What is Sustainable Investing, and how does it help your business?
Often, you read about sustainable investing and ESG, but why does it matter to your business? Large companies recognized a long time ago the value of bringing Sustainability into their business operations. Therefore, smaller and mid-sized companies are following the same pattern and creating the momentum of Sustainability.
To quote the pure definition of sustainable investing from Harvard Business School; "Sustainable investing, also called socially responsible investing or ESG investing, is a means of investing in which an investor strongly considers environmental, social, and corporate governance (ESG) factors before contributing money and resources to a particular company or venture." With this definition in mind, we can summarize that the essence of sustainable investing is to look at the broad picture of a company and how they contribute to society at large.
The Importance of Sustainability
Sustainability is an increasingly important issue in the business world. Climate change continues to affect our lives and the fate of all other species around the planet. For business owners, sustainable business practices are becoming imperatives. Human industry is a big part of the climate change picture because it relies on land, fossil fuels, and non-stop production and consumption.
There is no need to say it out loud, but businesses have a negative impact on our planet. But if your business is considering its impact on society and the environment, you are halfway to creating a sustainable business. Why? Because if you are aware of your business's impact, you are ready to face the problem.
How does Sustainability help your business?
If businesses don't act responsibly as members of the global community, the majority of many species will not survive past the 21st century. Environmental Sustainability journal indicates that we're on pace to produce 27 billion tons of solid waste by 2050 due to a business environment that prioritizes rapid production and turnover of products for maximum profits. In addition, unchecked CO2 emissions are projected to contribute to a temperature increase of two degrees Celsius by 2050, which will cause sea levels to rise and catastrophic weather events to increase.
To help the planet and your business, everyone in your organization should contribute to sustainability in your business.
Effective, sustainable change in your business is only possible if top-level management implements organizational decisions that benefit the company, its employees, its customers, and the planet.
Owners and executives have the intellectual insight to identify the most effective sustainability strategy and initiatives and the power to change policy and spur innovation. Environmental, Social, and Governance (ESG) reporting is designed to advance sustainability by embedding it deeply within operations, strategies, and supply chains. So, if you've been thinking about implementing ESG reporting at your own company and/or working to make it more effective, find an ESG expert and financial company to help you navigate through the process.
The Benefits of Sustainability in Business
Implementing sustainability is benefitting the planet and your business. "Greening" your business takes an initial investment, but over time, you'll save money by prioritizing sustainability. As an example, converting to solar energy needs an initial investment, but it pays off. The average commercial property owner will save about $500 per month on electricity, which equals savings of $587,377 over the life of the solar power system. Most businesses pay off the cost of panels in five to seven years.
Ultimately, the more sustainable your business becomes, the less you'll spend on energy and materials.
In addition, people view sustainability as a plus, and companies with green values are eager to showcase them because of that fact. Going green shows the world you care about more than just making money. You can use this to your advantage when marketing your business and developing your brand identity.
Challenges of implementing sustainability
For many small businesses and others, the greatest challenge is an unfocused plan. Without a well-structured plan to go green, you can easily overwhelm your business as you try to make a profit at the same time. Your plan should include an assessment of how sustainable initiatives can cut costs in the long run and increase profits.
It's impossible to know if your efforts are worthwhile if you can't accurately measure the outcome. Therefore, ESG reporting will help your business with this particular challenge. It's important to collect data on costs and sales and compare it with your outcomes once you've implemented sustainability initiatives.
Becoming more sustainable in an effective way may not be easy at first, but the challenge is well worth the reward. Successful entrepreneurs, owners, and leaders look at problems as opportunities. Now is your opportunity to embrace sustainability and implement innovative strategies in the process. If you have any questions regarding ESG and implementing sustainability in your business, please contact us.