In order to stay current and competitive, businesses must understand the importance of Sustainability in Business Strategy. Driving sustainability demands the same kind of company-wide change that digital transformation entails. Today, sustainability considerations must be included into every business plan. The now-familiar abbreviation ESG describes the three facets of an organization’s sustainability: Environment, Social, and Governance. (ESG).
While 90% of CEOs acknowledge the importance of sustainability, only 60% of organizations have dedicated sustainability strategy.
McKinsey & Co claims that businesses can plan for the future and make wise investments if they adopt a sustainability strategy. However, there are obstacles to sustainability efforts, such as a lack of board support, a lack of responsibility, sustainability teams without the power to execute ideas, and a lack of talent.
Sustainability-related strategic drivers
Investor pressure is a major driver of the transition to a more sustainable model. In 2020, ESG considerations were made by 85% of investors, according to Gartner research, and ESG performance is monitored by 91% of banks. In a recent letter, BlackRock’s CEO made it plain that sustainability is a top priority for the investment community.
Increasing numbers of millennials and members of Generation Z are driving a rise in consumer demand for environmentally friendly goods. Seventy-three percent of millennials surveyed said they would pay extra for environmentally friendly goods. Sixty percent of British customers, according to a Deloitte study, have cut down on single-use plastic in an effort to live more sustainably. Thirty percent of British buyers specifically looked for sustainable brands. Any firm that wants to survive in the next years must include sustainability into their corporate strategy, as the degree of demand for sustainability is only expected to rise worldwide.
The Paris Climate Agreement makes it quite evident that governments worldwide must be more stringent in their regulatory expectations. Legally binding net zero objectives for 2045 have been set in countries like Sweden and Germany, whereas the UK, Canada, Japan, and others have set a target year of 2050. Companies from all over the world that do business in the EU are impacted by the EU’s taxonomy, which regulates enterprises depending on how environmentally friendly they are. Organizations should begin restructuring their operations to become more sustainable in light of the shift by many governments towards sustainability. Maintaining positive relationships with authorities is possible via proactive sustainability efforts.
If you want to recruit top personnel, you need to have a sustainable company. 49% of Gen Z and 44% of millennials in a poll by Deloitte indicated they have made ethical considerations central to their job decisions. 51% of US business students in a recent survey said they would accept a wage cut to work for a more ethical firm. The competition for skilled workers is fierce, and businesses that don’t prioritize sustainability may find themselves at a disadvantage.
Productivity Boosts having a positive impact on the environment can inspire your staff to work harder. According to McKinsey & Company, sustainability may have a 60% positive impact on operational earnings through cutting expenses. A Deloitte study found that businesses with an inclusive culture not only had better profits (27% higher), but also had higher productivity (22% higher).
