Sustainability An Important KPI for All Businesses - What Is Your Stand?

Once the word sustainability is heard, we directly relate it to the environmental issues. There is no harm in doing so, as it is a matter of a fact that the entire world is nowadays giving it serious thought.

A recent study from Nielsen shows that 66% of consumers are likely to spend on products coming from a sustainable brand, while 81% of consumers believe that companies should improve the environment. For instance, there is a huge area for potential business growth by investing in renewable resources apart from the energy market alone, which is expected to be $2.15 trillion by 2025...!

However, if we are to talk about the sustainability of a business and how it has become a key performance indicator, we have to broaden the idea to economic and social ground as well as environmental.

Key Performance Indicators (KPIs) are measured on many grounds, and sustainability as a whole has a great impact on businesses' ability to grow and keep pace with what is happening in the environment. After all, everything is interconnected, right?

Nothing Can Survive on Quicksand

When the Great Pacific Garbage Patch (GPGP) covers an estimated surface area of 1.6 million square kilometers, how long can businesses keep the direction of their business vision or strategy aloof from environmental sustainability?

A recent report from The New Climate Economy, 95% of plastic packaging (worth $120 billion annually) goes to waste after the first use and results in the generation of microplastics that can be found in 114 aquatic species. Similarly, over 140 million people could be displaced from their homes by 2050 if such a scenario continues. Overall carbon emissions have to be reduced by 40% before 2060 to stop the overall increase of the earth’s temperature by two degrees Celsius or more! Another sad part is that another study revealed that only 100 companies are contributing to 71% of global carbon emissions.

After All, Businesses Revolve and Evolve Around Social Beings

All businesses know that customers are fast and last if they have to survive. In fact, they create their strategies while keeping customer satisfaction and retention in mind. Well, who is making these strategies and for whom—human beings, right? The strategy makers are out of society, the executing employees are not aliens, and the consumers are not dumb animals.

Studies again show that 90% of executives in companies globally think that overall sustainability is important for business growth, while only 60% of companies have proper sustainability strategies developed or applied.

A company that does not align its strategy towards sustainability is likely to gradually lose its revenue. A Nielsen 2019 study found that 73% of global consumers are ready to opt to change their buying habits to shift towards products that have a less negative impact on the environment. This has also shown that consumption/sales of sustainable products grew by nearly 20% until 2014 itself.

Good people make a company great. Nowadays, a large salary is insufficient to attract talent in any organization! A recent EY study indicates that 89% of executives believe an organization needs to have a sustainable outlook to increase employee satisfaction. It also points out that, out of 100 employees, 85 say general or buddy referrals go up if they find their chosen company has a strong purpose for others—the world at large.

When a business adheres to the well-known triple bottom line theory of caring for profits, people, and the planet as well, the overall business growth boosts up to higher percentages. A recent study of CPD finds that S&P 500 companies that inducted sustainability into their core business strategies have outperformed others that failed to adapt to sustainability.

Why Not Tap into The Trillion-Dollar Opportunities?

We all know that businesses will ignore anything that does not smell like profit! Small changes can have a great impact on business profitability. Studies show that thousands of commoners (including employees) waste 2.9 billion gallons of gas stuck in traffic (some reaching offices, others to whatever earning places they go), and each person forfeits close to $710 in productivity per year – doesn’t it affect profitability?

A2011 McKinsey survey on the business of sustainability points out towards 33% of businesses that have improved 19% in operational efficiency and reduced costs by integrating sustainable practices.

Well, sustainability is always going to leave its mark on the overall future growth of businesses. Sometimes the impact is related to reputation (not supporting environmental or humanitarian causes), as in the case of Shell, which faced massive protests over its oil purchase from Russia despite being aware of Russia's "invasion" of Ukraine. Otherwise, there will be huge areas for growth possibilities, just like investing in the renewable energy market can alone open up more than $2.15 trillion by 2025.

To sum up, we can see how China's initiative to fight air pollution has the potential to create investment opportunities worth more than $3 trillion through 2030. There is almost no path that a business can take without considering sustainability - in general, in strategy.