Sustainability to kindle and nurture the new Business Prowess

‘Sustainability’ in business is the practice of operating without negatively impacting the environment or society.?An environmentally sound business considers more than just economic milestones, it continuously evolves making considerable alterations on its society and the environment. Such a business shall lead to ‘sustainable outcomes’ because?it contributes to the health of the structure within which it operates, thereby helping construct an environment in which the business can thrive and succeed. The responsibility of the regulatory and governance of the business and organization then comes in to the limelight where the integral transformation takes place and there is the fine mix of the three that strengthens the core where resilience can be expected which again is the survival of the best in class!! In turn the competitive advantage thrives.

Sustainability is a vital pillar for business

With a growing awareness on the ecological crisis facing our planet, it’s clear that governments, businesses, and individuals are all part of the problem, as well as part of the solution. Businesses that overlook these issues are playing with their own survival, because they rely on nature for production and a stable society for sales. The human footprint of climate change is undeniable. As individuals, we have cultivated a consumer society where low-cost products sell regardless of the damage done to our planet. In businesses, profitability has always been king; we have created economic systems where the aim of fair distribution has not yet been materialized. Confirmed statistics state that the world's richest 1% have more than twice as much wealth as 6.9 billion people.?Sustainability is now priority for business creation and development.?

Customer behavior and it’s impacts

We, humans, spend most of our time consuming something. We consume food, energy, clothing, but also information and data. Our consumption behaviour at large changed dramatically over the last century due to increased wealth, life expectancy,

population growth and technological advancement. All the more reason why large consumer markets are gravitating towards a more sustainable lifestyle. The pandemic in 2019/20 drove in most parts of the globe for consumers to adopt a more sustainable life style, with the rise of ethical consumerism, and a third of consumers looked to buy from businesses with strong sustainable credentials.?How the consumers’ behaviour has changed over time, we can clearly see that we consume too much. This amount is disproportionate in comparison

with the Earth’s resources, which are not infinite. Through consumption, we use

these resources without realizing their finiteness and ability to regenerate.

Furthermore, we consume things that are not produced to

last due to poorer quality, to keep the production cost per unit

as low as possible, leading to further consumption. In addition, what we

consume can often come from production processes that are coupled with negative

environmental as well as social impacts. In addition, it’s important to recognize and understand the Millennials and Generation Z, the largest two living adult generations with increased purchasing power, considered conscious consumers who are willing to pay a higher price for sustainable products. Therefore, as this market grows, it makes financial sense for businesses to adopt sustainable policies and products.

Sustainable initiatives and regulations

The world is calling, in both written policy and public outcry, for companies to take accountability for their actions and make a commitment to better practices. One such practice is to simply stay informed about the sustainability regulations that affect your business and learn how to both navigate them and use them as a supportive framework for guiding your green goals. Initiatives to promote the long-term safeguarding of our environment and eradicating social problems are also on the rise, where even three decades ago 178 countries adopted the ‘Sustainable Development Goals’, this in turn is the corner stone that enables and drives the importance of business success in creating sustainable future. Many businesses have faced instability and uncertainty over the last few years from the combined impact of shifts in political status, the coronavirus pandemic and social and economic hardship all of which have led to or are pushing for new policies. While keeping up with regulations may not be the most enjoyable part of running a company, it is critically important to do so in order to maintain legality and avoid the penalties that come from malpractice. At a country level, many governments are working towards a sustainable future, by implementing new rules and regulations that directly affect businesses. New energy and emission rules that required all large companies to report on their annual energy use and greenhouse gas emissions in their annual reports and becoming mandatory. Most countries actively involved have mandated ambitious targets up to 65-70% reduction in emissions compared to 30 years ago over the next decade. Disclosure of information through sustainability reporting and sustainable certifications such as Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), and Task Force on Climate Related Financial Disclosures (TCFD) are rising worldwide. These trends reflect the importance of sustainability for businesses as a way to build consumer confidence and improve corporate reputations. It also highlights the need for more green-skill professionals in industry.

The sustainable finance to the forefront

Sustainable finance refers to the process of taking environmental, social and governance (ESG) considerations into account when making investment decisions in the financial sector, leading to more long-term investments in sustainable economic activities and projects. Environmental, social and governance (ESG) considerations have come to dominate many investment decisions in recent years. Put simply, this means investing your money where it will make the world a better place. Sustainable investing covers a range of activities, from putting cash into green energy projects to investing in companies that demonstrate social values such as social inclusion or good governance by having, for example, more women on their boards. Sustainability Linked Loans, on the other hand, are similar to any debt financing arrangement - with the key difference being the interest being paid by the borrower. These are loans which incentivise the borrower’s commitment to sustainability through mutually agreed quantitative sustainability performance targets (SPTs) and ESG Key Performance Indicators (KPIs). To ensure that sustainable investments deliver on their promises, global accounting body the International Financial Reporting Standards Foundation has established the?International Sustainability Standards Board to come up with new rules to validate sustainability claims. Although sustainable finance still represents a low percentage of total global investment, it is accelerating and enabling sustainable businesses to access capital, nevertheless as well as helping the planet and making society fairer and more inclusive, evidence is mounting that sustainable business actually offer higher returns for investors.?

Doughnut economics to be rolled out

Doughnut Economics is a new vision for an economy. By rethinking our systems, the goal of national and global economies can be changed from simply increasing GDP to creating a society that can provide enough materials and services for everyone while utilising resources in a way that does not threaten our future security and prosperity.?It is the foundation proposing a change of economic model as a response to humanity’s major challenge of eradicating global poverty within the means of the planet’s limited natural resource. Although there’s still a long road ahead to fully embracing this economic model, doughnut economics has been trialed in cities many major cities, of course, doughnut economics does require businesses and consumers to adapt. For example, in some countries, certain products include additional charges that account for their carbon footprint as part of the toll of farming. So, the move towards a more sustainable economic system will need to be embraced by society for it to succeed.

‘Looking beyond ‘Green’

There’s a big difference between traditional and sustainable business models. Although they each share the ultimate goal of business survival, traditional business models primarily focus on profit. Nonetheless, as the word?sustain?suggests, sustainability means trying to extend something while protecting the environment and improving social conditions. We’re trying to?sustain something like our?unsustainable?lifestyles. On the other hand, a sustainable business should focus on making a positive impact on some of the most urgent social and environmental problems. To achieve this, businesses have to embed sustainability into their business model and balance the cost/benefits of their product or service.?Growing consumer groups, like Gen Z, value trust and transparency, and are savvy at spotting greenwashing tactics used by many brands to wrongfully appear sustainable. Being a sustainable business takes time, money and resources. Brands that falsely claim to be green through their PR and marketing campaigns are at risk of losing consumer trust. For a business to have longevity, it needs the skills to solve, create and innovate under the parameters of a sustainable future.

“Envision Encourage and Empower” – Skies the Limit!!!