Why sustainability is the biggest business opportunity of our times

Sustainability as a business opportunity works in two ways. First, by turning your technologies, products or services green, your bottom line is bound to increase exponentially. Second, frontrunners will become the brand, supplier, employer and investment of choice for their stakeholders.

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The end of the beginning

In the past decade, lots of trends related to corporate sustainability have seen the light of day. Some are just emerging, like bioplastics and the metaverse. Others have been here for a while and are accelerating as we speak, such as energy storage, carbon offsetting and ethical sourcing. A third group of trends have steadily become the norm. Electric mobility, energy efficiency, diversity and inclusion, workforce health and safety, and waste management are all there-is-no-going-back topics.

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The rise of numerous trends related to Environmental, Social and Governance criteria (ESG), shows that sustainability has gained enormous momentum. All of us felt it the topic would be dominant someday. But only now has someday finally turned into today. We’ve reached the end of the beginning, so to speak. No business seriously doubts that sustainability should be on the agenda. However, a majority still needs to fully make the switch. In the meantime, the clock is ticking and the frontrunners are almost out of sight.

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Sustainability as key driver for innovation

Google ‘sustainability innovation’ and you’ll get over a billion hits. Both concepts go together like peas and carrots, as Forrest Gump would say. Indeed, sustainability is the mother lode of innovations that yield both bottom-line and top-line returns. This is largely because sustainability is about the long term. While the natural inclination for business might be to alleviate immediate economic pressures, a sustainability lens looks beyond the here and now. How do I make sure that my products, services, technologies, processes and business model are still relevant and economically viable tomorrow, with minimal impact on the environment?

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Concrete outcomes of this distinct mindset exist in a zillion shapes and forms: from sourcing locally and reselecting raw materials to setting up new distribution channels. Good to know: it’s mainly an innovation focus on the E in ESG that results in business value. Having a strong environmental proposition helps companies tap new markets and expand into existing ones.

It’s mainly an innovation focus on the E in ESG that results in business value.

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It’s simply what all stakeholders want (or even demand)

No stakeholders, no business. We know, that’s stating the obvious. Let’s turn it around: happy stakeholders, growing business. That sounds more like it, right? Here’s how sustainability relates to your stakeholders’ state of mind.

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Consumers – Although Covid briefly knocked sustainability off the speaker’s podium, our climate emergency has not gone away and neither has the consumer sentiment for change. Various studies show that consumers – the younger generations in particular – increasingly favor sustainable brands. They’re even willing to pay more for products and services that are made responsibly.

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(Future) employees – In the eyes of jobseekers and employees, a cultural match is by far the top attribute of an attractive employer. People look for a fit between their personal beliefs and the mission and values of the organization they work for. Remarkably, over 4 in 10 European employees state that such a fit is missing. In other words, there’s still plenty of room to make a difference in the war for talent with a clear vision on sustainability.

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Investors – The finance industry is changing course. Well aware of their financed emissions, more and more financial institutions are moving away from all carbon-related investments. But also other ESG issues are now recognized as key determinants of future value creation. So, expect investors to ask tough questions about ESG performance and make sure to embed your answers in your corporate strategy. Your wallet will thank you.

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Business partners – Traditionally, supplier selection criteria center around costs, product quality, supplier capabilities, consistency, and supplier risk. Today, sustainability has been added to the mix. The result: it has become next to impossible to be a supplier of choice if your sustainability strategy is an empty shell. Likewise, if you want to win a tender nowadays, acing sustainability is likely to give you the upper hand.

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Governments – Careful management of environmental issues can ease regulatory pressure and reduce risk of adverse government action, enabling you to achieve greater strategic freedom. The stakes may be higher than you think: about one third of corporate profits are typically at risk from state intervention, according to McKinsey. The opposite is also true: if you help governments in achieving their sustainability targets, you’ll get a lot of goodwill in return.

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The time is now

Yes, sustainability is a catch-all term that’s loosely used by all kinds of businesses. No, building a sustainable business is not a straight line to success. But Wal-Mart’s CEO H. Lee Scott hit the nail on the head when he said that ‘sustainability is the single biggest business opportunity of the 21st century and will be the next source of competitive advantage’.

It is no longer a matter of compliance or a risk that’s managed. Sustainability-driven initiatives have the potential to drive competitive advantage, innovation and revenue growth. And the best of it all: it’s entirely in your hands.

Sustainability will be the next source of competitive advantage.