Sustainable Business: How a commercial business can be a sustainable one
The case for organisations of all sizes to adopt responsible, environmentally sustainable business practices has never been clearer. Knowing where and how to start, and which actions will have an impact and prove cost efficient, can be difficult. But in the journey to sustainable business, every action counts.
Awareness of the impact of climate change and environmental responsibility and the shrinking window of opportunity we have to make a difference, is growing. From UN reports of impending environmental catastrophe to the 88% of people who changed their lifestyle in response to Blue Planet II1, as individuals and as consumers we are looking to businesses for solutions. According to a survey by Neilsen, four fifths of global consumers believe companies should help improve the environment2.
Commerciality and sustainability as one
Traditionally, sustainability was often, at best, alluded to somewhat vaguely in a paragraph in the annual report, and considered a cost centre and a non-priority. Before 2013, for example, just 20% of S&P 500 companies disclosed ESG information. In 2018, that figure rose to 85%3. That’s in response to shifting expectations of stakeholders, with sustainability today offering not just a moral, but a competitive advantage, as Elsa Palanza, Global Head of Sustainability and ESG at Barclays, explains:
This idea that commerciality and sustainability might be in opposition to one another is simply no longer the case. More and more we’re going to see that when you embed principles of sustainability into your business practice and into your strategy it’s going to set up your business for more success and more competitiveness in the future as we enter this next generation low carbon economy.
Research backs this up, showing that two thirds of people are willing to pay more for sustainable goods (the figure for Millennials is even higher)4, while almost half of global consumers surveyed would choose environmentally friendly products over a brand name5. However, it’s about more than just the goods you sell.
Sustainability extends to the way you do business in terms of putting the wellbeing of society, workers, the environment and consumers first. In the US, for example, shares of the 100 companies on Barron’s America’s Most Sustainable Companies Index earned an average of 34.3% in 2019, compared to the S&P 500 Index average of 31.5%6.
Where to start with sustainability
As more and more businesses wake up to the opportunities sustainability offers, competition increases and the imperative for taking action grows. But where to start? As we transition to a low carbon economy, there will of course be dramatic shifts, but smaller operational changes can have a surprisingly big impact. Breaking actions down, says Palanza, makes them more achievable: “Environmental sustainability really has to do with individual practices and then incorporating those at a larger level within a business.
Businesses are made up of a whole collection of thoughtful, practical human beings. The practices we might embed into our individual lives when it comes to sustainability need to be brought into practice here at work as well. We can then take it one step further and think about how we change our systems and our business models to embed these principles and concepts of sustainability into our overall strategy.”
Just as in our individual lives where small changes can make a difference and build momentum, the same is true for business. As Unilever’s Sustainability slogan points out, ‘small actions can make a big difference’. While it can seem overwhelming, potentially expensive or beyond reach, reviewing daily practices of your business can quickly identify a number of opportunities to cement sustainability into both practice and strategy.
For leaders wondering where to start, Palanza suggests a good method is to consider your working day: “Think about every system or approach that you come into contact with, whether it’s your supply chain, your vendors, your colleagues, your clients, your operations at large. Chances are there’s an opportunity to embed sustainability practices into every one of those aspects and so when you make that checklist you’ll end up with a very good starting point.”
Taking a joined-up approach
That list can help you to identify points that you can directly affect or influence, as well as highlighting any risks or opportunities. For example, you may spot actions one of your suppliers is taking to reduce the environmental impact of their operations, or you may realise that one of your vendors employs practices you’re not comfortable with. By auditing individual aspects of your business – supply chain, distribution and sales, and production – you can more easily spot where sustainable practices can be applied.
Sharing experiences with other businesses can also help build awareness of sustainable practices and the potential impact they can have. It’s an area that Barclays has been keen to embrace, Palanza explains:
The idea of sustainable business being separate from business as usual is a concept that is quickly becoming obsolete and this idea that every business must embed sustainability into its practices is going to be the new normal. It’s a journey that both we as a business and our clients are on together, so the quicker we can develop ways and practices to not only get there ourselves but help our clients to get there, the better for all of us.
Making the most of sustainable opportunities
One of the greatest impacts businesses have in terms of the environment is energy consumption, but this is also an area, says David Farrow, Head of International Corporate Banking at Barclays, where small actions can make a big (and obvious) difference.
If there’s one quick thing we can all be thinking about it’s about the amount of energy that we consume. And that means looking at things like our travel policies, it means looking at the way that our buildings are powered in terms of thinking about lighting and energy. And just by looking at that small area of energy consumption, we can all make our contribution.
The effect of government responses to the coronavirus pandemic has also been felt from a sustainability perspective. Studies show, for example, that the closing of international borders, and moves to encourage or force populations to stay at home, which cut transport requirements and changed consumer patterns of consumption, reduced daily global CO2 emissions by 17% in early April 2020.
Anecdotal evidence shows an abundance of wildlife and clear skies as air pollution, particularly in cities, tumbled. It has caused many people to reconsider their transport options, for example, but has also provided breathing space for businesses to address their sustainability plans and goals.
"The unprecedented shutdown during the Covid-19 pandemic has forced many businesses to completely close up facilities for extended periods of time,” says Farrow. “For some, this will have given them a unique opportunity to understand how they can reduce their carbon footprint in the short-term, but also how working adjustments could drive a long-term change. Imagine the difference that could be seen in carbon emissions if even 10% of the workforce opted to continue working from home one or two days a week after the crisis has abated?”
While the effect of homeworking on lowering emissions depends on a number of factors, such as mode and length of the average commute and office efficiency, rethinking the need to travel to meetings or conferences and to manage facilities located in remote locations could have a more widespread impact. Potential resource and cost reductions and the increasing use of technology as an enabler, could lead to deeper structural reforms in the way we work and travel, with huge benefits for sustainability.
Even small actions count
When it comes to sustainability, every action counts. Small changes can help businesses on their path to more sustainable practices. Think about whether your business could:
- Use less energy – consider switching to lower energy lighting or fitting motion detectors to automatically switch lights off.
- Switch to a renewable energy provider to lower your carbon footprint.
- Reduce waste – remove single-use plastic, such as coffee cups.
- Target environmental certification to give you an action plan and goal.
- Explore green finance opportunities.
We all have an opportunity to change the way we do business to ensure that as individuals, communities and businesses, we are part of a sustainable future. “This is not about dropping one bad thing overnight and then picking up a good green thing.That’s not really the way this is going to work,” says Palanza.
“It’s about the transition from the traditional economy that we’ve all been operating within to a low carbon economy and about transitioning all our business practices to achieve that. This is an opportunity for everyone to take on board this move to this next generation economy, which can make them not only sustainable but ultimately more competitive and more successful as well.”