In 2020, nearly 90% of the world's largest companies made sustainability commitments, according to the Global Reporting Initiative. Further on, a survey by Accenture found that 72% of consumers consider a company's sustainability when making purchasing decisions.
A 2019 report by the World Wildlife Fund found that over 60% of global greenhouse gas emissions come from just 90 companies. The same report found that 100 companies have been responsible for 71% of industrial emissions since 1988.
Lastly, a 2020 report by Deloitte found that companies that prioritize sustainability outperformed those that don't by 2.5 times over a five-year period in terms of stock price growth and average annual return on investment.
These statistics highlight how sustainability has become the focal point for the majority of people as well as businesses. Thus, having a sustainable business is crucial, but first, you must understand what is leading to this phenomenon.
To help you, this article will cover the following topics:
- What is Sustainability?
- What is Sustainability in Business?
- Ensuring Sustainability by Understanding Your Supply Chain
- Why Sustainability is Everybody’s Business?
- Making Smart Manufacturing Greener with Sustainability
- How to Ensure Sustainability in Your Business?
- FAQs Related to Sustainability in Businesses
- How can Deskera Help You Achieve and Ensure Sustainability in Your Business?
- Key Takeaways
- Related Articles
What is Sustainability?
Sustainability refers to the ability to maintain or preserve a certain level of ecological, social, and economic well-being over time. It involves meeting the needs of the present without compromising the ability of future generations to meet their own needs.
Sustainability encompasses three main pillars: environmental sustainability, social sustainability, and economic sustainability.
- Environmental sustainability involves preserving natural resources and maintaining the balance of ecosystems.
- Social sustainability focuses on promoting the equitable distribution of resources and opportunities and protecting human rights and social well-being.
- Economic sustainability involves creating a stable and sustainable economy that benefits all members of society.
Sustainability requires a holistic and integrated approach that considers the interconnections between these three pillars.
What is Sustainability in Business?
Sustainability in business refers to the integration of environmental, social, and economic considerations into a company's operations, strategy, and decision-making processes.
Sustainable business practices will tend to encourage returning customers, strong customer loyalty, higher net revenues, higher return on investment, and improved cash flow of your business.
It involves creating long-term value for the business, its stakeholders, and society as a whole while preserving natural resources and promoting social and economic well-being.
The concept of sustainability in business has evolved over time to encompass three main pillars:
- Environmental sustainability: This involves minimizing a business's negative impact on the environment and preserving natural resources. It encompasses areas such as energy efficiency, waste reduction, and sustainable procurement. This will also help in reducing your operating costs and improving your business metrics.
- Social sustainability: This focuses on promoting social well-being, promoting fair and ethical business practices, and ensuring that all stakeholders benefit from a company's operations. This includes areas such as human rights, labor standards, and community engagement. This will help in better management of workplace stress while also helping you in retaining top talents.
- Economic sustainability: This involves creating a stable and sustainable economy that benefits both the business and society as a whole. This includes areas such as financial performance, responsible supply chain management, efficient inventory and warehouse management, and creating sustainable products and services. This will lead to improved operational metrics as well as financial KPIs.
Sustainability in business requires a long-term perspective and a holistic approach that takes into account the interconnections between the three pillars of sustainability.
By incorporating sustainability into their operations, businesses can create value for their stakeholders, reduce risks, and contribute to a more sustainable future.
In fact, it will also lead to positive brand awareness, as well as positive brand marketing of your business, with increased sales referrals and improved customer retention.
Ensuring Sustainability by Understanding Your Supply Chain
In order to be able to gauge the sustainability of your business, you will need to go back to your supply chain and understand it better. Some of the questions you must be able to answer to gauge this is:
- Where are your materials coming from, and what is the nature of those materials?
- How do you move the materials around, and how efficient are your processes?
- What kind of packaging do you use, and are there any ways in which you can reduce it?
- What are your manufacturing processes, and how efficient are they?
- Are you making the best use of your transportation assets?
In addition to these questions, sustainability will also require you to start thinking about all of your products which are at the end of their lifecycle. This will also involve you having to figure out how to bring them back into your supply chain, or your partner’s supply chain, in an end-to-end circular way.
Why Sustainability is Everybody’s Business?
Sustainability is the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs. It is a complex and interrelated concept that encompasses environmental, social, and economic considerations.
