For many companies, sustainability is seen as an expense. Resources must be saved, new technologies must be invested in, which must be measured and, not least, reported. All something that costs time and money.
But it doesn't have to be that way. Because there are many ways you can make sustainability a good business.
But it requires a new mindset.
We will look at that in this article.
At a time when companies face ever-increasing demands for accountability and ethical business practices, it is tempting to put the main emphasis on reporting Environmental, Social, and Governance (ESG) metrics.
While ESG reporting is undoubtedly important and can help build transparency and trust, it is even more important for managers to understand that creating a sustainable business (read: profitable business) is at the heart of long-term success.
Fortunately, sustainability is much more than just reporting.
So it's about using the forces where it makes sense.
In LederInsigt, we use a model that helps companies see where their sustainable efforts are in relation to the effect they have on both the climate and the company's bottom line.
It looks like this:
Red: are efforts that have a less sustainable effect. Often this is where most businesses start. There are e.g. waste sorting, solar roofs, electric cars in the fleet and the like. The low-hanging fruit, one might say, which can help create awareness of sustainability internally within the company, but has a limited effect on the climate and bottom line.
Yellow: In the yellow zone we place e.g. reporting initiatives, such as ESG measurements. Reporting on climate action is important because it helps companies focus on sustainability.
And it is important for the climate, and something that more and more companies must keep track of. But that matters less in relation to the company's bottom line.
Green: In the green zone, we place initiatives that create value for both the climate and the company's business. It can be new thinking of products, business model or new sustainable cooperation with suppliers, e.g.
If a company wants to move from red, to yellow or green, it is about thinking in completely new solutions that not only benefit the planet, but also strengthen the company's long-term viability and competitiveness.
Companies focus on reducing waste and optimizing the use of resources by designing products that can be recycled, reused or repaired. This contributes to extending the lifetime of products and minimizing overall resource consumption.
Platforms that facilitate the sharing of resources and services can reduce overuse and waste. Examples include car sharing, home rentals, and shared use of equipment.
Companies are focusing on creating transparency and accountability throughout their supply chain to ensure that products are produced under sustainable conditions. This may include the use of sustainable materials, fair labor practices and reduced environmental impact.
Instead of selling products, companies offer service-based solutions where customers pay for the use of a product rather than owning it. This can reduce the need for frequent replacement and waste.
Companies that focus on developing and implementing renewable energy sources and environmentally friendly technologies contribute to reducing dependence on fossil fuels and reducing environmental impact.
Companies that adopt sustainable agricultural practices and focus on local and organic food production contribute to preserving biodiversity, reducing pesticide and chemical use and supporting local communities.
Businesses within the fashion industry that focus on sustainable materials, ethical production and recycling are working towards reducing the environmental impact of the fashion industry.
These examples illustrate different approaches to sustainable business models, and many companies combine several of these elements to maximize their positive impact on both the environment and society.
While ESG reporting is an important step towards more responsible business practices, it is critical for managers to realize that sustainable business must be the ultimate goal. By focusing on sustainability, companies can achieve a win-win situation where they not only meet society's expectations, but also ensure their own long-term success.
Sustainable business is not just a buzzword; it is the key to creating a more robust, innovative and competitive company. By investing in sustainability, managers invest not only in the world of the future, but also in the future success of their companies.
Don't feel bad about focusing on your bottom line. You can only continue with the sustainable efforts by delivering good results on the bottom line.
If you want to know more about how we can help you move closer to the green zone, you can read more here.
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