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The business value of sustainability

13/02/2019 v1.0

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Overview

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The world is going through unprecedented change, at extraordinary speed. Growing

populations, technological progress, environmental challenges are changing the

marketplace and shaping how companies operate.

To remain operative and profitable in this constantly changing environment,businesses need to address the most pressing social and environmental challenges,and embed sustainability into their thinking and operations. By doing so, they willmaximise market opportunities, improve revenue and reputation, and contributepositively to their competitive advantage and license to operate.

This document outlines the business case for sustainability, and summarises the four

main benefits of sustainability to business.

© 2019 Simply Sustainable Ltd. SIMPLY SUSTAINABLE

1. Improve marketplace positioning

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Sound sustainable management delivers positive returns on investments, by improving sales and revenues. Accordingto Project ROI, sustainability can increase revenue by up to 20%, increase market value by up to 6%, and build areputation asset based on your sustainability performance worth up to 11% of the total value of your business.

Studies conducted by different companies worldwide confirm these findings. For instance, when analyzing theperformance of its sustainable brands, those that embed a strong social and environmental purpose, Unilever foundthat they grow 46% faster than the rest of the business, and deliver 70% of its turnover growth. Similarly, in its report“How and Why Sustainability is Gaining Momentum with Customers”, Nielsen found that products with sustainabilityclaims outperform the growth rate of total products in their respective categories. They find that 66% of globalconsumers are willing to pay extra for them. Both studies suggest that the growth in revenue and sales are driven bythe desire of customers, particularly millennials, to purchase sustainable products and brands.

Consumers look for products that are good for them, the society and the environment. In 2014, 65% of total sales ofconsumers goods were driven by brands that were marketed as delivering social and environmental values. Accordingto the Edelman Earned Brand Study 2018, 64% of consumers around the world now buy on belief, an increase of 13points since 2017. These Belief-Driven Buyers will choose, switch, avoid or boycott a brand based on where it standson the political or social issues they care about. The belief-driven mindset has gone mainstream. Belief-Driven Buyersare now the majority in every market surveyed, across all age groups and all income levels. Almost as many consumersaged 35-to-54 buy on belief as 18-to-34-year-olds, and the most impressive gains come from the older cohort, withan 18-point increase among people 55 years old and up.

Embedding sustainable principles into your operations and products will enable your business to meet theexpectations of its customers, and improve their satisfaction. This will ultimately foster your revenues and growth,and improve your marketplace positioning.

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2. Comply with regulations

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Over recent years, Governments have come to realise that changes need to be made to address themost pressing societal and environmental challenges. They have developed standards andregulations to engage business in addressing these.

Sustainable practices enable businesses to not only meet regulations, but to address theseproactively, thus minimising the cost of adapting operations and infrastructures to meet futureregulatory requirements.

The Modern Slavery Act (2015), the Streamlined Energy and Carbon Reporting (2017), the EnergySavings Opportunity Scheme, the TCFD recommendations (2017), the Waste and ResourcesStrategy (2018) are only a few of the regulations that came out recently. These have shaped the waybusinesses operate, and more are yet to come. For instance, the second reporting date of theGender Pay Gap Reporting is fast approaching, and phase 2 of the UK Government’s Energy SavingsOpportunity Scheme is now underway.

Improving the sustainability proposition of your business will enable you to stay ahead of the curveand be prepared for when future regulatory requirements will come into force. Going beyond ashort policy statement and engaging with regulations proactively, will minimise risk and adaptationcosts, and will foster your license to operate and grow.

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3. Achieve operational efficiencies

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Cost saving is a high priority for all businesses. Sustainable practices are proven to produce savings, byhelping businesses to identify and address key operational inefficiencies. This, in turn, reduces theenvironmental footprint of a business, and contributes positively to its reputation and license tooperate.

A common area where business can achieve efficiencies and make savings is energy usage. According tothe Department of Energy and Climate Change, large companies could save over £250million on theirenergy bills annually, by reducing their energy consumption by a mere 1%. Waste management isanother area that generates operational efficiencies and, consequently, savings. Cutting down yourwaste output and moving towards circular practices, reduces costs associated with disposal and landfilltax.

Involving your employees in sustainable practices, such as reducing business car travel, favouring videoconferences over in-person meetings, and reducing printing, minimizes your environmental footprintand reduces your expenses. The Carbon Trust estimates that organisations around the country couldsave £300million and 6 million tons of CO2 per year by encouraging employees to adopt sustainablebehaviours.

Environmental certifications and standards (e.g. ISO14001, ISO5001, BREEAM) are there to supportyour business to achieve greater efficiency and maximise your environmental and financialperformance. Improved internal processes, more efficient systems, reduced costs and waste are allbenefits of achieving ISO14001. A quarter of companies state that they have been more successful inwinning business once they have achieved the certification.

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4. Attract and retain talents

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Evidence increasingly demonstrates that employees want to work for responsible businesses, thathave a purpose beyond profits. This is particularly true for millennials, who will make up 75% of theglobal workforce by 2025. Deloitte’s 2017 Global Human Capital Trends found that millennialslook beyond a company’s profit when deciding whether or not they want to work there, with only 1in 5 stating they would stay at a solely profit-driven company for more than 5 years. PwC’s report“Workforce of the Future” found that 88% of millennials want to work for a company whose valuesreflect their own.

For millennials, the sustainability proposition of your business is an opportunity to contributepositively to the environment and the society; it makes them proud to work for your business, andturns them into brand ambassadors, adding more value to your company than traditionalmarketing tactics.

Embedding sustainable thinking into your processes will help you attract and retain motivatedindividuals, who are far more likely to be engaged in their work and dedicated to help yourbusiness achieve your goals. This, in turn, will reduce turnover and associated costs. A 2015 studyfound that sustainable practices have the potential to reduce turnover by 50%, and increaseemployee engagement by up to 7.5%. The 2014 Global Workforce Study shows that engagedemployees lose only 8 days a year of productivity, as opposed to 14 for unengaged employees.

A motivated workforce will pay your business back by developing innovative ideas for yourproducts, delivering high-quality services and fostering a culture of responsibility and productivity.

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About usSimply Sustainable is an award-winning corporateresponsibility and sustainability consultancy founded in2010.

We support large national and international brands totake a strategic, yet practical, approach to integratingsustainability into their operations. We offer a 360’range of consultancy services from the fulldevelopment of sustainable business strategies tointegration, implementation and communication ofsustainability practices and programmes.

Our outstanding multi-disciplinary team brings aspecially tailored mix of skills and perspectives to eachproject. We work with businesses of all shapes andsizes, to offer intelligent, expert advice on all aspects ofsustainability.

We are proud to have long-term relationships withManchester Airports Group, Interserve, StanstedAirport, DHL, Costa and Whitbread.

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© 2019 Simply Sustainable Ltd. SIMPLY SUSTAINABLE

Our mission

Our mission is to create a world of sustainable, responsible business

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© 2019 Simply Sustainable Ltd. SIMPLY SUSTAINABLE© 2019 Simply Sustainable Ltd. SIMPLY SUSTAINABLE

What we do

Strategy

We are the forefront of modern, focused and ambitious corporate

sustainability strategies

Measurement

We support companies to underpin sustainability

through robust target-setting and impact measurement

Integration

We help businesses to integrate sustainable practices

into everything they do

Communications

We help deliver credible communications that resonate

with stakeholders, bringing sustainability to life

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Contact us

Nicola Stopps

CEO

Nicola.stopps@simply-sustainable.co.uk