A sustainability-focused company strategy has been known to boost brand value, match customer demands, boost efficiency, attract top personnel, and open new doors.
And, as sustainability becomes an increasingly important focus of companies worldwide, a McKinsey Global Survey reveals that organizations can become sustainable simply by adopting a specific set of management strategies.
After all, as per the respondents of the aforementioned survey, organizations are now likelier than before to prioritize sustainability and define specific goals and objectives.
Responses also indicate that value-creating businesses are likelier than others to integrate sustainability into their corporate culture and train employees to implement sustainability into their work.
The survey also found that value-creating businesses are likelier to include customers and business partners in their sustainability plans.
More respondents from value-creating companies said they collaborate with customers and suppliers to address sustainability issues, adjust product portfolios to be more sustainable, and consider sustainability factors when selecting and evaluating suppliers.
McKinsey also revealed that about two-fifths of those who responded to its study expect their companies to earn value from sustainability in the next five years.
These industries include automotive, electric power and natural gas, oil and gas, and travel, transport, and logistics, each of which plays a pivotal role in curbing climate change.
Sustainability is Vital
Although 90 percent of the executives interviewed said they value sustainability, just 60 percent of organizations have a strategy.
Often, companies that claim to be sustainable lack implementation.
A sustainability plan helps a corporation make long-term investments, says McKinsey. In terms of sustainability, inaction can lead to future losses.
What sets apart a business-value-creating sustainability program?
- Strategic, purposeful intent
Value creators, according to McKinsey, use a strategic, purposeful approach that differs from that of other businesses in key aspects.
Value creators state that their organizations handle sustainability issues to fulfill their organizational purpose to match their goals, mission, or values or make a tangible, beneficial influence on an issue.
On the other hand, other companies state that sustainability is being addressed for different reasons, like satisfying industry norms or standards or complying with regulatory obligations.
- Sharp focus
When it comes to implementing sustainability strategies, value creators place more importance than other companies do on translating the sustainability strategy into concrete terms.
Thus, value creators are significantly likelier to establish clear and focused priorities, set targets or goals, and develop key performance indicators for sustainability.
- Employee engagement
Another notable distinction between organizations that create value from sustainability and those that do not is that value creators engage their workforces in sustainability activities.
According to a higher percentage of McKinsey respondents, employees of value creators receive training on incorporating sustainable practices into their work, and understand how sustainability efforts match with the company’s goal.
Another element is incentives: A higher percentage of value creators indicate their firms consider sustainability performance to a moderate or large amount when making compensation decisions for their personnel.
Why should companies implement sustainability strategies?
- Add brand value and competitive advantage
Millennials are mostly the largest section of the population now.
A survey by Nielsen shows that millennials have become, in many cases, the most concerned about sustainability.
This indicates that corporate brands should focus on their interests, as many have already done.
For example, Apple has committed to becoming 100 percent carbon neutral for its products and supply chain by 2030.
- Meet Consumer Demands
The Nielsen study also shows that 66 percent of consumers would spend more for a product if it came from a sustainable brand.
It also said 81 percent of global consumers feel strongly that companies should help improve the environment.
- Increase Efficiency
According to McKinsey, a sustainability strategy can reduce costs substantially and affect operating profits by as much as 60 percent.
It also lowers energy consumption and water intake.
Building sustainability into business units can also increase an organization’s chance of profiting from its sustainability activities.