Sustainability: How Businesses Can Build Long-Term Value
Increasing environmental challenges are becoming a huge concern to consumers and businesses alike, underlining the now critical need for a commitment to sustainability. According to PwC's Voice of the Consumer Survey, 2024, 85% of respondents have experienced the disruptive effects of climate change in their daily lives. This awareness is affecting purchasing habits. Forty-three percent of surveyed consumers make purchases that reduce their energy consumption. Even more striking, all survey respondents say they're willing to pay more for sustainably produced goods.
Sustainability is no longer an extra benefit; consumers expect companies to do the right thing for the environment. Businesses that meet these expectations gain the advantage of building long-term relationships with eco-conscious customers and gaining a host of business benefits that cut costs and improve operations.
The Role of Sustainability in Long-Term Business Success
Sustainability is more than a buzzword or passing trend. It's the key to meeting customer expectations, complying with national and global regulations, and realizing efficient business practices. As consumers become increasingly aware of the impact of climate change, 62% of them are willing to change their purchasing habits to reduce environmental impact. This attitude will likely become more prevalent as younger generations exercise purchasing power.
As the largest generation on Earth, Gen Z represents more than 25% of the global population and $360 billion in purchasing power. Businesses hoping to interact with this group must consider their environmental impact. 70% of Gen Zers try to purchase from companies they consider ethical and 90% believe companies must act on social and environmental issues.
Government agencies around the world are responding to the demand for sustainable business practices with regulations to:
Improve product traceability
Reduce carbon emissions
Reduce waste
Prove environmental claims
Businesses will be required to meet regulations in their home location and the requirements in the states and countries they serve.
As an added benefit, sustainability can lead to more efficient practices and reduced business costs. By adopting practices that reduce energy consumption, waste, and environmental impact, businesses often improve operational efficiency and reduce energy costs. These changes create significant cost savings.
Achieving Sustainability
Eco-friendly claims—or even eco-friendly products—aren't enough to make a business sustainable. Sustainable companies incorporate positive social and environmentally friendly actions into their operational processes. By integrating environmental, social, and governance (ESG) practices into how you do business, you can better meet customer and stakeholder expectations and observe regulatory compliance. Robust ESG practices include many elements that customers look for in sustainable companies.
Achieving sustainability requires a multi-faceted approach to change operations across your entire product cycle.
Energy Efficiency
Often considered the cornerstone of sustainable business practices, energy efficiency enables a company to shrink its carbon footprint and reduce utility costs. Depending on your operations, you can achieve greater energy efficiency by using sustainable buildings and tools and changing procedures. Energy-efficient buildings naturally require less energy to run. They also create a healthier environment through the use of natural resources. You can further reduce your carbon footprint by investing in energy-efficient tools and changing high-consumption activities like transportation.
Transparency
Documenting and sharing your sustainability practices is vital to achieving regulatory compliance and meeting customer expectations. When Gen Z and Millennial customers rate a brand highly on transparency, they are 30% more likely than older generations to spend more money with it and 20% more likely to choose it over its competitors.
These younger generations will soon have most of the purchasing power in the US. When you want to earn their trust, make sure it's easy to find straightforward information about your brand's sustainability practices.
Supply Chain Sustainability
The practices within your facility do not encompass the entirety of your impact on the environment. Every green business works with vendors, transportation companies, and other third-party providers to meet business goals. Seeking like-minded and green business partners who share your commitment to sustainability will further reduce your environmental impact.
Community Engagement
Actively involving community members in the planning and decision-making of sustainable development projects can help you achieve greater success. By establishing better communication channels and hosting inclusive meetings, you can gather community feedback and create a supportive environment for sustainable development initiatives. This approach is especially helpful in learning customer expectations when entering new regions.
Examples of Companies Succeeding through Sustainable Strategies
Companies that create a culture of environmental responsibility develop processes that align with an ethical corporate responsibility to protect natural resources and avoid pollution and actions that harm the environment. So, what does this look like in the real world?
An outdoor clothing company might source recycled or organically grown materials to reduce its environmental footprint. They might also use renewable energy to eliminate carbon emissions by using solar panels and wind power and installing more energy-efficient machinery. They can work with suppliers to reduce the amount of energy used in third-party operations and connect consumers with local activist groups in their community to generate awareness and bring their efforts full circle.
A cleaning products company might create plant-based products made of ethically and sustainably sourced ingredients. They’d ensure their packaging is equally environmentally friendly by using recycled materials and designing the packaging to be recycled. The company might also focus on environmental advocacy and community engagement by supporting a campaign to offer grants through nonprofit organizations.
These example companies aren't simply jumping on the greenwashing bandwagon. They're leading the way forward in presenting ideas to protect the environment and reduce carbon emissions throughout their entire product lifecycle.
A Commitment to Sustainability
Embracing sustainable practices is not simply an ethical matter, it is also a strategically advisable move. Whether it’s shrinking costs, boosting efficiency, strengthening your reputation, or adhering to compliance, sustainable practices equate to long-term success. Businesses have a duty now more than ever to take meaningful steps toward a more sustainable future.
