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The Benefits of Environmental Sustainability For Business

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What Is Environmental Sustainability?

The most widely known definition of sustainability is the one declared by Investopedia which states: ‘The concept of sustainability is composed of three pillars: economic, environmental, and social—also known informally as profits, planet, and people.’ This definition was created for the 1987 United Nations Brundtland Commission and has become the basis for all proceeding iterations of environmental sustainability.  

In the business world, environmental sustainability is often referred to as the triple bottom line, which details:

  • Profit – a measure of the financial profit generated for the shareholders of the business. With the implementation of a sustainable business strategy, many businesses are using their power to influence positive change, without impacting their profits. 
  • People – a measure of how stakeholders have been impacted by the company’s decisions, how socially responsible has the business and its operations been. A few examples of this include fair, non-discriminatory hiring practices, paid time off for employees doing charitable work, and partnerships with non-profit organisations. 
  • Planet – a measure of how environmentally responsible it has been, from reducing water usage to cutting plastic production. It can also mean making changes to operations to reduce emissions and offsetting the carbon generated from ‘essential’ processes.

The triple bottom line introduces the importance of assessing the performance of a business in relation to its societal impact, over a representative period of time.

For Businesses 

There are a number of methods available for businesses to measure, communicate and certify their environmental sustainability efforts, helping to both gain a competitive advantage and encourage other businesses in their sector to follow suit.

Environmental Social and Governance criteria (ESG) are standards by which companies evaluate their performance and what investors consider when comparing potential investments.

  • Environmental criteria relate to how a company conserves and protects the natural environment through the utilisation of sustainable practices. 
  • Social criteria relate to how a business manages its relationships with stakeholders such as employees, suppliers, customers, and its local community. 
  • Governance criteria relate to a company’s leadership, how it conducts itself, its compliance practices, risk and crisis management strategies, tax strategy, executive pay, audits, internal controls, and shareholder rights. 

Environmental performance typically accounts for around 80% of an ESG assessment. The larger scope of impact and frameworks for measurement often sees a greater emphasis on environmental criteria over the social and governance counterparts. Often, fewer gains are received in these areas and businesses ought to consider these facets with just as much importance. 

Corporate Social Responsibility (CSR) is a self-regulating model by which businesses try to ensure that their social and environmental activities are aligned with their business purpose and values. This drives businesses to be accountable to themselves, their stakeholders, and the public. CSR initiatives require businesses to be self-aware and present in the impact that their operations have on all aspects of society.

Companies can assess their own ESG progress through impact assessments and apply for a B-Corp status, which is perceived as a gold standard in overall sustainability. Achieving B-Corp certification means that the company meets ‘the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.’ B-Corp status is helping to redefine what business success looks like, accelerating the shift towards a more inclusive and sustainable economy.

For People

The UN’s 17 Sustainable Development Goals are the perfect example of how we as a collective can benefit from a personal, individual level when businesses instil sustainability into their everyday practices. A few examples include:

Goal 1 – Reducing Poverty 

The global poverty rate is projected to be at 7% in 2030 and the current rate is rising for the first time in twenty years due to the pandemic. Those in poverty are at the greatest risk of the effects of climate change. These people have the fewest resources to recover and are often financially marginalised into living in areas subject to extreme weather conditions that affect their homes, businesses and families. Businesses who work towards a net zero target and fund global carbon offset projects are reducing their own impact on the environment whilst at the same time providing essential funding to projects that better the lives of poor communities who cannot afford to protect their environment and level up their access to green energy.

Goal 2 – Ending Hunger

In 2020, 2.37bn people were reported to be living without food or the ability to have a healthy diet on a regular basis, and the pandemic has only exacerbated this. Food production and unsustainable consumption is contributing to a third of greenhouse gases and up to 70% of water extracted from nature. By making sustainable changes to the number of food miles transported, farming techniques implemented, packaging consumed and food wasted, we can dramatically decrease the emissions related to our food consumption and increase food security for those who are most in need. 

