Why your brand needs to reflect sustainability.
Sustainability Considerations are Here to Stay
In today’s socially conscious society, sustainability is becoming increasingly important to businesses across every industry. More than 62% of executives today consider a sustainability strategy necessary to be competitive, with another 22% suggesting it will be in the near future. Sustainability reflects a business' commitment to sustainable business practices and has been proven to increase brand loyalty and attract responsibly minded customers, investors and employees.
As climate change, social inequity and environmental degradation becomes more tangible, these challenges will grow for society. Even today, businesses are seeing the negative financial implications of these non-financial issues being captured through director’s duties, impacting their profitability and ability to deliver services. This has been seen through physical assets being impacted by climate change related weather events, or reputation damage through labour or modern slavery in the supply chain. This trend is irreversible, and companies can either respond to these expectations while mitigating risk in the short, medium and long term, or risk significant penalties both for their directors and the organisation as a whole. Sustainability as a business is now irrevocably tied to linking long-term strategies for Environmental, Social and Governance pillars with core business strategies, policies and planning.
Consumers and Investors are Calling Out for Sustainable Brands
More and more, we are seeing consumers, investors and stakeholders viewing climate change and corporate responsibility issues as a real risks, particularly as millennial's become a greater proportion of this audience. The majority of millennial's will only invest their super with a responsible fund and >70% would take a pay cut to work for a responsible brand which aligns with their own values. These consumers prefer to spend their money on brands that preach pro-social messages, apply sustainable manufacturing practices and exercise ethical business standards. What more of a reason do businesses in Australia need to start practicing sustainability, particularly when there are so many easy wins with such a significant pay-off?
While a sustainable brand is one that has successfully integrated environmental, economic and social issues into its business operations, many organisations that consider themselves to be sustainable only meet one-third of this definition.
Sustainability metrics and disclosure have become an expectation for Fortune 500 companies, right alongside financial reporting. Stakeholders expect businesses to be practicing sustainability and transparently disclosing their environmental footprint. Businesses denying climate change or refusing to take up these practices often experience negative brand impacts, including boycotting of goods and services.
Commonly we see two critical gaps that businesses need to be aware of and bridge during their journey to becoming more sustainable.
“The knowing – doing gap”: A study by MIT found that while 90% of executives find sustainability to be important, only 60% of their companies incorporate sustainability in their strategy, and merely 25% have sustainability incorporated in their business model.
“The compliance – competitive advantage gap”: More companies are seeing sustainability as an area of competitive advantage, but they are still the minority at only 24%. Management should address these topics separately – not blend them together. Compliance is holistic, a “must do”. For competitive advantage, only a few material issues count.
Organisations who practice industry leading sustainability have bridged both of these gaps through a comprehensive sustainability and corporate responsibility program.
Align your business strategy with your sustainability approach to avoid having two separate approaches: One for economic prosperity, and one for CSR management.
Leverage CSR practices to become proactive rather than reactive: Don’t wait for your stakeholders, customers and investors to start querying your values and approach in this space, start your journey now so that you gain a competitive advantage on your peers and can preempt market questions.
Communication is key: If you are doing good work, share it! Make sure your stakeholders are aware of your program and that you utilise the right language to communicate your approach and achievements effectively.
Engage your organisation more broadly: Sustainability and Corporate Responsibility (CSR) cannot succeed if it is siloed, these values and practices must underpin all the work your organisation does and be embedded in all your thinking, practice and decision making to truly benefit your bottom line and reputation.