If you are not entirely sure what is meant when someone talks about sustainability, you are not alone. It can be especially confusing when thinking about sustainability in the context of a business: Is it possible to be sustainable and profitable? Or is it mainly just a PR trick?
Sustainability can be defined as meeting the needs of the present without compromising the ability of future generations to meet theirs.
However, there are ton of assumptions and prejudices around what it means for businesses – and their customers.
Next, we'll help unravel some of the myths about sustainability.
1. Sustainability is expensive.
Yes, it's true that the up-front costs of shifting to more environmentally-friendly business practices can be expensive. However, this point of view fails to recognize many long-term initiatives such as reducing energy, water, and resources that will eventually reduce operational expenses and costs.
For example, IKEA is working on their emissions by installing heat pumps to heat and cool their stores with renewable energy. Besides the environmental benefits, IKEA has estimated yearly savings of 980 000 SEK (95 000 EUR) by installing one of these ground sourced heat pumps in their store in Helsinki.
Indeed, green business initiatives don't have to be either or – effective for profit or planet – but can be seen both beneficial for the environment and cost-saving for the business.
Additionally, it has been shown that companies investing in sustainability saw their employees become more engaged, as wells as a 22% increase in profitability and 21% increase in productivity.
2. Consumers say it's important but don't want to pay extra for it.
The awareness of sustainability is increasing among consumers, especially millennials and generation-Z. In an IBM research, over seven in 10 say it's important at least on some level that brands are sustainable and environmentally responsible. This reflects a change in consumer mindset, where people are shopping increasingly based on their personal values and want to choose companies that reflect these values.
This doesn't only mean that people expect brands to use energy efficient light bulbs or promote their recycling efforts. More and more, they also prefer products that are simple, fresh, non-processed and contain little or no preservatives.
And lastly, according to IBM, over seven in 10 would actually be willing to pay up to 35% more for sustainably responsible brands.
3. Sustainability is all about environment and recycling.
Sure, a lot of the sustainability discussion revolves around environment, especially climate change, biodiversity and waste disposal. After all, it is an extremely broad subject matter.
However, one should not forget the two other pillars associated with sustainability: social and economical.
At its broadest, social sustainability is about human rights and equality. In more detail, it covers areas like employee wellbeing and gender equality within the company, community engagement, such as fundraising and sponsorships on a local level, and awareness of supply chain and issues like child labor, fair salary and safety of work environments on a global scale.
Economical sustainability, in turn, casts light to the grassroots of any successful business: To be sustainable, a business has to be profitable. However, this does not mean profit should be achieved at any cost. In addition, economical sustainability means also governance and risk management as well as taking anti-corruption measures.
4. Employees are not committed to sustainability.
Values guide where people want to work these days. This is true especially with millennials, as nearly nine in 10 tell they are searching for employers whose behavior reflects their own values, and over half says they've ruled out the possibility of working for certain organizations due to conflicting values.
This is extremely important, as millennials already make up majority of today's workforce.
However, employees have shown to become more engaged, productive and loyal to companies that invest in sustainability, so it's not just a millennial thing.
5. Sustainability does not give competitive advantage.
Business environment today is very competitive. This is thanks to technology that has made starting a business easier than ever, simultaneously broadening the market via online retail. Therefore, it's vital for businesses to develop with unique competitive advantages to stand out.
As small businesses don't have the market share or buying power to compete with price, the focus needs to be on other things. One possibility can be found in sustainability. As said, more and more consumers are looking for sustainable options today.
6. Sustainability tracking is too time-consuming and pricey.
Nowadays there are digital solutions transferring large amounts of data into digestible insights about businesses' sustainability initiatives. Not to forget possibilities deriving from digital POS-systems, where real-time data keeps track of sales and stock, thus helping to decrease the amount of inventory.
Last but not least, digital solutions like smart receipts, though not completely emissionless, help use less natural resources and thus reduce the CO2 footprint of your business.
+ 1 Covid-19 shifts priorities away from sustainability.
According to a recent survey, experts believe that due to the Covid-19 pandemic, sustainability will become a lower, less urgent priority for businesses, especially when it comes to environmental issues. Covid-19 has brought forth issues such as unemployment, poverty and inequality which, understandably, should be focused on – after all, that is in line with social sustainability pillar.
However, as we are slowly moving towards the end of the pandemic, it is important to ask oneself: What will happen after this? Are we going to go back to how things were, or would this be the time to consider shifting to some more sustainable business solutions?
Leading experts also say that as climate change worsens, so will the frequency and impact of pandemics, meaning the two issues may have the same root cause to be addressed.
Ultimately, it's up to us to decide how the new normal will look like.