Sustainable business is better business
A sustainable business focus is no longer the domain of good intentions. Future focused businesses are looking to sustainable business practices to create long-term financial success, brand differentiation and, importantly, improved social, environmental, and cultural outcomes.
Small to medium sized businesses (SMEs) have an important role to play if New Zealand is to move from laggard to leader and build a
sustainable economy. There’s an opportunity here too for the humble SME to take advantage of their strengths – innovation, agility and
How Will Sustainability Lead To Better Business?
Better businesses have a long-term view and are built to last. They aim to make a profit as well as do their bit to improve environmental
conditions and make a positive impact on society. In other words, they are sustainable.
What are the benefits of making yours a sustainable business?
Sustainable business practices can help you attract customers. According to Colmar Brunton’s Better Futures Report (2017),
69% of Kiwis are willing to pay a bit more for sustainable and ethically produced products (or 75% of females). Our bet is that this will be
an increasing trend – especially as we see world leaders like Xi Jinping and Joe Biden emphasise the importance of climate action and
encourage a much bigger effort from the world’s largest economies.
You’ll attract & retain great employees. The Better Futures Report found that 73% of respondents said it is important for them to work for a company that is socially and environmentally responsible. Looking to the future, the report indicates that 72% of youth say it’s important for their future employer to be environmentally and socially responsible.
- A sustainable business model is often more efficient and more profitable. Examples are cost savings through reducing waste or resource consumption, identification of new revenue streams or products, and improved relationships with suppliers and other stakeholders.
- It brings a sense of purpose and encourages a collaborative culture. When embedded into strategy and played out in the every-day, sustainable values can demonstrate a purpose-led business and encourage the culture that allows your business to thrive.
Regulatory pressure and incentives. It’s likely that access to capital (both debt and equity) will be easier and cheaper for businesses that have a positive impact on the world. This is because regulatory and market pressures will encourage banks and investors to be much more selective in the way they channel funds. For example, Westpac has published a 2025 sustainability strategy with a stated goal to “build in climate change risk and opportunity to our lending and investment decisions, and help our customers do the same”. They also seek to enable $10B in sustainable finance!
Future opportunities. The World Business Council for Sustainable Development and the World Economic Forum have both published studies estimating the global opportunity for sustainable development at greater than 10 Trillion dollars (USD). These studies were released prior to the election of Joe Biden and the recent joint announcements by the USA and China – which only add weight to the point.
How Small Businesses Can Adapt?
We believe the businesses that make changes and take action now will be more likely to thrive and succeed long term. It is clear that there is regulatory change ahead of us. Larger businesses will require their suppliers (often SMEs) to do better and to be more transparent. Customers will look to purchase from those that not only walk the talk but can also prove their impact. Access to capital will be cheaper for a sustainable business as banks and financiers become selective.
Our advice is to take an integrated approach. Look at your strategy and build sustainability into it. Make sure you consider all stakeholders and develop a plan to focus your resources on to the initiatives that will make a difference – socially, environmentally, and economically.
What Is An Integrated Approach?
Recently, discussion in New Zealand has focussed on our climate impact. The world’s media has applauded the declaration of a climate emergency in New Zealand but have also pointed out our very poor record at addressing our impact on the climate – we are among the worst in the OECD. Now’s the time to take urgent action to combat climate change and its effects but we also need to consider that action in one area will affect outcomes in others, and that development must balance social, economic and environmental sustainability.
Helpfully, in 2015 the United Nations put forward 17 Sustainable Development Goals (SDGs). The goals link together the issues of economic, environmental, and social sustainability and are intended as a “a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity by 2030”. These goals and the resources that accompany them are a very useful tool that you can use to maximise the impact of your efforts.
Six Tips To Make Your Business More Sustainable
Strong leadership. Success depends on gaining support from your team, if you have their buy in then achieving your sustainability goals will be much more likely. Foster a progressive culture where any employee can encourage better practices – it’s making the business case and convincing others that’ll make it happen.
Identify areas of opportunity. Map out your value chain and identify the areas where your business has the biggest impacts. The UN’s Sustainable Development Goals are a useful reference point.
Understand and evaluate the importance of your identified opportunities. It is likely that value is created in your business through relationships with key stakeholders, so analyse from both an internal and external perspective and from a financial, strategic, operational, and legal point of view.
Alignment. Ensure that the actions and business interventions that you make are aligned to your business plan and strategy.
Plan, measure, report. Agree and set your goals, measure your status quo and then report on progress.
Team effort. Involve your team in the process and ensure that you support their efforts with well-designed and clear communication.
Simply Better Business Examples
Among the many excellent examples of businesses that have moved beyond ‘talk’, here are three that we think are worth a mention:
RedVespa is in ‘Business for Good’ and have been reporting publicly on their impact since 2019. The business has
established twelve Business for Good values, which sit alongside Redvespa’s strategic pillars and guide their strategy and everyday
operations. You can take a look at the values, achievements and next steps on a dedicated website https://businessforgood.co.nz.
BNZ recently released their first sustainability
The report provides a good overview of the process a small business could follow in order to produce their own sustainability report but
goes a step further in the form of a pledge to help small businesses manage the transition to a low-emissions economy. To assist with the
transition BNZ has partnered with the Sustainable Business Network to “create and deliver a digital
climate change toolkit to
support our SME customers in understanding, reducing, and reporting on their carbon emissions and climate risk”.
Method Recycling is a business with a clear purpose. They exist to empower people to become ‘changemakers’, and enhance the corporate social responsibility of the world’s most influential workplaces. Check out their recycling and waste reduction guides here.
Want To Get Started?
As chartered accountants, we have an interest in helping business owners to achieve their goals. We are here to help you develop an integrated plan and then measure and report on progress so that you can be sure that your efforts are making the intended difference to both your finances and to the world you live in. Now’s the time – let’s start making a difference today.