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- Business Sustainability Strategy: Definition and Helpful Tips
As more people grapple with the realities of climate change, there’s been growing pressure on businesses to be part of the solution. Companies big and small are embracing sustainable business practices, but transitioning to eco-friendlier operations may be challenging. Below is a guide to what business sustainability looks like so you can incorporate a strategy that’s right for you.
What does "sustainability" even mean?
Sustainability refers to business practices with little to no negative impacts on the environment, the company’s community, or society. Adopting sustainable practices may help mitigate your company’s environmental impacts and help your business run more efficiently. In fact, if done right, some green business ideas may even lower your costs and improve your financial performance.
What sustainability in business looks like
If you’re interested in what a sustainable business looks like and how it operates, here are a few common sustainable business practices:
Manufacturing with sustainable materials
A sustainable business may source its raw materials in ways that minimize its environmental impact. Typically, this means using renewable resources instead of non-renewable resources. Another option is using recycled material to extend your resources’ lifetime while reducing your costs. Examples of sustainable materials include bamboo, cork, cotton, corn, and recycled fabrics.
Using optimized supply chains
Many sustainable businesses regularly look at their supply chains to find and cut unnecessary parts that increase their carbon footprint. For example, you might reduce the size of your shipping boxes if you don’t use most of the space inside. This can lower your carbon footprint and prevent your products from needlessly bouncing around inside the box.
Generating power with renewable sources
A sustainable business uses power generated from renewable sources such as wind or hydro energy rather than carbon-emitting, non-renewable fossil fuels. Alternatively, your business may use an on-site generator for your power needs, such as a geothermal pump or solar panels.
Developing sustainable work practices
A sustainable business ensures its operations are eco-friendly from top to bottom. A common policy is turning off electronic equipment when not in use to save power. It’s a small step, but if you follow it every day, the environmental benefits compound over time. Another eco-friendly work practice is remote working. Commuting is hard on the environment and having employees work from home may be a solution.
7 benefits of sustainable business strategies
Below are several ways your company can benefit from a sustainability strategy.
1. Better public perception of your company
Some shoppers refuse to purchase products from companies that don’t adopt sustainable policies. Additionally, according to a First Insight and UPenn study, two-thirds of shoppers are willing to pay more for sustainable products. Making environmentally friendly operations a part of your company values can improve your brand's image in a market where the environment is increasingly important to consumers.
2. Compliance with government regulations
With increasing concerns about environmental degradation, governments worldwide are rolling out regulations to lessen the damage. A solid business sustainability strategy can help your company stay compliant with the law and avoid a challenging transition when new regulations come into play.
3. Attracting new employees
Job seekers in today’s workforce often want the companies they work for to have a positive impact on the environment. In fact, according to IBM statistics, 70% of job seekers say that they prefer employers that prioritize sustainable practices. Adopting sustainability as one of your core values may make recruiting employees easier.
4. Tax benefits
The government offers several tax breaks for companies that address sustainability issues within their operations. For example, you can take advantage of the alternative energy tax credit. This tax credit can offset the costs of installing small wind turbines, solar panels, and fuel cells. You may be able to claim a credit of between 10 and 26 percent of your installation costs. The maximum credit is usually $1,500.
5. Better employee retention
Employees are more likely to feel engaged with their work when their company shares their values. As your team pays more attention to conversations around climate change, sustainability might become a higher priority for them. Decreasing your company’s impact on the environment and bettering society can do more than attract new employees – it can keep your current staff happy, too.
6. Reducing waste
A sustainable business strategy can encourage you to get as much out of your resources as possible and avoid excess waste. Often, that means recycling anything you can and buying only what you need. Finding new ways to use your current resources for your existing processes is also a great way to reduce waste.
7. Cutting costs and increasing productivity
Typically, with business sustainability strategies, you can get more results from fewer resources and cut back on inefficiencies. In fact, Bain & Company® has reported that one business’s approach to using less material for a longstanding process cut its costs by 11 percent. Using fewer materials may also mean that you get through your processes more quickly, increasing your productivity.
How do you create a sustainable business strategy?
Below are several considerations as you build out a sustainable business strategy for your organization.
The first step in transitioning to a sustainable business model is to convince your stakeholders that it’s worth the effort. That means getting your vendors, investors, and employees on board. Highlight the long-term financial benefits of your changes, such as reduced costs and faster production.
Fully adopt sustainability
Your organization's transition to a sustainable business model should be comprehensive and genuine about making change. Adding sustainability to your core company values is an excellent first step that can lead to more far-reaching policy and enhanced employee training.
Shifting to sustainable business practices requires an in-depth examination of your current model and its environmental impact. Fixing issues with your systems could be as simple as changing one element, but it’s often more complex. That means innovation will likely come into play. Work with your team to develop new solutions to your sustainability issues – and if what you come up with doesn’t work, try something else.
Bring in lots of viewpoints
Tap into your resources to help formulate wide-ranging solutions. Bringing varying perspectives to the table can help everyone build off each other's ideas and experiences until you find a solution that fits everyone.
Set up long-term, step-by-step goals
Making your business sustainable won’t happen overnight – it’s something you have to work toward every day. If your goal is to reduce your company’s impact on the environment, don’t be afraid to set far-reaching milestones to get there. Then, plan out every step you’ll need to take to get your organization from where it is now to where you want it to be.
Sharing public progress reports can show your customers and employees that you’re serious about going eco-friendly. This will hold your team accountable and keep them working toward even the most ambitious sustainable changes.
When one business adopts a sustainability model, other organizations within that industry will often follow suit. This is a case where direct competition is good – as businesses try to outdo each other on the sustainability front, the planet benefits. So don’t be afraid to embrace your competitors’ sustainability policies if they can fit into your business model. When your processes do less harm to the environment, everyone wins.
Obtain funding to cover sustainable shifts
Before making any big changes to your business, it can be a good idea to review your finances. Look at your income statements and balance sheets to see how you can fund your sustainability efforts. Making your organization sustainable at all levels can be a significant expense, and without the necessary capital, you might get off on the wrong foot. If you can’t find that capital from your typical revenue stream, you typically have other options.
Fund your business sustainability strategy with SmartBiz®
While adopting sustainable policies can be expensive, it often offers enough benefits to make the price tag worth it. And if you need help financing the shift, you can use SmartBiz® to find SBA loans, bank term loans, and custom financing options. See if you pre-qualify* for a loan today – it only takes five minutes.