Sustainability in business is no longer a choice
Nobody can foresee specific events or disruptions, however, there are trends and forces that are already shaping the future. One of these is sustainability – or what investors sometimes call ESG.
Sustainability can be understood in some lights as a business approach to creating long-term value by considering how an organization operates in the ecological, social and economic environment. Sustainability (and ESG, which stands for environment, society and governance) is built on the assumption that such business strategies foster company longevity.
Non-financial risks such as climate change, anti-corruption, health and safety, human rights, resource use, boardroom diversity and land degradation are all part of sustainability and ESG. How organisations manage these non-financial risks in their business and the related impact from their operations on people and the planet is being watched closely.
Responsible investors prefer to back sustainable companies. Talented people want to work for them. High-value consumers want to buy their brands and products.
Trends in the EU are making this less of a strategy for companies and more of a requirement; Under the Corporate Sustainability Reporting Directive, reporting how companies operate and manage social and environmental challenges will be mandatory. Furthermore, for those companies working within the supply chain, there is already mounting pressure to do the same due to proposed legislation on supply chain risks.
The business case for sustainability
Here are three more reasons why sustainability matters to your business:
The growth of sustainable investing has grown 107.4% since 2012, and accounts for 18% of all assets in the wealth industry (In the US, it is even higher with 33%)
One fifth of the world’s 2,000 largest companies aim to be carbon net zero by 2050 (the number of net zero commitments has doubled in less than a year)
Online searches for sustainable goods have risen 71% over the past five years (90% of consumers care about sustainability when buying goods and services)
