Once thought to be opposing goals, sustainability and financial success now go hand-in-hand for many businesses. Some, however, may be skeptical of the claim that a business can do well by doing good. How can you make the business case for sustainable practices to skeptical decision-makers in your organization?
Here are key terms to use to frame your discussion, several ways sustainable business practices can pay off financially, and tools to leverage when pitching sustainability to stakeholders.
Corporate Social Responsibility and the Triple Bottom Line
Corporate social responsibility (CSR) is a business model in which for-profit companies seek to create social and environmental benefits while pursuing organizational goals. Whereas companies typically focus on the bottom line, or generating profit, socially responsible corporations focus on the triple bottom line.
The triple bottom line can be described as the “three Ps”: people, the planet, and profit. In other words, in addition to striving to succeed financially, socially responsible companies commit to measuring success through their impact on people—employees, customers, and society at large—and the environment.
It’s important to not think of sustainability initiatives as a financial trade-off, but rather, as a wise financial strategy.
“There’s good reason to believe that solving the world’s problems presents trillions of dollars’ worth of economic opportunity,” says Harvard Business School Professor Rebecca Henderson in the online course Sustainable Business Strategy.
Leading with purpose can positively impact both the planet and your business’s financials. Here are eight benefits of a sustainable business strategy you can use when making the case to your internal team.
8 Benefits of Sustainability in Business
1. Drives Internal Innovation
Making the switch to sustainable business practices provides an opportunity for new, innovative ideas to grow. Consider this your chance to question the way your organization operates. Are there inefficiencies in your production process? Are there alternatives to how you currently source production materials? What equipment or technology could make your internal processes and product delivery more energy efficient?
These types of questions reveal opportunities to save money on energy and reassess how ethically you source materials. They can also shake up your mindset of “this is how we’ve always done it” and prompt innovative ideas for new business opportunities.
Related: 23 Resources for Mobilizing Innovation in Your Organization
2. Improves Environmental and Supply Risk
Investing in more sustainable practices can pay off in the form of risk management. By using renewable resources—such as wind, water, and solar power—your company has greater security over its energy sources.
This can also offer financial benefits. For example, if your company switches from coal to clean energy, like ice cream company Ben & Jerry’s, you can avoid the hassle and cost when coal prices skyrocket.
3. Attracts and Retains Employees
Being a sustainable company can have a big impact on the talent you attract and retain. A recent survey conducted by clean energy company Swytch found that nearly 70 percent of employees report that their company’s strong sustainability program impacts their decision to stay with it long term.
The same survey reports that 75 percent of millennials—who will make up three-quarters of the workforce in five years—would take a decrease in salary if it meant working for an environmentally responsible company. Nearly 40 percent selected one job over another because of an organization’s sustainability practices.
Committing to sustainability puts your company’s values at the forefront, which can attract employees and job seekers who share those values. Hiring and retaining the right team can save your organization the time and money of having to rehire for multiple roles.
4. Expands Audience Reach and Builds Brand Loyalty
A focus on sustainability can not only help attract and keep the right employees, but build a broader, more loyal customer base.
Research in the Harvard Business Review shows that sustainable businesses see greater financial gains than their unsustainable counterparts. In addition, consumers’ motivation to buy from sustainable brands is on the rise. For instance, products with an on-package sustainability claim delivered nearly $114 billion in sales in 2019—a 29 percent increase from 2013—and products marketed as sustainable grew more than five times faster than those that weren’t.
Adopting sustainable practices and marketing appropriately can enable your business to reach new, sustainably-minded market segments while building brand loyalty among your customer base.
5. Reduces Production Costs
One of the simplest business cases for sustainability is that using fewer resources, or more sustainable ones, can decrease production costs.
Examining your supply chain, production process, and energy use at brick-and-mortar stores and office buildings can help identify places where cutting back on finite resources and switching to greener alternatives is a cheaper option.
