Six Reasons for Investing in Sustainability

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Six Reasons for Investing in Sustainability
Anneke Zwart, Student (University), Netherlands

Businesses are increasingly focusing on sustainability in their operations. However, executives often remain reluctant to put sustainability at the heart of their business strategy, mainly because the business case can still not be made according to them. In other words, they believe that the costs of doing sustainable business do not outweigh the benefits of doing it.
However, integrated sustainability efforts can obviously crate a positive impact on organizational performance. Actuall Whelan and Fink (2017) aim to make the business case for sustainability.
  1. STAKEHOLDER ENGAGEMENT: Traditional organizations aim to create value for their shareholders, often at the expense of other stakeholders. On the contrary, new business models aim to incorporate all stakeholders of the business. This includes employees , supply chains, society and nature. It aligns with the idea of Porter and Kramer of generating ‘shared value’, which argues that economic value can be created by detecting and addressing social or environmental issues related to their business.The strategic value for sustainability comes from considering all stakeholders, and interacting with them on a regular base. Through continuous and regular dialogue with them, organizations are able to better position themselves foresee changes on all dimensions when they arise.Falling short of considering the needs, concerns and desires of your stakeholders increases the chance of conflicts and reduces stakeholder collaboration. This in turn affects an organization’s overall performance. In that way, the aim for sustainability is in an organization’s own interest rather than just being just an act of CSR.
  2. IMPROVING YOUR SUPPLY CHAIN, PRODUCTION PROCES AND DIMINISHING ORGANIATIONAL RISKS: As supply chains nowadays are far more complex than before; they often involve multiple organizations and cross national borders. This also implies that supply chains are vulnerable to climate change, national disasters, and other types of environmental, social and economic risks. Risks that manifest over the longer term, that are outside’s an organization’s control. They can disrupt supply chains and whole manufacturing and other production processes. Addressing social and environmental threats is needed to increase an organization’s ability to prevent or react on those risks. And this exactly makes the case for sustainability, as it builds on long-term capacity and adaptive strategies.
  3. DRIVING INNOVATION: Investing in sustainability means investing in innovation when it leads to the redesign of invention of new products to meet social and environmental needs also lead to new business opportunities.
  4. FINANCIAL PERFORMANCE: Investments in sustainability can foster financial performance through for example increasing competitive advantage. This may sound as a surprise, because it has long been the perception that sustainability cannot go together with financial improvements. Increasing the degree of sustainability can lead to costs reductions through increasing operational efficiencies (for example, by better managing natural resources) and reducing waste. A focus on sustainability may also open opportunities for improved logistics and process efficiencies. There are plenty of other examples of sustainable investments driving financial performance.
  5. CUSTOMER LOYALTY: until recently organizations did not have to focus on sustainability when it would have come to consumer interests. However, consumers’ interest seem to shift towards more sustainable interests: honesty and transparency are central values that are considered when choosing between products or services. Besides this, product performance of sustainable products is generally is high.
  6. EMPLOYEE ENGAGEMENT: Investments in sustainability with the aim of increasing environmental, social and governmental performance can increase statistics on employee retention, engagement and morale. Even more if we consider that employees emphasize moral purpose more than ever.

These six points together make a strong business case for making sustainability a core value in your business strategy. Can you think of examples that support or contradict the business case for sustainability?
Whelan, T. and C. Fink (2017) “The Comprehensive Business Case for Sustainability” HBR October 2016


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