Sustainability has become a top priority for many businesses in recent years. There are several reasons why sustainable business practices are beneficial for companies, employees, and the environment. See below for the top five benefits of sustainable business practices.
Sustainability and Covid-19
In the wake of the Covid-19 pandemic, businesses have been forced to change the way they operate. Companies are quickly adapting their business practices to protect employees, customers, and the environment. In some cases, this means that companies may need to adjust their operational processes or adopt new technologies to maintain sustainability standards while also ensuring profitability for shareholders.
In other words, sustainable businesses consider the environmental, social and governance (ESG) factors that can impact their business. Consumers are more likely to purchase products from companies that are committed to the responsible use of natural resources, ethical practices and transparency. Last year, Nielsen published a report titled "Sustainability in a post-Covid world and the emerging “conscious shopper," arguing that sustainable companies are better positioned to outperform their peers.
"In the midst of the hardships brought on by the global pandemic," the report wrote, "there’s been an emergence of a new class of shoppers that’s primed to have a profound influence on marketers." Nielsen's conclusion is supported by a 2020 Accenture global survey, which found that 60 per cent of global consumers saying that they are making more environmentally friendly, sustainable, and ethical purchases in the wake of the pandemic.
What Are the Top Benefits of Sustainable Business Practices?
1. Reduced Costs
Sustainable business practices can help companies save money in several ways. For example, implementing energy-efficiency measures can reduce a company's energy bills. Energy efficiency is especially effective for businesses that use a large amount of electricity, such as manufacturers and retailers.
2. Increased profits
Sustainable businesses enjoy increased profits because they operate more efficiently and have lower overhead costs. According to a review of 56 academic papers by Deutsche Bank, firms with high ESG ratings have lower debt, and equity costs and nearly 90% of the studies examined found that firms with high ESG ratings outperform the market in the medium (three to five years) and long (five to ten years) terms.
3. Improved public image
As explained before, consumers are increasingly interested in sustainable products and services. Implementing sustainable business practices can help a company improve its public image, leading to increased sales, profits, and market share. In addition, sustainability can help a company improve its reputation with stakeholders in the community and government officials because it shows them that the business is concerned about environmental protection, social justice and good governance. Bloomberg Intelligence predicts ESG assets to hit $53 trillion by 2025, a third of the global assets under management.
4. Greater employee satisfaction
Employees at sustainable businesses tend to be happier and more engaged in their work, which leads to a more productive workforce and lowers employee turnover rates. Sustainable businesses tend to provide a healthier work environment with good ventilation, natural lighting, and ergonomic furniture. These things can help reduce stress and improve employee morale. Additionally, sustainable business practices are associated with the ethical treatment of workers. For example, the company might support worker unions or offer fair wages and benefits to all employees regardless of their position in the company.
5. Enhanced social responsibility
Sustainable businesses are more likely to be socially responsible, which is vital for many reasons. For example, it makes the company more attractive to consumers who want to support businesses that are helping improve social conditions in their communities. It's also a good way for businesses to build goodwill and strengthen their ties with the communities in which they operate.
In brief, businesses concerned about their impact on the world around them often make better decisions, leading to a stronger bottom line. Implementing sustainable business practices can help a company save money, increase profits, and become more socially responsible.