The Climate Of Business #88: 10 ways to increase profits by making your business more sustainable

Climate Change Reality

• Up to 70% of California beaches could disappear by end of the century (The Guardian )
• Will drought and heatwaves swing Spain's upcoming elections? (Euronews )
• Wasted food costs the global economy more than $1 trillion every year and accounts for approximately 8%-10% of global greenhouse gas emissions (World Research Institute )
• Antarctic Sea Ice Is at Record Lows. Is It an Alarming Shift? (Wired )

• The nine hours in which Spain made the 100% renewable dream a reality? (Financial Times)
• Cacti, wild coffee and false bananas: Scientists sketch out the menus of the future (CNBC )
• Bring Back the Seabirds, Save the Climate (Wired )
• More than 1,500 arrested at Extinction Rebellion protest in The Hague (The Guardian )
• Fifth of the world's population may face life-threatening heat by 2100 (Euronews )
• Climate change causes 2m deaths in 50 years; poor suffer most: UN (Al Jazeera )

Business Climate Reality

• Why nature tech start-ups are poised for growth (World Economic Forum )
• Shell AGM disrupted by protests as investors reject new emissions targets (The Guardian )
• Rolls-Royce tests 'game-changing' engine technology (BBC )
• Is generative AI bad for the environment? (Euronews )
• Solar investment outshines oil as race for clean energy heats up (Al Jazeera )
• We desperately need to embed science in sustainability investing (World Economic Forum )

• No destroying unsold goods: EU countries agree on green product rules (Euractiv )
• France bans short-haul flights as it looks to cut transport emissions (CNBC )
• France needs to invest €66bn a year on climate action, government report states (Euractiv )
• TotalEnergies suffers investor revolt over climate goals (Financial Times )

Reality Check

What is sustainability?

Sustainability: to maintain or endure at a certain rate of growth indefinitely?

Applying this definition within a business sense means for a business to be sustainable they are an endlessly operational organisation, focusing on the interplay of environmental, social, and economic factors. More specifically; businesses who act sustainability strive to ensure they meet the economic, social and environmental needs of the present, without compromising the needs of future generations.?

Meanwhile, Environmental, Social, and Governance (ESG) refers to a set of criteria used to assess a company’s environmental, social, and governance impact. In an attempt to remove ambiguity, ESG criteria has been increasingly used by key stakeholders, such as governments and investors, to address unsustainable business practices. The widespread integration of this criteria into stakeholder decision-making processes and policy implementation has therefore made corporate sustainability a vital strategic focus for businesses around the globe.??

The contrast between the two terms must be clearly recognised by businesses; while both terms overlap, they ultimately have different scopes and focuses. Businesses who embed sustainability as a central part of their wider business strategy, rather than solely focussing on ESG performance will ultimately be able to increase profits and create long-term value

The relationship between sustainability and profit

Through fostering the importance of company longevity, and placing a key focus upon how a business interacts within ecological, social, and economic environments; businesses are able to create long-term value. The relationship between sustainability and profit can be understood via the following cases:

• Companies that disclose environmental data and have ambitious emissions reduction targets have a 67% higher return on investment than those that don't.
• Companies that set science-based targets to reduce their carbon emissions outperform their peers by 5.6% in terms of shareholder returns.
• 60% of investors say they will increase their investments in companies that prioritise sustainability over the next five years.
• 94% of consumers are more likely to be loyal to a company that is transparent about its environmental and social impact.
• The transition to a net-zero economy could create up to €8 trillion in business opportunities in Europe alone by 2050. Companies that are slow to transition risk losing market share and competitiveness.

10 ways to make your business more sustainable and at the same time more profitable.?

Meanwhile, taking actions to reduce or improve a businesses environmental and social impact is one of the most important steps in becoming sustainable; and the opportunity of businesses to gain a competitive advantage through decarbonisation is ever-so present. As such, businesses should familiarise themselves with the following actions which stand vital within the overall sustainability journey?

