Sustainability 101: What is a Sustainable Business
Author: Green Business Bureau
Businesses all around the world are becoming more sustainable, balancing their fiscal, economic, environmental and social responsibilities to protect the planet and people. Although companies are being pressured by consumers, competitors and employees to implement green initiatives into their business model, most sustainable companies are driven by purpose and the greater good. Executives and business owners are finding ways to make the necessary sustainability changes while still growing their businesses and maintaining profit.
So what is a sustainable business? This article discusses the policies, processes and programs companies need to incorporate in order to become more sustainable. It is an excellent primer for companies and leaders starting out on their sustainability journey but also a reminder of what it takes to be a true green business.
What is a Sustainable Business?
Triple Bottom Line
The goal of sustainability in business is to balance the economic, social, and environmental responsibilities that every business has. These three business dimensions are often referred to as the “triple bottom line”.
The triple bottom line is a business concept that emphasizes measuring social and environmental impact in addition to financial performance. Most businesses are focused on the standard “bottom line”, often not seriously considering the impact that their activities have on society and the environment. The triple bottom line is much more holistic and can be broken down into three P’s: people, planet, profit.
Businesses have a social responsibility to take care of their workers and treat all their constituents with respect and fairness. A truly sustainable business focuses on the wellbeing of their employees, customers and the local community. Businesses can improve their social responsibility in a variety of ways such as ensuring safe and healthy working conditions, paying employees fairly and recognizing their hard work, being inclusive of all workers regardless of gender identity, race, religion or cultural background, providing employee benefits and wellbeing programs, supporting policies and laws that protect minority groups, fundraising and donating to charities, and participating in community outreach events.
Businesses also have an environmental responsibility to protect the planet and conserve finite resources. Businesses that are solely profit-focused are often unmindful about their waste and pollution and how they impact surrounding ecosystems. As consumers become more knowledgeable and passionate about climate change and planet wellbeing, businesses will have to cater to this demand and adjust their operations to have a lower environmental impact. This often involves minimizing waste, preventing pollution and investing in resource efficiency strategies.
Businesses still need to generate revenue and profit to create new jobs, grow their operations and pay their workers. They need to have governance in place that balances purpose and profit and transparently makes all important data available to stakeholders.
Some sustainability initiatives – such as transitioning to an electric fleet or investing in renewable energy – can require costly investments up front but making both large investments or small adjustments over time will lead to significant financial and environmental benefits. Studies have shown that investing in sustainability can actually increase profit in the long run from greater energy savings, operational efficiency and an increase in sales. Balancing the purpose of becoming a sustainable business while maintaining profit is the new “key to business success”.
Benefits of Sustainability in Business
Being sustainable positively impacts all stakeholders: your employees, customers, partners, investors and local community. Markets are changing and sustainability is now a necessity for businesses to prosper and stay relevant. Investing in sustainability provides benefits throughout your business as well as each of your stakeholder groups. Employees want to work for green companies, customers are looking for sustainable brands they can trust, and investors understand that green business is good business with lower risk.
Being environmentally and socially responsible attracts passionate employees who share your same sustainability vision. When you have purpose-driven employees working together on green initiatives, it creates a positive work culture. This yields greater employee satisfaction and loyalty, improved operational efficiency and goal attainment. Every business knows how valuable it is to have a positive work environment, and focusing on sustainability can help create the green culture that your business may be missing.
Climate change and other global issues are part of the reason that consumer demand is shifting to buying green alternatives over cheap, unsustainable products. This is especially true with the growing number of young consumers, most of whom prefer doing business with ethical, green companies. It’s important that businesses understand this shift towards sustainability and adjust their business models, product design and marketing to reflect their commitment to being a better business. Making the necessary changes early can offer benefits such as more creative freedom to market their new sustainable products to customers who share the same values.
Investors are becoming increasingly reliant on environmental, social, and governance (ESG) ratings to determine the investment value of a business. Businesses with a low ESG rating will be less likely to receive investors as this generally is associated with increased risk and low Return on Investment (ROI).
Sustainability as Differentiation and Competitive Advantage
Gaining the Upper Hand
In any given industry, the businesses that hop on the growing trend of green initiatives first will have a competitive advantage over their competitors and could even become industry leaders. Sustainable business practices will drive sales and differentiate responsible businesses from competitors. To give an example, Green Business Bureau member, Hit Promotional Products, won a one million dollar bid because they were the only business that had a definitive sustainability plan. With Green Business Bureau’s certification program and other tools, they made significant progress in their sustainability performance and have earned Platinum level of certification.
Long Term Advantages
A smart business strategy would be shifting the company’s current focus from “how to increase profit” to “how to reduce future liabilities.” Because sustainability is intrinsically linked to environmental regulations, worker health and safety, and community wellbeing, not investing in sustainability could be perceived as a potential liability for businesses. Developing a sustainability plan now will serve as a safety net for the future and positively impact the long term profit margin.