Environmental sustainability concerns the preservation and responsible use of natural resources, such as water, air, and soil, to maintain the balance of ecosystems and support the well-being of all living things. Climate change, pollution, deforestation, and species extinction are just a few examples of environmental sustainability challenges that affect everyone everywhere.
Social sustainability refers to the equitable distribution of resources and opportunities and the promotion of human rights, social justice, and well-being. This includes issues such as poverty, inequality, access to education and healthcare, and the protection of marginalized communities.
Economic sustainability is concerned with the creation of a stable and sustainable economy that benefits all members of society. This requires a focus on long-term growth, sustainable use of natural resources, and fair distribution of wealth and opportunities.
Therefore, sustainability is everybody's business because it affects all aspects of life, and the decisions and actions of individuals, businesses, and governments can have a significant impact on our future. It is not something that can be solved by one group alone but rather requires a collective effort from everyone.
For example, businesses have a responsibility to operate in a sustainable manner, individuals can make more environmentally conscious choices in their daily lives, and governments can create policies that support sustainability.
In conclusion, sustainability is not just about protecting the environment for future generations but also about ensuring social and economic stability and prosperity for all. By recognizing the interconnected nature of these issues and working together toward a sustainable future, we can create a better world for everyone.
Thus, the top 10 reasons why sustainability is focused on by the majority of businesses are:
Compliance with Regulations
Many countries have enacted laws and regulations that require businesses to operate in a sustainable manner and to reduce their negative impact on the environment.
Abiding by these laws and regulations will help in keeping business expenses in check while also ensuring there is no undue pressure on your working capital.
Sustainable practices can lead to cost savings in areas such as energy and water consumption, waste management, and supply chain management. This will help in keeping your expenses in check while minimizing your cost of goods sold and the cost of goods manufactured. In turn, this will lead to higher revenue earned by your business, as well as more satisfied customers.
Attracting Customers and Investors
A commitment to sustainability can increase a company's reputation, making it more attractive to customers and investors who value environmental and social responsibility. This will lead to increased sales, as well as higher gross profits.
Sustainability practices promote resource efficiency, reducing the need for raw materials and minimizing waste. This will also help you reduce the need for safety stock, as well as lead to more efficient resource capacity planning as well as a master production schedule.
Companies that prioritize sustainability with sustainable supply chains often have a competitive advantage, as they can differentiate themselves from their competitors and appeal to environmentally conscious consumers. It will also help you convince your buyer personas to choose you over your competitors.
Sustainability initiatives can foster employee engagement and create a positive work environment, leading to increased productivity and employee satisfaction.
A focus on sustainability ensures that a business can operate in a responsible and sustainable manner for the long term, reducing the risk of financial, environmental, and social instability. It will also help improve the health of your financial statements.
Adaptation to Changing Market Trends
The demand for sustainable products and services is increasing, and businesses that adapt to these changing market trends can benefit from new opportunities for growth and innovation. In fact, these adaptations will ensure the ratio of your accounts receivable is higher than accounts payable.
Positive Impact on the Community
Sustainable businesses can have a positive impact on the community by reducing their environmental footprint and contributing to the well-being of local residents.
Addressing Global Challenges
Sustainability is crucial in addressing global challenges such as climate change, poverty, and inequality. By focusing on sustainability, businesses can help create a better future for all.
Making Smart Manufacturing Greener with Sustainability
Smart manufacturing is a term that the majority of us are familiar with. While we frequently consider integrating IoT, AI, ML, 3D printing, and other technologies into conventional industrial processes, we also need to include sustainability in the definition of what smart manufacturing is.
Consider the potential of IoT and how it enables you to interact with and keep an eye on the physical environment in real-time. You may gain the insights you need to make wise decisions by fusing this real-time data with robust analytics.
By reducing waste, streamlining your supply chain, and keeping an eye on your equipment to ensure it is operating at peak efficiency, these decisions will help you advance sustainability.
As you interact with your clients, your regulatory environment, and society at large, sustainability is increasingly becoming a prerequisite for your business. Today, your firm will struggle if you don't innovate inside that framework.
How to Ensure Sustainability in Your Business?
Here are some steps you can take to ensure sustainability in your business:
- Conduct a sustainability assessment: Assess your business operations and identify areas where you can reduce your environmental footprint and promote social and economic sustainability.
- Set sustainability goals: Develop clear and measurable sustainability goals and objectives, such as reducing energy consumption, reducing waste, and improving employee engagement.
