Maximizing Business Success through Sustainability: Why do it and How to get started
As individuals and organizations, we have a shared responsibility to protect our planet and its resources, now more than ever. The World Economic Forum recently identified failure to mitigate climate change as the top risk facing the world over the next ten years.
Not only is sustainability an existential imperative, but it is also becoming increasingly vital for business success. Customers, employees, investors, and regulators are demanding that businesses demonstrate the sustainability of their products and practices. This makes sense beyond the environmental implications, as research has shown that sustainability can significantly impact an organization's success, from reducing operating costs to attracting and retaining top talent and fostering innovation. Here are some examples:
McKinsey & Company found that improvements in operating efficiencies can reduce operating costs by up to 60%.
A 2016 employee engagement study by Cone Communications found that 51% of all workers will not work for a company that doesn’t have strong environmental or social commitments, and the percentage of Millennial workers who share that perspective is even higher, at 64%.
Gartner reports that 85% of investors considered ESG factors when making investment decisions in 2020.
Recent research by IBM found that 3 out of 4 customers want to make more sustainable choices at home and a 2021 study by Simon-Kucher & Partners revealed that 50% of consumers worldwide consider sustainability an important factor when making a purchase.
Companies that scored highly in ESG metrics measured by Morningstar’s U.S. Sustainability Index outperformed the U.S. market by more than 8% in 2021, with returns exceeding 33% annually.
However, many businesses struggle with where to start or how to prioritize their sustainability efforts. After all, a company can’t address every risk or pursue every opportunity. We recommend focusing on what is material: issues that can substantively affect the organization’s credibility, operational or financial integrity, or the decisions of key stakeholders.
A materiality assessment systematically identifies what is important (material) to an organization and its stakeholders.
While there is a range of approaches to materiality in sustainability, the basic concept is that an organization engages with stakeholders to understand the relative importance to them of specific environmental, social, and governance topics. An organization uses that insight to inform its sustainability priorities. Companies can then focus their resources on the highest priority topics – those that are most important to the success of the business and their stakeholders. While there’s no “one size fits all” when it comes to sustainability, we generally recommend starting with 3-5 topics and growing your program over time to address additional considerations. By taking this approach, sustainability can significantly contribute to a company’s success through actions that are informed, strategic, and embedded into how they do business – quality over quantity!
Still unsure where to start? WSBC offers several options to support members on this journey. The new Green Masters Program starts with a materiality worksheet that allows participants to customize the program based on their unique business priorities, offering a tool to define, prioritize, measure, and manage performance in the environmental, social, and governance (ESG) topics that are meaningful to their organization and stakeholders. And, since priorities can change over time, the system allows users to update their identified priorities as their program grows and changes. Additionally, WSBC joined forces with WMEP Manufacturing Solutions in 2019, when WMEP became the new home for the Council. Through this partnership, Wisconsin manufacturers can access hands-on support to accelerate progress in developing and implementing sustainability initiatives. Recently, WMEP introduced a Sustainability Assessment to help organizations identify the sustainability topics that matter most to their organization and stakeholders, develop a strategic approach to sustainability integration, and hit the ground running in the new Green Masters Program.
Contact Greg Gasper or Christa Kananen to learn more about the sustainability assessment and explore other ways that WMEP can support your company’s efforts and accelerate your journey.
Written By: Christa Kananen
To learn more about WSBC, visit: https://www.wisconsinsustainability.com/
To learn more about the Green Masters Program visit: https://www.wisconsinsustainability.com/greenmasters
To learn more about WMEP: https://wmep.org/
To learn more about WMEP Sustainability Services visit: https://wmep.org/services/sustainability/