How to Measure Sustainability
Measuring Sustainability Performance
There are two popular ways to measure the sustainability performance of a business:
- Process-based or initiative-based sustainability assessments
- Carbon footprint-based sustainability assessments
A process-based assessment is much simpler and can be completed in a few hours. It gives you a view into what you’re doing right in terms of applying sustainable practices and what you’re missing in your sustainability program, policies and procedures.
A carbon footprint-based approach is more technical and more difficult to calculate given all the data that needs to be collected and scrubbed. The carbon footprint gives you an estimate of your company’s carbon emissions. The EPA provides a simple carbon calculator for a household that demonstrates the concept, but it is not very practical for a business which has many more elements that contribute emissions beyond heating, electricity and vehicles.
Process-Based Sustainability Assessment
A process-based assessment is entirely initiative based. This type of assessment compares your policies, procedures and completed initiatives to a long list of initiatives that are possible and practical. One real world example, Green Business Bureau’s assessment, takes a points-based approach where your company receives points for each and every initiative it completes. Initiatives are organized by the business area they impact, such as operations, business practices, cafeteria, transportation, bathrooms and office space. Able to be completed at your own pace, the EcoAssessment generates your current performance and identifies improvement opportunities. Completing the initial assessment will produce an overall scorecard that correlates to a specific ranking; Gold or Platinum levels reflect strong sustainability performance.
Balanced Sustainability Scorecard
In terms of the three R’s – Reduce, Reuse, and Recycle – reduce is the first and most important of the three for a reason. By reducing your waste generation from the start, you are using less virgin resources and less energy compared to reuse and recycling processes.
There are various ways to reduce the waste of your business. Cutting back on single-use items is a key initiative as well as finding ways to eliminate waste streams. Manufacturing products from recycled-content as well as producing 100% recyclable products prevents utilizing virgin resources and keeps unnecessary waste out of landfills.
Encouraging the use of reusable products – such as installing a water dispenser for employees to fill their water bottles or providing lunchroom dishes and cutlery that can be washed – will drastically reduce your employees’ everyday waste.
Lastly, ensure that there are recycling bins at every corner of the workplace with clear labeling to guide employees on which items are accepted. Depending on what materials your local collection facilities accept, you may use different bins to separate different materials – paper/cardboard, plastic, glass, aluminum, e-waste, etc.
Investing in renewable energy is a notable solution towards reducing fossil fuel use but this can be a costly investment for many businesses. There are so many other ways to save energy and lower fossil fuel use such as switching to LED lighting, implementing energy saving habits (turning off lights), investing in Energy Star certified appliances, unplugging electronics when not in use to avoid phantom power, use natural lighting when possible, program thermostats to regulate temperature efficiently, and ensure building insulation and HVAC systems are in optimal condition.
Low flow fixtures are a crucial upgrade to effectively save water. Energy Star certified appliances are another option as they are designed to use less water than traditional appliances. Even something as simple as signs at sinks and water fountains to educate employees to be mindful of their water consumption can have a positive impact. Checking for and repairing leaks is a tip that is often forgotten as even a drop of water every few minutes can result in gallons of wasted water. Shutting off AC units and using fans when appropriate is another useful water-saving strategy.
Recycling can be tricky at times because unacceptable or contaminated items can ruin an entire batch of recyclable materials. For instance, cardboard or paper saturated with water or grease are difficult to sort and cannot be recycled. There are also many types of plastic that cannot be recycled due to their composition or the potential of breaking apart into fragments, contaminating other batches of recyclables.
The best thing you can do is research which items your local collection facility accepts and ensure your employees know this information as well. Intentionally choosing materials that can be 100% recycled such as paper, cardboard, aluminum, plastic and steel will result in less waste to landfill and more resources conserved.
Sustainable Business Maturity Curve
Every business is at a different stage of sustainability maturity. Some companies are just getting started while others have well-established sustainability leaders and teams. A company’s level of maturity will be driven by the following:
- Policies & Processes
- Staff & Organization
- Employee Engagement
- Monitoring & Measurement
- Software & Systems
- Strategic Alignment
Companies Getting Started
Companies in the early stages often have several environmental and social initiatives underway with basic policies and procedures in place. Their initiatives tend to be ad hoc and driven by a few employees, often a grassroots movement. In most cases, they have completed a baseline assessment to understand their current situation and have discovered necessary tools and strategies for maintaining progress. It’s also very common for one executive to be leading the charge, sometimes the CEO, but not always.
Companies Well On Their Way
Companies further along typically have a green team or sustainability committee that is actively engaged with executives and all employees. Their sustainability program is well-defined and includes formal communication to all employees.
A formal sustainability assessment has been completed, goals have been set, and KPIs and metrics are for Sustainability Performance Management.
Leading Sophisticated Companies
Companies at the highest maturity level have become purpose-driven companies. Their sustainability strategy is executive led and actively updated. They may have a director of sustainability completely focused on sustainable business operations. There are many active employee-led initiatives and sustainability policies and programs are mandatory. They often have several sustainability certifications, a sustainability scorecard in place and report on sustainability results at all levels: staff, executive team, board level and publicly. Sustainability has become the fabric of the culture.
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