- Implement sustainable practices: Incorporate sustainability practices into your business operations, such as using energy-efficient technology, reducing paper usage, and implementing a recycling program.
- Engage employees: Involve your employees in your sustainability efforts and educate them about the importance of sustainability.
- Evaluate and track progress: Regularly evaluate your sustainability efforts and track your progress toward your goals. This will help you identify areas for improvement and adjust your approach as needed.
- Collaborate with suppliers and partners: Partner with suppliers and partners who share your commitment to sustainability and work together to reduce your collective environmental impact.
- Communicate your sustainability efforts: Share your sustainability achievements and goals with your customers, employees, and stakeholders to build trust and demonstrate your commitment to sustainability.
- Continuously improve: Sustainability is an ongoing effort, so continuously review and improve your practices to ensure that your business is operating in the most sustainable manner possible.
FAQs Related to Sustainability in Businesses
- What is sustainability in business?
Sustainability in business refers to the integration of environmental, social, and economic considerations into decision-making and operations in order to meet present needs while preserving resources for future generations.
- Why is sustainability important for businesses?
Sustainability is important for businesses because it can reduce costs, increase efficiency, improve brand reputation, and contribute to a better future for all.
- How can a business become more sustainable?
A business can become more sustainable by implementing environmentally-friendly practices, reducing waste and emissions, using renewable energy, engaging in sustainable procurement, and considering the social impact of its operations.
- What are the benefits of sustainable business practices?
The benefits of sustainable business practices include cost savings, improved efficiency, enhanced brand reputation, increased customer loyalty, and reduced risk of regulatory action.
- What is the role of the government in promoting sustainability in business?
The role of government in promoting sustainability in business includes setting regulations and standards, providing incentives for sustainable practices, and supporting research and development in the field.
- What is the role of consumers in promoting sustainability in business?
The role of consumers in promoting sustainability in business includes making informed purchasing decisions, supporting companies with sustainable practices, and advocating for sustainable business practices.
- What is the connection between sustainability and profitability in business?
Sustainability and profitability are interconnected in business because sustainable practices can improve efficiency and reduce costs, leading to increased profits in the long term.
- What is sustainable procurement?
Sustainable procurement is the process of purchasing goods and services in a manner that considers the environmental and social impact of the product life cycle.
- What is the triple bottom line of sustainability in business?
The triple bottom line of sustainability in business refers to the three aspects of sustainability: economic, social, and environmental.
- How can a business measure its sustainability performance?
A business can measure its sustainability performance by setting sustainability goals and tracking progress, conducting sustainability assessments, and reporting on sustainability performance through sustainability reports.
How can Deskera Help You Achieve and Ensure Sustainability in Your Business?
Deskera is a cloud-based business management software that provides various tools and features to help businesses achieve and ensure sustainability. Some of the ways Deskera can help with sustainability include the following:
- Supply chain management: Deskera CRM provides tools for managing the procurement process and tracking supplier performance, which can help businesses identify areas for improvement and promote sustainability in their supply chain.
- Resource optimization: Deskera's tools for resource optimization can help businesses identify inefficiencies and reduce waste, which can have a positive impact on their environmental footprint.
- Reporting and analytics: Deskera provides reporting and analytics tools that can help businesses measure and track their sustainability performance, identify areas for improvement, and make data-driven decisions to promote sustainability. With Deskera Books, you can even track your financial health.
- Collaboration and communication: Deskera provides tools for collaboration and communication between stakeholders, which can help businesses coordinate their sustainability efforts and promote a culture of sustainability throughout the organization. Deskera People keeps all your employees connected through one dashboard.
Sustainability is everybody's business because it affects all aspects of life, and the decisions and actions of individuals, businesses, and governments can have a significant impact on our future.
In fact, the top ten reasons why sustainability is focused on by the majority of the businesses today are:
- Compliance with Regulations
- Cost Savings
- Attracting Customers and Investors
- Resource Efficiency
- Competitive Advantage
- Employee Engagement
- Long-Term Viability
- Adaptation to Changing Market Trends
- Positive Impact on the Community
- Addressing Global Challenges
Some of the ways in which you can ensure sustainability in your business are:
- Conduct a sustainability assessment
- Set sustainability goals
- Implement sustainable practices
- Engage employees
- Evaluate and track progress
- Collaborate with suppliers and partners
- Communicate your sustainability efforts
- Continuously improve
By using Deskera, your business will be able to improve its sustainability performance, meet sustainability goals, and contribute to a more sustainable future.