Sustainability in the Boardroom: the Business Case

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.

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.

A 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.