There are many ways in which a business can consistently generate net profits over time. They can make the choice to reduce expenses, they can increase the price of the product that they are selling, or devise a plan to sell the current product at a greater volume. They can also figure out a cheaper way to design the product. But what about an intentional effort to undertake sustainability initiatives?
For businesses in North America, it might sound like a radical idea. What’s the point of focusing on sustainability when things are going well? It’s not like they are going to suddenly run out of resources anytime soon. There is no real pressure nor is there a true incentive to pursue this path. However, this type of thinking might be preventing these same companies from becoming even more profitable in the future.
Have People Tried Sustainability Before?
Consider an annual study done by MIT and the Boston Group in 2012: After analyzing responses from over 2,600 executives, they found that 37% of companies that chose to focus on sustainability efforts had increased profits from doing so. It was interesting to note that companies located in developing countries were far more likely to focus on sustainable initiatives. This can be explained by a combination of population growth and scarcity of resources within these countries. Therefore, it follows that sustainable practices are mandatory to achieve success through profitability.
The main problem with pursuing sustainable initiatives for companies in developed countries is that it requires a major change. The business model needs to be re-drawn in the drawing board. Employees need to double down on measuring and tracking in order to ensure that the sustainability goals are being achieved.
They might need to take on a chief sustainability officer to oversee that things are being done properly. Products may have to be re-designed in order to meet sustainability criteria. Using different environment-friendly containers for shipping existing products might become the norm.
Within these conservation constraints is a new opportunity for innovation and, if done correctly, a competitive edge over competitors. Sustainability does not have to be pursued at the expense of lowering profits!
What Can Companies Do?
Companies should also consider that there are many sustainability routes that can be explored. The packaging could be changed to a material that is more environmentally-friendly and lightweight than what is currently being used. There could be a company investigation into their business operations to determine how waste production can be reduced and better managed. Less energy could be used to generate the same result.
There is another angle that is worth pursuing for those that are on the fence of pursuing these eco-friendly initiatives—adding customers that place eco-friendliness as a high priority to their existing base of customers.
There are many young people in North America that are becoming more educated on the benefits of environmentally friendly practices and products in society. When they purchase something, they want to make sure that they are supporting someone who shares their values of sustainability and environmental preservation.
If a company in a competitive industry ends up being one of the first to re-design their existing product line or add new products to the line, they can gain a massive advantage over their competitors. Expect to see many companies making this switch in the near future.
It is now apparent that sustainability is the hidden key to growth and innovation. The hard work of re-invention will become a necessity for companies that are interested in staying competitive and relevant in their industries.