Rising sea levels, severe pollution, and global warming are just a few examples of humans' disastrous effects on the natural environment. Fossil fuels, burnt every day, contaminate our planet's atmosphere with carbon dioxide, producing the greenhouse effect.
These days you do not have to be a scientist to realize that an inevitable tragedy is waiting for us just around the corner if we do not change the way we live. Luckily, people are becoming increasingly aware of the influence that their daily decisions have on our planet. The emphasis on sustainability is stronger than ever.
The truth about sustainability in business
In reality, sustainability requires additional efforts, which is why it tends to be strongly associated with expenses rather than profits. However, companies embracing it tend to outperform financially. According to the International Journal of Accounting and Financial Reporting findings: "sustainability practices are associated with a higher level of both market value of equity and return on equity."
In addition, according to the World Economic Forum, more than 75% of the manufacturers around the world had experienced lower profit margins when their expenses for materials grew. This effectively speaks in favor of introducing ecological solutions to businesses that could reduce costly waste and boost their materials' productivity.
These facts explain the phenomenon noticed by the director of Forum for the Future, Jonathon Porritt, called "governance shift" in the field of sustainability. It consists of the tendency of businesses to outperform governments in their efforts to lead the change.
But is the eco-friendly approach really this profitable?
Let's start by stating the obvious truth expressed in a quite colloquial way: there can be no business on a dead planet. This makes up one of the most critical factors speaking in favor of the eco-friendly approach.
However, it turns out that transforming businesses into environmentally sustainable has long-lasting benefits, not only for the environment and consumers but also for the companies themselves. Implementing ecological solutions to everyday processes and reducing the use of non-renewable resources can improve many aspects of companies around the world.
Firstly, it can successfully reduce particular costs and save money. The price of introducing or changing individual practices is usually the most solemn part to carry. After that, companies typically tend to enjoy lower costs of energy and other materials used along the value chain.
It has also got the mighty power of building consumer loyalty. Numerous studies have proved that the customers perceived so-called 'green businesses' to be more trustworthy than their non-green competitors. According to one of the economic models, most loyal consumers tend to make up only 20% of the company's audience; however, they can provide as much as 80% of its revenue.
An eco-friendly approach can also help to attract loyal employees and lower the circulation of workers. When the employees notice that their company's leaders care about the environment, they are more likely to develop a deep sense of loyalty and attachment.
Moreover, the U.S. government encourages companies to use sustainable and renewable energy by offering various financial incentives, especially tax advantages, like tax breaks and rebates. There are also numerous grants, subsidies, and financing programs created all around the world to motivate businesses to become more environmentally friendly.
Beware of greenwashing!
In the era of choosing environment-friendly goods and services, we should be genuinely aware of businesses trying to earn profits via greenwashing. This process bases on conveying false impressions of a company's environmental soundness to capitalize on the growing demand for eco-friendly items. Businesses can do this by press releases or commercials highlighting their efforts to lower pollution levels or maximize green energy usage; at the same time, they may not make any meaningful commitments to ecological initiatives in reality.
These deceptive practices can lead to increased consumer skepticism towards eco-claims and diminishing some genuine efforts to make the world a better place.
So, what can we, consumers, do?
As I've already mentioned in one of my previous posts, we shall all feel empowered by the immanent consumer capability to impact the market by buying particular products.
If we set the standards high, companies will be forced to follow.
However, this relationship works both ways - if we continue to be idle spectators of these actions, we will effectively lead to the destruction of our incredibly precious natural environment.
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