge investment. Nor do they always need you to re-engineer your business. They can come from simple steps too –while still improving profitability.
The Harvard Business Review gives the example of a Costa Rican drinks bottling company that radically improved sustainability and cut costs by reducing the amount of water lost through leaks. Each individual step may have been small, but the total water saved was enough to fill a large dam.
Are there areas of your business where you can cut waste – through turning down air conditioning, or reducing energy or water use for instance?
3. Taking the broader view
Why restrict your efforts to improve sustainability to your own business alone? The effort and expenditure could be even more worthwhile if you have customers – or commercial partners or suppliers – you could work with to help them profit from sustainability too.
Whichever approach your business adopts, you may even be able to get support with the costs of sustainability initiatives – giving another boost to your bottom line.
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