Why Sustainability Matters

Sustainability is no longer just an academic concept

Plain and simple, businesses that adopt sustainable practices perform better than those that don't.

Sustainability is a modern business discipline, and it is as central to a company's success as are accounting, or marketing or logistics, for example. The appropriate application of the principles of sustainability is very much among a business leader's core responsibilities - and must be a prominent component of his or her leadership and management tool kit.

Why you ask? How does my business benefit? What's in it for me? Fair questions; and the short answer is that the preponderance of research and case studies show that all businesses - whether multi-nationals or SMEs - benefit in a variety of ways that impact on the bottom line:

  • Reduce Operating Costs
  • Improve Brand Maintain and Improve Market Share
  • Improve Access to/Lower Cost of Capital/Bank Financing
  • Increase Regulatory Compliance/Reduce Risks
  • Gain Competitive Advantage
  • Attract & Retain Good Employees
  • Enhance/Protect Reputation

These are obviously not just pie-in-the-sky concepts - these are core business issues, affecting nearly every business enterprise. A comprehensive review of studies presents some eye-watering statistics:

  • 90% show that sound sustainability standards lower the cost of capital
  • 88% show that solid ESG (environmental, social, governance) practices result in better operational performance
  • 80% show that stock price is positive influenced by good sustainability practices

Increasingly, legislators are embedding CSR standards in the regulatory framework. Current law in the UK requires that emissions must be cut by 80% by 2050; but it has become increasingly clear that efforts to reach those targets will fall short.  In the wake of the Paris Agreement wake-up call, energy minister Andrea Leadson told Parliament the government would take the step to widely embed "net zero emissions in UK law." The government's pledge, is a "demonstration on a cross-party basis ...[of the] determination to tackle climate change."

Inasmuch as the UK has already embedded CO2/GHG reporting requirements on larger and publicly traded companies, it seems clear that the next wave or legislation or regulatory activity has little option but to engage SMEs in emissions-cutting efforts. Given that SMEs represent more than 90% of all UK businesses, and employ more than half of the UK's workforce, the impact of SMEs cannot be underestimated.

 

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