The business case for sustainability has changed. Not exactly, I would say! It has evolved. 67% of the CEOs of companies above 1 billion revenues believe that sustainability will be essential for the future success of their businesses, in companies with lower revenue this percentage goes down to 52%. Over 90% of all of them know it is relevant. These leaders understand there is a need to decouple growth from the use of natural resources. Yet, only 21% see that business is actively contributing to the Sustainable Development Goals.
Barriers for moving forward, despite the assurance of personal commitment from officers, keep being pointed at the demands of the short-term result by more than half of leaders. What is changing in the business case for sustainability is its basis, which moves from operational to strategic levels. For instance, as companies already acted on energy savings and reduction of waste, they do not see so much the cost and inefficiencies reduction as the critical value of sustainability. Although those are still relevant, they have reduced relative consequence nowadays. Competitive advantage, market positioning and access to capital are now considered the actual factors of the value of making sustainability happen.
Most informed leaders know they have no choice other than bringing sustainability to their strategy engrained into their core businesses. They already could see that, in being a sustainable business, costs don't necessarily go up, and that most time, they go down. What is new is that now investors, banks and the consumers are making decisions, relevant ones, based on how sustainably and responsibly one leads its business. It is evident to enough executives today: their companies will not exist or continue to be profitable if they do not engage amidst this new understanding. The desired ESG performance is significantly impacting today's long-term investments (after this not being the case for the last decades).
Here it is what it is vs what it was:
From reducing costs to being attractive to capital
From reducing waste to being able to keep being competitive in a demanding market
From attracting talents to enabling innovation and being capable of leading the industry or, at least, be acknowledged as a qualified player
From fighting inefficiencies to being digitally, physically or biologically skilful (4IR capable)
One business case factor has not changed, only increased in relevance: risk management in supply and value chains.
Is your company catching up with the needed actions for success? We live in a decade that will distinguish the successful business from the ones which will cease existence or struggle enormously. Political uncertainties play against the action, but they only exacerbate the risks brought by the lack of natural resources, the transformation of the energy sector, the started 4IR with all the innovative technologies into play, social plus gender issues and climate change. Those risks are all addressed through committed sustainability strategy. Great leaders already got it. What about you? Are you still looking for the business case for sustainability?
*You can find the sources of provided data in the links within the text.