We all feel a responsibility to minimise our impact on the environment, both personally and professionally.
Businesses feel that obligation too, but its more than just a moral duty; the motivations are far more diverse.
For a start, in the UK, sustainability is enshrined in law.
A key driver is the 2050 Net Zero target, which compels the country to bring all greenhouse gas emissions to net zero by 2050.
That may seem a long way away, but there are also two additional interim targets; to run a net zero power system and reduce emissions by 78% by 2035.
We are not alone in this ambition; 113 countries and over a third of the world’s largest companies have also set net zero targets, though not all are legally binding.
It means every business is now part of an environmentally engaged ecosystem, where they must work to find their place in this new green economy where having a sustainable strategy isn’t optional.
That requires the right skills and, according to LinkedIn data, the UK is facing a significant shortage.
It found almost one-third of all jobs advertised in the last year demanded at least one green skill, yet only one in eight workers have any on their CV.
This provides an opportunity for those with the skills to support firms’ sustainability ambitions, because sustainability isn’t just an obligation, it’s an opportunity.
Organisations that are environmentally conscious enjoy a wide range of advantages.
Today, let’s explore five of the most important:
Access to finance
Simply, if a company acts sustainably, it has access to a bigger pool of external investment capital.
Private and institutional investors all have a growing focus on sustainable investing because they want to be seen to be enabling positive change, are bound by the same Net Zero targets as every other business – and because the green economy is a sound investment too.
So, businesses that can prove they are incorporating sustainability into their operations are more likely to attract investors.
Firms with sustainable ambitions will also find they can borrow money more cheaply from mainstream lenders.
The Lloyds Bank’s Clean Growth Financing Initiative, for example, offers discounted lending to support sustainable investment, from renewable energy infrastructure to electric vehicles.
The UK also has a range of government and local authority grants, funding programmes and schemes to support businesses investing in green strategies and innovating sustainable technologies.
That could include work to reduce energy use, carbon emissions and waste.
Winning new business
Ever more organisations require firms to demonstrate their environmental credentials when tendering for new business.
Public bodies already have sustainability embedded into their procurement policies.
They are doing it because they want to minimise emissions created by their suppliers – known as Scope 3 emissions – in order to support the decarbonisation of their own products and services.
But they are also doing it because suppliers that use less energy, create less waste and operate more sustainably are more resilient and reliable.
The challenge for suppliers is being able to communicate their environmental credentials in a transparent and verifiable way, providing detailed information on practices and procedures, as well as data to support their claims.
Those businesses with the skills to do this can create a competitive advantage when it comes to both national and international tenders.
A good impression
A commitment to sustainability can improve an organisation’s image.
That can help win new customers and contracts and support the recruitment and retention of staff.
People want to work for an organisation that is socially responsible and has a purpose, beyond just making money.
A business that can effectively communicate that it is sincere about sustainability can improve engagement from all its stakeholders.
But beware; they are also increasingly sceptical of claims made by corporations and can spot any attempts at greenwashing, so it’s vital that any statements stand up to scrutiny.
The bottom line
Sustainability is closely linked with efficiency.
Organisations that can find ways to operate using less energy, which in turn means lower emissions, are more productive and profitable, for example.
It may take some initial investment to get there, but the business case is generally clear cut.
Research by the Boston Consulting Group found that most businesses can still make energy- and process-efficiency gains of between 20% to 40% with comparatively short payback periods[1].
Risk and resilience
We’ve seen how sustainability can help open up new markets and win new business, helping businesses diversify their income streams, making them less reliant on particular customers and reducing risk.
At the same time, recent geopolitical events have shown how disruption to energy supply chains can quickly have a global impact, sending prices soaring.
But a business that adopts energy efficient technologies like wind and solar power, and electric vehicles, can insulate themselves from the slings and arrows of international energy markets.
We’ve also talked about green legislation, which will only become more onerous over time.
Those businesses that can get ahead of the agenda won’t be faced with any nasty compliance shocks if and when new rules are imposed.
Sustainable organisations are more resilient to reputational risk; we’ve all seen how many UK water companies have been condemned for their perceived poor waste management, for example.
The University of Manchester’s MSc in Sustainable Business is designed to provide students with the ability to apply a business perspective towards developing sustainable goals.
Find out more information about the course and how to apply here.
[1] https://www.bcg.com/publications/2020/short-term-solution-to-tackle-climate-change?utm_source=ft&utm_medium=cpc&utm_campaign=climate&utm_description=none&utm_topic=none&utm_geo=global&utm_content=partnercontent?sp=true