Seven reasons to conduct
Forward-thinking companies embrace sustainability because they see opportunities, not because regulations force them to do so.
‘In the last twenty years, sustainability has evolved from a marginal issue to a top priority for managers and business owners’, says Professor Xavier Baeten, who teaches corporate sustainability and responsibility at Vlerick Business School. ‘Previously, a sense of urgency was often lacking, but due to the climate shocks, everyone realises that this cannot continue.’
Many companies are adopting a wait-and-see attitude: they’ll adapt if and when new regulations come into force. But when it comes to sustainability, it makes sense to get ahead of the game. For these reasons.
1/ Driver of innovation
Companies with sustainability at their heart tend to be strongly focussed on innovation’, says Baeten. Take Finnish company Neste: once a traditional oil refining company, now a global market leader in renewable technologies. The company refines diesel with 90 percent less CO2 emissions from used frying oil and fats. ‘Sustainability creates opportunities and can even give companies a new purpose’ according to Baeten.
2/ New sources of revenue
Sustainability leads to new business models. For instance, the circular economy, with maximum recycling of materials, or the as-a-service model, not only offering products, but also the service around them. ‘A good example is Patagonia, a clothing brand that also arranges repairs and second-hand sale’, says Baeten.
3/ Cost savings
‘By investing today, a company can avoid high costs tomorrow’, says Filip Ferrante, general manager corporate sustainability of KBC Group. Investing in solar panels, for example, doesn’t just reduce electricity bills today. ‘Sooner or later, there’ll probably be a tax on CO2 emissions. Companies who already embrace sustainability will escape these extra costs.’
4/ Cheaper finance
Companies with a big environmental footprint risk paying more to borrow in future. Because banks that still have too many polluting sectors in their portfolios will eventually be forced to set aside more capital for this by the financial regulator. ‘Loans aren’t becoming more expensive yet, but that’s the direction in which we’re heading. Companies need to transform now. KBC and its partners can assist with this’, according to Wim Eraly, senior general manager KBC corporate banking Belgium.
‘By investing today, a company can avoid unexpected costs tomorrow’
5/ Sustainable suppliers are in demand
Big companies are increasingly working to make their entire value chain more sustainable. Consequently, they want their suppliers to be greener too. ‘SMEs that supply big companies would do better to anticipate this than wait until it becomes a requirement’, according to Ferrante.
6/ Proud employees
‘Applicants used to go for a job. Now they go for the company. This gives sustainable businesses an edge’, says Eraly. What’s more, this positive effect continues after recruitment. ‘Our own research shows that if a company has a good reputation, this has a big impact on employee engagement’, says Baeten.
All of this guarantees a company’s long-term continuity. Sustainability affects all levels of a business – its impact spreads like ripples in a pond. ‘I’d advise anyone who’s only doing it for their reputation not to even start’, says Baeten. ‘But companies that sincerely believe in this are sure to reap the rewards.’
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