Plant growth is sensitive to changes in temperature and CO2 levels affecting not only its lifecycle but chemical structure too. There are concerns about how an increase in global temperatures will affect the quality of harvests and the amount of micronutrients and toxins present in our food.  Reducing global emissions and slowing the effects of climate change on our crops is vital to maintain the nutritional content and quality of the food produced currently.

For The Planet

Over the last century, the rate of resource depletion, habitat destruction, species extinction and climatological disruption has increased rapidly, becoming a global source of ethical and existential concern. A rise in 0.5 celsius or half a degree could result in drastic global climatological changes, variable water availability, increased rates of extinction, a lack of nutritional foods, and much more. It has become more apparent within the business world that companies need to be aware of their impact and actively implement initiatives to help mitigate their involvement, which has resulted in CSR policies becoming widespread.

As a society, we are in disaster mitigation mode. Businesses have to start actively making changes to their habits and behaviours in a sustainable way, ensuring their adoption throughout processes and operations as standard. Over time, the voluntary carbon sector will be transitioning towards implementing emissions recapture schemes alongside avoidance to further accelerate the rate at which carbon is removed from the atmosphere.

With every negative change, such as pollution-intensive industrial activity, planetary systems  ‘correct themselves’ in response over time. The biggest victims of this are the marginalised and most vulnerable ecosystems. Our concerns are with the quality of life of existing species and the preservation of natural habitats and ecosystems. For many years businesses have released propaganda around ‘saving the planet’ while being more concerned about marketing opportunities and protecting their profits. Using environmental action to hide dirty or disingenuous practices is referred to as ‘greenwashing’. A number of high profile greenwashing cases and an increased public understanding has led organisations to double down on their socio-environmental responsibilities and create robust sustainability strategies. It remains important to be mindful of greenwashing, however, transparency in and clear communication of your environmental sustainability actions will not only eliminate any unwanted scrutiny but creates powerful engagement opportunities. 

What Are The Benefits Of Environmental Sustainability For Business? 

Reduced Costs

Implementing environmental sustainability in business can help to significantly reduce business costs in a number of key areas:

  • Reduction of energy costs, water and fluctuations in the pricing of raw materials. 
  • Switching to energy-efficient lighting and adjusting lighting levels in accordance with your production schedule will reduce your long-term electrical costs. 
  • Implementing reusable components or remanufactured components can help to reduce manufacturing and production costs. This relieves the reliance on raw materials, helping to reduce business’ carbon footprint and increase profit margins.
  • Empowering in-house sustainability champions reduces the need to hire external sustainability consultants.
  • Having a sustainability strategy decreases the costs associated with net zero regulations which will come into play as we approach government targets.

Less Waste

Less waste generated from operations not only saves your business in costs but also helps to decrease the impact your business has on the environment. As a result of actively reducing your wastage in day-to-day practices and operations, less waste is sent to landfill where it could take hundreds, if not thousands of years to degrade.

Sorting waste your operations produce and sending an increased portion to be recycled has a dramatic effect on lowering your operational emissions. Waste to landfill generates 467kg CO2e per tonne whereas one tonne of waste recycled generates only 21kg CO2e.

Investment in reusable and remanufactured components means that fewer materials are required and the number of ‘essential’ processes needed within production is reduced. In the EU alone, recycling within the manufacturing sector could save $630 bn per annum (approx. £462.4 bn).

Attracting New Customers With Similar Values

Consumers are more conscious than ever of their impact on the environment. In a study recently conducted by IBM, 70% of consumers are prepared to pay higher prices for sustainable alternatives and 57% are willing to change their buying behaviours to help reduce their negative impact on the environment. One in two consumers have changed or adapted their consumption behaviour for sustainability reasons. 