“Some firms invest in sustainability because the business case is so glaringly obvious, they’d be foolish not to,” Henderson says in Sustainable Business Strategy.
6. Garners Positive Publicity
Another outcome of opting for sustainability is the positive publicity it can garner. Especially if it’s a divergence from your business’s previously established practices or industry standards, your switch to sustainability and investment in the environment can call for press releases and announcements.
Side effects of this positive publicity can be employee pride, sustainably-minded job applicants, and increased customer loyalty and referral rates.
7. Helps You Stand Out in a Competitive Market
In a competitive market, any way to differentiate your product and brand from your competitors is valuable. Sustainable business practices can be a positive way to stand out if your competitors haven’t adopted those practices themselves or match them if they’ve already made the switch to sustainability.
Calling back to research in the Harvard Business Review, consumers’ focus on brands’ sustainability practices is on the rise, and your business’s practices could be the sole reason consumers choose your product over your competitors’.
8. Sets the Industry Trend
Sustainability not only helps your company stand out against competitors but also influences their behaviors. If your organization is one of the first in its field to adopt sustainable practices, it could set your business apart as a trend-setting leader and prompt other companies to follow suit.
“The leaders, the firms who are driving real change and reaping the benefits of being first-movers are often as motivated by a driving desire to make a difference as they are by the wish to make money,” Henderson says in Sustainable Business Strategy.
If the sustainability trend continues, it could become the norm in your industry. When many corporations adopt sustainable practices, they have the potential to make a real impact on the world’s largest problems.
Tools for Pitching a Sustainable Business Strategy
When pitching sustainability to internal decision-makers, use the data, projections, and anecdotal evidence at your disposal. Here are a few tools to help you make your case.
1. Data Visualizations
Data visualizations are graphical representations of data. When making the case for sustainability, you may create a graph that shows the increasing prices of fossil fuels, a chart that shows consumer preferences for sustainable companies, or a visual forecast of what future revenue could look like if a piece of sustainable technology were purchased.
Some data visualization tools you can use are:
- Microsoft Excel & Power BI
- Google Charts
- Tableau
- Zoho Analytics
- Datawrapper
- Infogram
Visualizations are a clear, concise way to tell the story of why you should adopt a sustainable business strategy.
Related: Bad Data Visualization: 5 Examples of Misleading Data
2. Anticipated Return on Investment Formula
When advocating for specific sustainability projects or equipment purchases, it can be useful to calculate the anticipated return on investment (ROI). Calculating the anticipated ROI shows internal stakeholders how much financial return the business can expect as a result of investing in the sustainable practices you’re proposing.
To calculate anticipated ROI, use the following formula:
ROI = (Net Profit / Cost of Investment) x 100
In project management, the formula is written similarly but with slightly different terms:
ROI = [(Financial Value - Project Cost) / Project Cost] x 100
3. Case Studies of Businesses with Successful Sustainability Initiatives
Real-world examples can go a long way when proposing new ideas. There are plenty of businesses that have successfully executed sustainability initiatives and put the triple bottom line at the forefront of their business strategies. A few examples include:
- Rothy’s
- Bank of America
- Etsy
- AstraZeneca
- Ben & Jerry’s
- Lego
- Salesforce
- Levi Strauss
- Starbucks
Dig deeper into what made these firms’ efforts successful, and use that as fuel for your company’s strategy.
Related: 5 Examples of Corporate Social Responsibility That Were Successful
Furthering Your Sustainable Business Education
If you and your colleagues want a strong foundation for making the shift to sustainable business, consider taking Sustainable Business Strategy. The online course presents groundbreaking concepts using the HBS case method and asserts that sustainable capitalism has the power to influence the world’s most pressing challenges.
By bolstering your knowledge of the space, your organization could become one of the many success stories of those that create shared value from sustainable business practices.
Are you interested in leading your business to a more sustainable future? Explore our three-week online course Sustainable Business Strategy to become a purpose-driven leader.
