Sustainability is often seen as being bad for business, as a return on investment is not instantly clear. Traditional ROI models have more of a focus on the short-term gains of an investment, yet business strategies centred around sustainable development need to take into account the long-term gains, both financially and environmentally. Read on to see how sustainability can help drive your ROI up, not down.
Building brand ROI: Identifying your brand with sustainability
Though it may appear that there is little interest worldwide regarding sustainability, many individuals will prefer one company over another if they associate them with positive ideas regarding their sustainable nature. Patagonia, for example, have once again secured themselves as the world’s most sustainable brand (source), donating 1% of their sales to environmental charities and encouraging consumers to fix and reuse their clothes instead of buying new ones. While this may seem instantly counter-intuitive to profit-fuelled businesses, Patagonia have tripled their profits in the past five years. They have invested away from themselves, putting their own money in sustainability yet seeing the fruit of this in the form of increased revenue – such is the case with brand association.
Recruiting talent, and keeping it
The cost of replacing a staff member has been set at £30,614, according to Oxford Economics (source). Besides fair pay, a good team and enough holidays, there is one thing that employees want in a company, and will make them stay: purpose. Working for a good company will have two beneficial effects on the business: You will keep your employees for longer, and you will hire the best out there, as they will seek to work for you. Companies can measure this by including questions about sustainable business practices in employee appraisals or send out questionnaires, as well as noticing employee retention go up as a result. Don’t just hire people who need a job, but hire people who believe in what you believe, and they will stay.
Do as those who lead
Interface, Marks and Spencer, Ikea, Unilever, Patagonia and Nestle. What do all these companies have in common? They’re market leaders. Ikea posted profits of £2.5Bn from 2014 to 2015, a 5.5% increase (source), whilst simultaneously investing heavily in their goal to be 100% reliant on renewable energy. Nestle, despite a scathing past, have seen their CO2 emissions per tonne of product fall by 15% between 2013 and 2015, with further targets set for 2020 (source). These companies are clearly doing something right, both when it comes to their profits and their sustainability procedures. Their teams work to develop the best strategies, so why not emulate them? We are clearly in an age where sustainability matters, and consumers will pay attention. Putting yourself in a position where you are doing good to the environment will only attract consumers, whilst giving you something to boast about and talk about.