Companies can make money by becoming sustainable!
Here’s a checklist of 5 tips on how to do it!
By Hanin Alzuhairy, founder and CEO of Advising International ApS. August 19th 2020.
“Do well, while doing good,” as taught at Harvard Business School Online, and Copenhagen Business School
Climate heating, water waste, greenhouse gases / CO2 emissions, and beef production are some of the environmental themes that have become commonplace in the media. We are facing a major problem, which we’ve been guilty of perpetuating since the 1980’s, when the manufacturing industry really let loose. The CO2 emissions we’ve emitted over the years will remain in the atmosphere for up to hundreds of years. But, if we do something serious about it now, there’s hope for future generations.
Sustainability is about investing in the future of our children and grandchildren, so that they can have a good quality life, rather than focusing solely on making money in the short term, at the expense of the climate, and thus, future generations. As a business owner however, one must also think about its profits, as it would otherwise not make sense to have a business.
One must find one’s “sweet spot” in business, where a company’s business strategies allow them to do something good for the world, while simultaneously increasing revenue. Today’s consumer has now become very aware of sustainability. It’s this consumer that companies must work towards attracting.
Based on the UN’s 17 world goals and 169 sub-goals, experts have come up with several different aspects that can lead to sustainable economic growth if the business strategies and marketing strategies are in place. According to the “Better Business Better World” report, compiled by The Business & Sustainable Development Commission, the global targets could open up $ 12 billion in market opportunities in just four areas, accounting for 60% of the real economy. They are: food and agriculture, cities, energy, and health.
Checklist 5 tips: how your business can make the world a better place, while simultaneously increasing its revenue:
1) Read the UN’s 17 World Goals and the “Better Business Better World” report and assess what the “sweet spot” is for your company: Can you integrate any sustainable areas in your business strategy? This can apply to new opportunities, as well as the adaptation of existing ones, as long as both have sustainability in mind.
2) “Disruptive Sustainability” is what you need when you’ve found your unique sustainable business area, or “sweet spot” (niche). Your company must disrupt the market with sustainable products or processes, and dare to seize the opportunities, despite associated risks.
Some start-up companies are already doing this in the “experimentation” phase—the first phase in which a company experiments with a product. If they’re lucky and skilled like Kodak, for example, they discover brand new ways of doing things.
The company then enters the “start-up phase.” This phase is usually incredibly profitable, but sooner or later most industries and companies approach maturity, as they run with the same product line/production methods but try to make them more efficient. New technologies, product types, and processes emerge that often satisfy customers’ needs in new ways, and completely replace the existing product. Smartphones replaced the classic mobile phones and wiped out Nokia and Motorola. Digital streaming put many of the major music publishers out of business. Often, companies have a hard time letting go of old ways of thinking and working.
Using analytical methods, one can investigate what major uncertainties the company or industry is facing or what may become relevant in the future. For instance, sustainability is a long-term investment for some manufacturing companies in their business or industry in general, due to pollution, water supply problems or poor soil quality as a result of climate warming.
By taking such risks, companies will be able to avoid the fate of Motorola or Nokia and become “market jumpers.” The leading companies have incorporated a “risk mindset” into their business strategy. They recognize the uncertainty they face and use it to strategically restructure their business.
Doing this requires a comprehensive analysis of the company’s disruption opportunities in sustainability, whereby the disruption strategy and business model are also chosen.
3) Find your sustainable purpose, and create a strong corporate culture: Purpose is a central theme when it comes to sustainability. Define your clear and distinct sustainable purpose and build it into your company’s culture. The idea that purpose improves performance is supported by extensive academic research.
A clear purpose helps to increase performance, as there are many psychological effects associated with a good purpose. For example, purpose can help a company develop a strong corporate culture and thus, a strong identity.
Employees driven by a good cause are more motivated and work more efficiently. Furthermore, purpose creates a reputation for “doing the right thing,” which is used in differentiating a business from its competitors and attracting and retaining customers.
Companies with a clearly sustainable purpose play a major role in the green transition, as they help make production processes and work processes sustainable, while simultaneously changing consumer behavior towards sustainability.
4) ESG investment can definitely pay off. ESG stands for Environment, Social, and Governance. As a sustainable company, it’s relevant to show consumers and investors that your company is living up to the ESG requirements. How the company plans to lower its energy consumption, fight child labor, promote employee health and well-being, and act ethically in its management are all aspects of such.
5) Invest in the right marketing strategy: The company’s marketing strategy, including branding and communication, must be able to explain the company’s sustainable direction, including any ESG and publishing reports on the company’s sustainable efforts, in a consistent, strategic and tailor-made manner—to differentiate itself from its competitors and to attract and retain employees, customers, partners and investors.
Unfortunately, there are some companies that don’t know their marketing power, which is ultimately the path to success.
Sustainable change is a process that must be incorporated into your business strategy.
Everyone can take steps towards a sustainable transition. As long as it’s a common global project with a good purpose, all businesses can make a difference—big and small—while achieving growth through the right business and marketing strategies!