Consumers are even more conscious of unethical business practices and the difference between authentic climate action compared with insincere marketing or greenwashing. ‘One in five consumers are suspicious of the eco-friendly claims made by companies.’A genuine effort to adopt a sustainable approach will strengthen your reputation amongst customers with similar ideals, setting your business apart from the competition. Aligning your message with your actions, not only ensures that you put your initiatives at the forefront of everything your business does but also means that you can use this to your advantage when marketing your business and building your brand identity. A positive company image and reputation vastly improves customer engagement, fostering loyalty that can’t be bought or swayed, which is vital to long-term business success. 69% of respondents would be more likely to purchase from a business that had a B-Corp certification.

Attracting New Hires

In a recent study of how climate change and Covid are transforming the workplace, 65% of people said they were more likely to work for a company with a strong environmental policy. This trend was adopted even further in younger age groups. With over 75% of the future workforce in 2025 projected to consist of millennials, adopting environmental practices sooner rather than later will help to both attract and retain the best new talent and futureproof the reputation of your business.

Improve Motivation And Morale Amongst Staff

Your staff should be advocates and ambassadors of your brand. Having regular conversations that reinforce how these changes are relevant and beneficial to them, will encourage active involvement in initiatives and making changes in their day-to-day lives. This provides you with the reassurance that everyone is working towards the same end goal.

One way to ensure that these initiatives are adopted is by creating a dedicated team that is responsible for the company’s sustainability efforts. This places the power in their hands; making the final decisions on behalf of everyone and increasing their motivation to achieve what the business has set out to do. This also helps to promote fresh ideas and the following up with staff to align their activities with initiatives and targets. You may also consider creating incentives that further motivate your staff to achieve their targets.

Happy Investors

Recent research into the FTSE 100 found that increased pressure amongst investors who demand transparency on the potential climate risks within their portfolios has improved the overall quality of reporting. 

The Task Force on Climate-related Financial Disclosures (TCFD) is a subsidiary of the Financial Stability Board which is committed to ensuring that businesses and investors alike can incorporate climate-related risks into their strategic planning and risk management, providing greater transparency and stability across various markets. Many investors are unable to determine which companies and markets are likely to struggle, due to the constant fluctuations in regulations, technology, customer behaviour and even the environment. This is further exacerbated by the lack of reliable information and reporting. 

Increasingly, investors are expecting that due diligence has been carried out to ensure their investments are free from climate risks, safeguarding their portfolios in line with the TCFD. In 2020, 56% of companies were actively changing their behaviour to align with the demands of their investors. Companies that enforce a sustainability initiative often demonstrate lower financial risk, insurance risk and liability risk amongst both insurers and investors.

How Plannet Zero Can Help You

Our OneTwo Zero programme can help to measure and reduce your business operational footprint by identifying your Scope one, Scope two and Scope three emissions. 

Additional benefits of the One Two Zero programme:

  1. Empowering an in-house sustainability champion – Plannet Zero provides guidance, template documents and support to your team to educate and empower a culture of sustainability in every business we work with. This is crucial to identify opportunities and encourage reductions within each organisation.  
  2. Engaging your supply chain – another key action is to initiate and engage your wider supply chain in the adoption of reducing their climate impact, both upstream and downstream. This is essential in working towards addressing scope three emissions, helping create a shared goal of environmental action; leading to an acceleration in reductions and a shared financial cost.
  3. A net zero target – having an understanding of your carbon footprint and achieving carbon neutrality through initiatives such as offsetting is just the beginning. The next step is to set the target of net zero. By 2050, the government has instructed that all organisations reach a target of net zero. Our team will help you to understand how to achieve this goal and will support you with the setting of realistic and achievable targets that will get you one step closer with every accomplishment, throughout your transition.
  4. Making the switch to renewable energy – one of the most impactful ways to reduce your carbon footprint is to implement energy generated from renewable and sustainable means, wherever possible. There are a number of different solutions available to your business including green tariffs, Renewable Energy Certificates, Power Purchase Agreements and installing on-site renewable power.

We are more than happy to discuss the appropriate solutions available to your business to reach your energy goals. For more information on our services please get in touch with a member of our friendly team. Alternatively, you can give us a call on +44 20 3637 1055 or email us at info@redshawadvisors.com. We look forward to hearing from you.


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