7 Reasons Why Corporate Sustainability Matters

To some businesses, brand sustainability is a problem created to introduce more penalties for non-compliance. Sustainability is an issue that is too distant to achieve within the lifetime of the company, and that the business can survive without having to deal with it.

While some organisations might be oblivious to the facts and figures on sustainability, the increasing pressure from government regulations, as well as complications in the supply chain, have raised their awareness that sustainability is more than just a trend.

If you need more convincing, here are the top 7 reasons why you should embody corporate sustainability and make it a top priority:

1) Comply with regulations

Everyone is to blame for not doing enough in preserving natural resources. The United Nations Environmental Program (UNEP) predicts that the annual environmental cost of human activities all over the world will rise to as high as 17% of global domestic product by 2050. On the other hand, the countries considered the biggest polluters pay only up to 2.5% of their GDP to clean up pollution and repair the damage they’ve done to the environment.

Based on the figures above, the world is consuming resources seven times faster than it is spending to replenish them. Because of this, regulations are made to at least slow down the consumption rate and raise the investment on pushing for corporate sustainability.

2) Manage resources more efficiently

Resources continue to deplete faster than they’re replenished, resulting in grave environmental impacts and increased production costs for businesses. Because of this, companies are encouraged to find ways to improve performance while minimising pollution and wastage.

Fig. 1. Using biodegradable components for packaging
(Source: Unsplash)

According to the World Wildlife Fund, people have spent all the natural resources the world can offer equivalent to the expected consumption about 30 years ago. This means that the current resources the world economy is using are being borrowed from future generations.

Experts expect the world to eventually experience a resource crisis, so businesses like yours are encouraged to factor in this possibility in doing long-term forecasts and planning.

3) Create a sustainable identity

It may not seem outright visible, but consumers value corporate sustainability. Even if your business meets regulations, consumers will know if you’re not doing your part for the community and environment. Compliance with rules is one thing, but observable social responsibility is more valuable to customers.

People are conscious of greenwashing, so they look for genuine action when it comes to corporate sustainability. Consumers aren’t easily tricked by marketing tactics, claiming your brand uses eco-friendly materials, helps communities, or utilises renewable energy. They’re likely to ask for proof, which as it is, is already forgiving because truly sustainable companies don’t have to do this since their actions reflect their pledge to brand sustainability.

Some companies hide behind commercial confidentiality and non-disclosure clauses to evade demands to show figures and documents proving their commitment to corporate sustainability.

If you want to pursue brand sustainability, you must look at areas where the transformation will have the greatest impact. Prioritise them and plan for mitigation strategies. If possible, you can also look for a way to monetize them to your advantage.

4) Outperform the competition

The best companies that embrace corporate sustainability are found to be more profitable, attracting more investors that help them further fuel growth.

According to a study done on global Fortune 1000 companies and how they do on the sustainability performance metrics, the top half outperforms the bottom half of companies by as high as 38%.

Contrary to what some might believe, corporate sustainability drives business performance rather than bog it down and impact profitability. In an S&P 500 Climate Change Report, companies that incorporate sustainable development in their core strategies outperform those who aren’t prioritising sustainability efforts. The metrics in the study show that sustainable brands have an ROE of 67% better and an ROI of 18% higher than those that don’t pursue sustainability.

5) Boost employee performance

It’s not only customers that value corporate sustainability. Employees want to work for companies that value sustainable development and are serious about pursuing this avenue more than just compliance.

A report from a non-profit organisation shows that students who are soon to be employed value the company’s social impact as one of the top things they look for in a job. It ranks among their top goals along with good compensation and great career progression.

Fig. 2. Employees volunteering for corporate sustainability campaigns
(Source: Freepik)

Since employees know how the company actually operates, they can easily see through greenwashing tactics and marketing ploys. Many don’t want to be part of a business that deceives its consumers because that just shows how untrustworthy the company is when it comes to doing the right things.

Offering activities that enable employees to see business practices up-close is a great way to prove that the company is acting on its mission to pursue corporate sustainability. This motivates employees to do better, knowing that they’re working for an organisation that genuinely cares. They’ll feel proud to be part of a company that aims for more than just profitability.

Employees usually come from different backgrounds, so they can be a rough representation of the public. If they – the insiders of the business – don’t fully trust the business, then it’s more likely that the consumers will do the same.

On the other hand, happy and motivated employees show better productivity and improved customer relations. In effect, the consumers who interact with these employees will have a better assessment of the brand.

6) Engage more business opportunities

As more businesses participate in sustainable development, more market opportunities open up. Prospects stemming from the use of renewable energy, sustainable sourcing of materials, efficient logistics, and fairer business practices are showing a good rate of profitability.

Consumers want to spend money on a company they believe in and not just what the products offer as advertised. They want to see that ethical practices are incorporated into the products or services, even if that means paying at a premium compared to other brands.

The younger generation of consumers values corporate social responsibility more than older customer segments. They utilise their savviness in technology to research a company, looking into labour practices, environmental impact, and community projects that the organisation is doing.

Millennials and the younger consumer generation are geared to occupy the largest portion of the workforce and consumers, so listening to what they need and expect from a business is the best smartest thing to do.

These consumers don’t want companies to just be present during CSR campaigns. They want the commitment of organisations to brand sustainability to be deeper, resulting in social and environmental changes.

7) Mitigate future risks

Businesses that ignore corporate sustainability rankings risk being at the bottom of the industry. A bad environmental and social reputation can lead to negative consumer views that affect the success and profitability of the brand.

Pursuing corporate sustainability helps mitigate risks that come from changes in market trends and consumer demands. Among the best practices that companies are already doing include sourcing resources through fair trade programs, reducing waste through recycling and upcycling, and investing in renewable energy sources.

The returns of seriously pursuing brand sustainability are evident in lower energy consumption, fewer spikes in prices, better sourcing of materials, fairer labour practices, and more satisfied customers. The overall brand performance also shows improvement as more people learn about the importance of sustainability; they realise that their role as consumers has a significant impact on society by choosing businesses that put corporate responsibility at the forefront of their strategies.

Make Things Count With SmartHead

SmartHead is an online platform that supports companies aiming for brand sustainability. The platform promotes corporate social responsibility by providing an accessible portal where all your campaigns, SDGs, activities, and plans can be defined with full transparency.

Fig. 3. Sustainability Profile
(Source: SmartHead)

SmartHead makes it easy for you to manage sustainability activities by categorizing SDGs and campaigns according to how you structured your targets. Sustainability reporting is also more convenient through the built-in reporting system on the platform that details how close are you to achieving your sustainability goals.

For consumers, the SmartHead Sustainability Profile helps them track the sustainability efforts of their favourite companies with ease. They don’t have to go to different sources just to see whether the company is pushing through its promise of brand sustainability or just joining the bandwagon for promotion.

Time to realise the benefits of corporate sustainability? Contact us today to find out more information and to book your demo the platform. Click here to find out more or email [email protected]