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What is a Sustainable Business?
Sustainable business refers to a company or organization that operates in a way that minimizes its negative impact on the environment, society, and the economy while maximizing its positive impact. This approach takes into account the long-term consequences of business operations, and seeks to create economic, social, and environmental value in a way that is financially viable, socially responsible, and environmentally sustainable.
A sustainable business aims to balance the interests of all stakeholders. This involves adopting practices that promote environmental sustainability, such as reducing greenhouse gas emissions, minimizing waste and pollution, and using renewable resources. It also involves promoting social sustainability, such as treating employees fairly, supporting local communities, and respecting human rights.
Sustainable businesses recognize that long-term success is tied to the well-being of the planet and society. For more, read of our blog article “Sustainable Business Explained”.
What is an example
of a sustainable business?
A sustainable company is a purpose driven entity that operates in a way that provides an overall benefit to society and the environment. This does not mean it comes at the cost of profits or quality of products or services. There are sustainable companies that provide expensive luxury goods, and there are also small, privately held companies that offer excellent products and services. Sustainability can be developed in all areas of operations:
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Employee development, benefits, remuneration, personal growth
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Product circularity, recycling or innovation
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Stakeholder engagement and community involvement
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Waste and energy reduction
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Procurement of a sustainable supply chain
Click HERE to read about Three Canadian companies exemplifying business sustainability.
How do I become a sustainable business?
Companies should start their sustainability journey with an assessment. This process gathers information about the company’s operations, major environmental aspects, materiality factors and identifies opportunities of low hanging fruit to minimize resource use and cut waste. Brands with a clearly defined purpose are better able to connect to their consumers. Mission statements communicate a brand's purpose and should clearly explain who the company is, what it does and why.
The results of the assessment inform the drafting of a sustainability strategy. A successful strategy should set achievable, but challenging goals to reach by a deadline. The use of SMART goals (specific, measurable, achievable, relevant, time-bound) is a standardized approach in target setting. The strategy must also include parties responsible for implementation and verification, regular monitoring, and evaluations at the highest level of the company. Progress towards constant improvement should be institutionalized as a norm.
Transparency is an important part of sustainability, and even if a company is struggling to reach its targets in some or all areas, it is important to be forthright and communicate these facts to stakeholders through a sustainability or impact report. A study by McKinsey confirms that consumers are increasingly concerned about the sustainability of their purchases.
A sustainability certification is not required to be sustainable although internationally accepted standards provide informative frameworks to design and implement environmental management plans, social responsibility, and sustainability strategies. Example frameworks include ISO, GRI and B Corp.
A key aspect of being a sustainable company is having a plan in place to reach net-zero carbon emissions by 2050, but preferably sooner. Beyond that, a company can devise ways for its operations to make a positive contribution to society and the planet, otherwise known as a
“social benefit”. Examples of this are:
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providing scholarships and grants
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working with conservation entities to restore and manage habitats
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upcycling existing materials
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uplifting local communities and marginalized group
Why is sustainable business important?
Sustainable Business is important for several reasons, a few of which are listed below:
1. Economic Benefits: Sustainable business practices can result in economic benefits for the company. For example, by reducing energy consumption and waste, companies can save money on operational costs. Sustainable businesses can also benefit from increased access to capital and investment, as investors are increasingly looking for companies that demonstrate a commitment to sustainability.
2. Long-Term Success: By operating in a sustainable manner, companies can position themselves for long-term success. This includes reducing risks associated with environmental and social issues, attracting, and retaining employees, and building a strong reputation and brand image. In addition, by addressing social and environmental issues, companies can tap into new markets and customer segments, and innovate new products and services that meet evolving customer needs.
3. Environmental Protection: Sustainable business practices can help reduce the negative impact of business operations on the environment. This includes reducing greenhouse gas emissions, minimizing waste and pollution, and using renewable resources. By reducing the environmental impact of business operations, companies can help protect natural resources and ecosystems for future generations.
4. Social Responsibility: Sustainable business practices also involve treating employees, customers, and communities with respect and fairness. This can include providing safe working conditions, fair wages, and benefits, and engaging in philanthropic activities that benefit the local community. By being socially responsible, businesses can build trust and goodwill with their stakeholders, which can lead to increased brand loyalty and customer satisfaction.
Overall, sustainable business is important because it recognizes that businesses have a responsibility to create shared value for all stakeholders, including people and the planet.
How can sustainable
business create jobs?
The United Nations estimates that 20 million jobs could be created globally by transitioning to a green economy. This estimate is in relation to a Just Transition towards nature based solutions, defined by the UN as “actions to protect, conserve, restore, sustainably use and manage natural or modified terrestrial, freshwater, coastal and marine ecosystems which address social, economic and environmental challenges effectively and adaptively, while simultaneously providing human well-being, ecosystem services, resilience and biodiversity benefits.”
But the opportunity is even greater for business. According to the World Economic Forum, sustainability accelerates innovation and companies that take advantage of that gain a greater competitive advantage. This is applicable to every industry, product and service. As companies face increased risks due to climate change, dwindling resources or increasing costs they must find alternative solutions.
A fantastic example of innovation creating opportunities are meat-substitute products. From having very little market share 10 years ago, meat substitutes are now a $4.4 billion market. Demand and competition has forced product innovation that ranges from plant-based alternatives to lab-grown meat. The first lab-grown meat, made in 2012, cost $325,000. Innovation has allowed this to go from concept to market ready with the first FDA approval being issued in 2023 for Upside Foods.
In Canada, the sustainable jobs sector is expected to grow 3.4% annually.
Are sustainable businesses more profitable?
Research suggests that sustainable businesses can be more profitable in the long run. While sustainable business practices may require an initial investment, such as retrofitting buildings to improve energy efficiency or sourcing materials from sustainable suppliers, these investments can pay off in the long term through increased cost savings, improved operational efficiency, and enhanced brand reputation.
For example, sustainable businesses may be able to reduce their energy and water consumption, which can result in lower utility bills and reduced operating costs. They may also be able to reduce waste and increase recycling, which can lead to lower disposal costs and potentially even generate new revenue streams. In addition, sustainable businesses may benefit from increased customer loyalty and positive brand reputation, which can lead to increased sales and revenue.
Studies have also shown that sustainable businesses can be more attractive to investors, as they are seen as less risky and more likely to generate long-term returns. This is especially true as environmental and social issues become more important to consumers, investors, and regulators.
Overall, sustainable businesses can lead to long-term cost savings, increased efficiency, and improved brand reputation, which can result in increased profitability. For more, check out our blog article here.