Sustainability in the boardroom: the business case

  • Written by Peter Needle
  • Published on 4th December 2018
  • CategoryBlog

Some of the arguments around sustainability are obvious: protecting our planet, creating a healthier environment for upcoming generations, and securing the continuation of the human race. However, one thing that is often not so obvious is the advantages to businesses to integrate sustainability at their core. We’ve taken a look at why sustainability makes not only environmental sense, but also business sense. 

Brand risk and unsustainable practices

Business leaders are no longer answerable only to the board and shareholders. With consumers becoming more conscious of sustainability issues, there is an increasing pressure on businesses to implement ethical and sustainable practices. Today, consumers are seeking more than just products and services, demanding responses to the action that businesses are taking to protect the environment, employees and suppliers.

For us, sustainability is about saving energy, reducing water consumption and making better use of raw materials…it is perfectly aligned with what we want to achieve for our customers and ourselves as a profitable business.

Dennis Jönsson
CEO of Tetra Pak

The risks associated with failing to address consumer expectation are higher than ever. A study conducted by EBS Universität and Roehampton Business School found that consumers hold retailers accountable for unsustainable practices in the supply chain, regardless of the tier at which they occur. The level of control that the supplier has over the incident, the presence of supplier company environmental policies as well as the severity of the incident that has occurred, all contribute to the action taken by consumers. The study concluded that unsustainable supplier behaviour and consequent consumer boycotting could result in disastrous economic consequences for the brand.

Investor and stakeholder transparency requirements 

Directors of companies worldwide are being challenged by investors and stakeholders to address and proactively tackle environmental and social concerns. There are increased requirements to provide transparent and consistent sustainable disclosure in order to satisfy demand. 

Through Segura, our customers are able to collect data that can span hundreds or thousands of suppliers and factories across many regions, quickly and easily. By allowing businesses to harness large volumes of data from multiple sources, quickly and efficiently, deeper insight into the whole supply network can be gained. This can help to improve visibility across the chain, to give businesses a competitive advantage when it comes to risk management and decision making.

Achieving sustainability: A top-down approach

Sustainable change needs to be driven from the top, down, incorporating “doing the right thing” into the heart of the business. Most senior executives are found to send external messages about profits and tasks four times more than those about purpose. One example given by Sustainable Brands is a Fortune 100 company that they coached to conduct a 50-50 message ratio. Over the next four months, the company experienced a major shift in perception, with employees feeling that they created a larger impact than profit alone.

With a new generation of CEOs about to take the helm, we can expect the way we do business, and the role of the CEO itself, to change substantially…it is important for business leaders today to take steps to incorporate the priorities of millennials into their organisations’ structures and operations.

Jose Carvalho
general manager at American Express Global Commercial Payments Europe

2015 study conducted by Harvard university found that whilst more than 80% of global CEO’s felt that activating purpose in their company would make a big difference for company performance, only one in three felt that their company were doing it well enough.

I have to be the head of sustainability; it can’t be delegated to anyone else.

Muhtar Kent
former CEO at Coca-Cola and now Chairman of the Board

The 2016 United Nations Global Compact-Accenture Strategy CEO Study (the largest ever CEO sustainability study ever conducted) found that since 2013, there had been a shift in the minds of business leaders. In place of frustrated ambition as previously discovered, now there is a mandate to solve societal challenges as a core element in gaining a competitive advantage.

It is up to business leaders to position themselves at the head of the drive for sustainability, utilising their power and influence to cause positive change. 

Have you seen our infographic:

The cost of doing nothing

View infographic