1. Set sustainability targets: Companies often are incredibly ambitious about sustainability and want to see results fast; this is achievable if you break it down in small steps over the coming 12 months. Setting short-term tangible sustainability targets is vital for businesses that wish to pioneer on the topic in both the longer, and shorter term. Sustainability leaders, such as Chief Sustainability Officers (CSOs) , should oversee the development and implementation of science-based targets (SBT’s) to future-proof their business.
2. Develop and implement a sustainability policy: A sustainability policy is a way for a business to document the way the company will act upon and handle sustainability issues in the organisation. Implementing a sustainability policy and engaging employees in sustainable practices will not only improve the long-term ecological and social sustainability of a business, but a sustainability policy will also communicate the company’s commitment to key external stakeholders.
3. Choose sustainable suppliers and products: Choosing sustainable suppliers and products can help reduce emissions throughout the supply chain. For instance, partnering with suppliers who make an active effort to use recycled materials, reduce packaging, and create products with low-carbon footprints will be key to reducing scope 3 emissions , and thus becoming more sustainable. Read more about how suppliers can best prepare for their partners sustainability journey here .?
4. Offer remote-work alternatives: Enabling employees to work remotely is a key step to becoming more sustainable. Employees are responsible for consuming vast? amounts of office resources - such as electricity, heating and paper. Reducing the necessity for employees to congregate in-person will therefore aid in reducing the significant costs associated with resource consumption and improve employee satisfaction. Meanwhile, remote work alternatives can make a huge impact in reducing emissions from employee commuting, as transportation accounts for 17% of global greenhouse gas emissions.
5. Go digital: Reducing the need for paper through transitioning to digital alternatives, such as using DocuSign rather than printing contracts, can help businesses save vast amounts of money through reducing the need for printers. Actively striving towards minimal paper usage and fully going digital where possible is key to becoming more sustainable as printers utilise vast amounts of electricity and energy; thus also making digitalisation a key step towards cost reduction and profit maximisation.?
6. Use green certifications: Using green certifications such as LEED, BREEAM, or WELL to design and operate sustainable buildings can greatly reduce emissions. Buildings with green certifications have been found to emit 34% less carbon dioxide, use 25% less energy, and consume 11% less water than non-certified buildings, according to the US Green Building Council. ?
7. Use energy-efficient lighting: Using energy-efficient lighting such as LED bulbs, CFL or T5 fluorescent can save up to 75% of energy compared to traditional incandescent bulbs. According to the US Department of Energy, businesses can save up to $0.06 per square foot per year by using energy-efficient lighting
8. Optimise heating and cooling systems: Optimising heating and cooling systems with programmable thermostats, clean filters, and energy-efficient HVAC systems can save energy and reduce emissions. A well-maintained HVAC system can reduce energy consumption by up to 30%, whilst individuals who lower their thermostat by just 1°C can save around 7% of their heating energy or €50-70 per year.
9. Transition to smart grid technology: A smart grid is an electricity network that delivers electricity directly from the source to the consumers. The ability of smart grids to provide real-time information and prevent blackouts is central to enabling greater control over energy usage; thus maximising resource management and energy efficiency. Combatting the energy crisis via the mass adaptation of smart grid technology is estimated to save up to €117bn globally by 2027.
10. Utilise sustainability software: Utilising technology, such as Plan A’s comprehensive decarbonisation platform , is key to optimising the sustainability strategy of a business. The provision of expert data management, analysis and consultation on best practices regarding sustainability - specific to the? business’ operations and budget - will allow organisations to develop and implement a long-standing sustainability strategy and thus realise the potential profits of business-wide sustainability integration.

A study by MIT found that although 90% of executives find sustainability to be important, only 60% of companies incorporate sustainability into their business strategy, with a mere 25% having sustainability incorporated into the business model. Therefore, taking steps to ensure sustainability is a central focus of a business’ strategic value proposition should be a priority for all businesses of all sizes.?

Ultimately, businesses who strive to become sustainable through accounting for the long-term interplay of environmental, social, and economic factors will be able to create long term-value. Such value is created through better meeting the needs of stakeholders, attracting and engaging top talent, improving brand reputation, reducing costs, and finally, maximising profits.?

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