4 Ways Sustainability Can Boost Bottom-lines

By the SMU Social Media Team

When it comes to business, let’s face it, environmental sustainability or social responsibility is often approached as a PR exercise rather than being a truly—excuse the double entendre—sustainable revenue model. But besides more lofty goals like the protection of environmental and social interests, running a sustainable business actually makes plenty of sense for the bottom-line. Not convinced? Check out our list of the top four reasons why it pays to be sustainable:

 

1. Sustainability boosts a business’s value

Did you know it appears that better returns can be earned from investing in sustainable businesses? Mutual funds with strong ESG (environmental, social and governance) ratings, for example, have shown strong recent returns, according to this Forbes.com article. Faced with increased regulations, companies that have a strategy for long-term sustainability are perceived by investors as less risky and more successful—in turn, ramping up its value.

 

2. Sustainability cuts costs

Alternative energy might soon become mainstream as countries work towards achieving grid parity—the moment that alternative sources of energy cost the same as electricity from the grid. In fact, for China, this has already become a reality with solar generation being cheaper than grid energy.

Besides smart plants and factories, some farms in Malaysia are cultivating crops using methods that replenish the nutrients of soil naturally instead of employing costly chemical fertilisers.

 

3. It is a compelling marketing strategy

When sustainability is genuinely part of a business’s road map for success, it provides a strong message that can be communicated across multiple platforms to boost business longevity and awareness.

Take Starbucks’ sponsorship of The Betacup Challenge, an open design competition that aims to reduce the waste from take-out paper coffee cups. The alliance shows the coffee giant’s commitment to addressing the problem of 58 billion coffee cups being trashed a year, which translates to the cutting down of 20 million trees. It creates interest in the media, and consequently, with consumers about the company’s take on being responsible for the environment.

 

4. Sustaining a network of cooperation

The realms of non-governmental organisations (NGOs), government bodies and corporations usually do not intersect. And when they do, there might—more often than not—exist a degree of tension when their interests fail to align. A strategy of sustainability, however, could strengthen a business’s relationships with external organisations.

Smart businesses may collaborate with and lobby governments to roll out legislation and incentives that promote sustainability—and achieve their business goals. The US Environmental Protection Agency, for example, provides financial grants, tax incentives, low-interest loans and rebate programmes to companies using a combined heat and power technology. These initiatives, in turn, can leverage these initiatives for competitive advantage.

With good partnerships established, this allows both businesses and NGOs to achieve more. For example, businesses can tap on the credibility and extensive reach of NGOs through sustainable projects. While corporations can build relationships with the community and their brand equity through partnerships with NGOs, or conduct market research and scale operations through the collaboration; the latter gain from the technical expertise, manpower and funding provided by businesses.

By keeping an open mind to the possibilities of sustainability, businesses can realise that such a strategy has great long-term potential, leading to the growth of a triple-bottom-line of profit, people and the planet.

 

For more insights on the subject, check out  The sustainability edge: Driving top-line growth with triple-bottom-line thinking by Jagdish Sheth and Suhas Delos, published in the Asian Management Insights, Vol. 4 Issue 2.

 

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