Why It Pays to Be a Sustainable Business

There has been no better time to make the business case for sustainability. Just recently the Intergovernmental Panel on Climate Change released a report that included some stark warnings about acting now to stop some of the most devastating effects of global warming. One of its conclusions is that we will experience 30 years of worsening climate impacts, irrespective of what the world does. But there was some good news amidst the bad: we have a narrow window to limit warming trends, especially if we can achieve net-zero emissions by 2050.  

It’s clear that what we do now matters significantly, not just as individuals but collectively. Government has a role to play but so, too, does business. Everyone must come on board if we are to have a chance of reversing or limiting some of the worst damage. 

Here at GridDuck, we believe that being sustainable as a business should be a key priority as we look to the future. While this may require an upfront investment, there is growing evidence to suggest that consumers are looking to support companies that embrace sustainability over those that don’t. Moreover, it makes business sense. 

Purpose-led brands do better 

In 2019, Unilever reported that its pivot towards promoting purpose-led brands was paying off. In fact, the “sustainable living brands” - a range of products that communicate a strong environmental or social purpose - grew 69% faster than the rest of the business. These products were also responsible for 75% of the company’s growth. It’s proof that customers responded to brands that had a strong message. Unilever is now challenging consumers to choose products that are good for the planet as part of its strategy.

More and more of us are already doing so. In 2020, a study conducted by IBM and the National Retail Federation tracked global consumer trends by surveying nearly 19,000 shoppers from 28 countries. It found that values matter and that people will ultimately pay more for products that resonated with their own. “Consumers of all ages and incomes pay much higher premiums for products aligned with their personal beliefs,” an IBM press release said. “On average, 70 percent of purpose-driven shoppers pay an added premium of 35 percent more per upfront cost for sustainable purchases.” 

Embedding sustainability is challenging

Yet some chief financial officers and CEOs still view embedding sustainability as a cost rather than an investment that will pay off in the long term. Why might that be? “Change is hard,” says Tensie Welan, director of the NYU Stern Center for Sustainable Business. It’s her view that companies need to develop new expertise, engage stakeholders and undertake change management, as well as evolve job responsibilities, incentives and organisational structures to integrate sustainability. Engaging in all these practices, while not easy, will make for a better, more competitive business in the long run. That’s why she believes “those who do embed sustainability will win”. 

As part of her work with the Center for Sustainable Business, Tensie has worked to develop a framework called the Return on Sustainability Investing, or ROSI for short. It aims to build a business case for implementing sustainability strategies, by showing how it can drive better financial performance. The CSB has partnered with a range of companies that have used ROSI to change some of their ways of doing business. One of its partners is Eileen Fisher, a women’s apparel company in the United States. It wanted to transition to more carbon-efficient transport and it worked with NYU Stern CSB to monetize its efforts over four years, between 2015 to 2019. 

One of the CSB’s findings was that shifting away from air freight was, in fact, good for business and not just good for the planet. While air freight is faster than other forms of transport, it’s also the most expensive. As air costs tripled as a result of Covid-19, Eileen Fisher’s transition to sea and trucking saved them nearly $640,000 in additional transportation costs. By doing the ROSI analysis, the company was able to demonstrate the financial impact to its stakeholders, as well as some of the intangible benefits associated with becoming more sustainable. This includes securing positive press coverage and being the choice of savvy shoppers.  

“Sustainability is the next wave of good management,” Tensie predicts. “It drives operational efficiencies, innovation and growth, risk mitigation, employee and consumer engagement, sales, and other positive benefits. It will be the leading edge of competitive advantage moving forward as we all deal with climate change, water scarcity, and inequality, among other big societal challenges.”

Convincing the business world to do better 

The movement towards business sustainability has convinced the World Economic Forum to develop a common set of metrics for companies, in partnership with the International Business Council. Launched at the WEF’s annual meeting in 2020, the aim is “to improve the ways that companies measure and demonstrate their contributions towards creating more prosperous, fulfilled societies and a more sustainable relationship with our planet”. The report includes 21 core metrics for companies that would like to commit to sustainable value creation - something which the WEF believes is important for business viability. 

“To continue to thrive, companies need to build their resilience and enhance their licence to operate, through greater commitment to long-term, sustainable value creation that embraces the wider demands of people and planet,” the report concluded.

Sustainability in practice

In California, Rubio’s is a well-known food chain famous for bringing the fish taco to San Diego in 1983. Co-founded by Ralph Rubio, it has always believed in the importance of fresh food. Increasingly, however, it is championing sustainability in the hospitality industry. “At Rubio’s, our dedication to the ocean and sustainability is the core of our brand,” Ralph Rubio tells us. The menu features responsibly sourced seafood, for example, and it has developed a selective ingredients list called Made With a Mission. 

With nearly 150 locations, the chain uses eco-friendly, compostable packaging and reusable catering bags for its takeaway orders. Many of its restaurants offer dishware when you’re dining in, diverting approximately 350,000 pounds of paper waste from landfill every year. The company even recycles the oil from its fryers, estimating that the recycled oil could create enough biodiesel to fuel all the food deliveries to its stores over one year. Its restaurants use energy-efficient, smart lighting, with sustainable and recycled building materials sourced whenever possible.  

Back in London, the team at GridDuck automates our heating system, keeping it at a steady 19 degrees Celsius. We use light switches that are automatic and put temperature sensors in our fridges. We are careful about our energy consumption and waste, ensuring that it’s kept to a minimum. If you want to see how we use energy in our headquarters, you can click on the demo button for a chart that’s linked to our dashboard. Alternatively, schedule a call with Miles to learn more about how we can help your business to save money and cut carbon emissions.

We are increasingly convinced that being sustainable is a must-have for any business. We call on others to join us in embedding practices that will make our communities and our planet more resilient in years to come.