Strong sustainability performance is fast becoming a business’s licence to operate and also acts as a clever marketing tool.
Businesses who are not prioritising improving their sustainability performance will find it increasingly difficult to operate in the coming years.
Consumer advocacy, attracting talent, and remaining competitive through tender processes are just some of the challenges businesses may face.
Some of the biggest impending risks for businesses not proactively prioritising good sustainability practices include:
Regulatory Compliance
With the Corporate Social Responsibility Directive fast approaching, and the EU’s commitment to net zero by 2050, organisations are under increasing pressure to appropriately measure, manage and report on key sustainability criteria.
Those who do not comply risk facing penalties and greater headaches down the line. By contrast, there is significant opportunity for organisations willing to invest the resources and human capital in setting up proper reporting frameworks.
Brand Impact
There is an ever increasing awareness of the environmental impact of our consumer behaviour, not just at brand level, but right across the supply chain. Consumers expect transparency and are exercising their purchasing power to support businesses whose practices are aligned with their own values. Failure to adopt and communicate good sustainability practices leaves businesses vulnerable to brand damage and loss of consumer advocacy. However, effectively communicating positive sustainability stories fosters increased loyalty and creates a halo effect, allowing the consumer to feel good by extension of engaging with your brand.
Investor and Stakeholder Expectation
Stakeholders, investors and financial institutions are giving increased weight to ESG to inform decision making. Businesses who do are not on top of their sustainability commitments risk losing favour with stakeholders and decreasing their attractiveness to investors. As financial institutions look to ‘green’ their loan book, businesses with positive sustainability proof points may be rewarded with access to cheaper debt and will gain a competitive market advantage.
Attracting and Retaining Talent
With an increasingly environmentally conscious workforce, businesses that do not evolve with their talent’s values and ideals will become stale. With a good sustainability strategy, businesses can engage, excite and mobilise employees, gaining a competitive advantage and attracting top talent along the way. Items like gender pay gap, and diversity, equity and inclusion are critical to an effective sustainability strategy.
In these ways, it is of critical importance for businesses to put sustainability top of its agenda. A strong sustainability strategy that is well executed and clearly communicated is not only a licence to operate, but an opportunity to accelerate.
