It’s Proven! Sustainability is Directly Linked to Business Success

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You don’t have to operate with zero waste, a recycling program, and environmentally friendly policies to be a sustainable business. Being a sustainable business means your company is working with conscious thoughts regarding the future – knowing that the decisions you make today will affect your ability to act purposefully tomorrow.

Sustainability and Success 

Businesses that operate with sustainability in mind promote innovation because they are continuously reviewing their processes to find new and better solutions and alternatives. They are mindful of changes outside the company walls and encourage employees to implement those within the organization. They promote an attitude of questioning and bettering the organization.

An article in The Guardian (The Guardian, 2012) reported a study found that “over an 18-year period, the high-sustainability companies dramatically outperformed the low-sustainability ones regarding both stock market and accounting measures.” The high-sustainability organizations saw a higher return on equity and return on assets, indicating that sustainability is directly and positively correlated with success.

Investors are attracted to businesses that demonstrate a concern for environmental and social factors. McKinsey (Environmental Leader, 2016) found that an investment of $1 in a high-sustainability company in 1993 would have grown to $22.60 b 2010, whereas the same stake in a low-sustainability company would have only increased to $15.40 in the same period. High-sustainability businesses demonstrate to investors a forward-thinking mentality that indicates longevity and a heightened sense of awareness. Sustainability not only helps the world but is a reflection on the commitment and long-term commitment of a company’s leadership team.

It's proven that highly sustainable companies operate in a way that increases employee loyalty and retention. These businesses prioritize paying fair salaries, empowering and inspiring their employees. Employees and potential recruits want to work at these organizations because it promotes an environment of “working for the greater good,” creates shared value, and is an indication of good management practices (Co2 Australia, 2015).  Overall, sustainable businesses can offer more fulfilling jobs.

When looking at current customers and attracting new customers, sustainability comes in handy too! Research (Oekom, 2018) shows that 58% of consumers consider the business's environmental impact when deciding from whom to purchase goods and services. As a result, they are more likely to buy from a company that has demonstrated sustainable habits.

Businesses can and should be a force for good. Through sustainable supply chains and positive client relationships, successful companies need to operate with a forward-thinking perspective. Conserving resources today will ultimately lead to an easier tomorrow- and for companies expecting to be in business for many decades to come, this should be an influential factor in every business decision.


References

Eccles, R., Ioannou, I., Serafeim, G.  (2012, January 06). Is sustainability the key to corporate success? The Guardian. Retrieved from https://www.theguardian.com/sustainable-business/sustainability-key-corporate-success

(N.A.) Why is Sustainability Important for Business? (2015, September 24). CO2 Austrailia. Retrieved from https://www.co2australia.com.au/why-is-sustainability-important-for-business/

Anon, (2018). Sustainability and Business Success. Oekom Research. Available at: http://www.oekom-research.com/homepage/english/study_TUM_oekom.pdf

6 Benefits of Becoming a Sustainable Business. (2016, March 24). Environmental Leader. Retrieved from https://www.environmentalleader.com/2016/03/6-benefits-of-becoming-a-sustainable-business/