Why Companies Should Follow Sustainable Practices?
A good part of the earth is disappearing in service of large industries. There is a continuous loss of water, soil, and crop. Climate change causes natural calamities, barren land, and crop growth. This also leads to civil strife and obstructs companies from their suppliers worldwide.
In 2004, Coca-Cola shut down its industries in India due to water shortage. In 2011, floods in Thailand drowned over 160 textile industries. Nearly 25% of the textile industry of the country was wiped out. Due to water distribution issues in Peru, 21 billion USD in oil mining projects have been suspended. Companies' decisions cause environmental damage. Like domino pieces, society and the economy take the next hit.
There is a need for companies to assess losses due to the climate-change and take accountability of their practices. Carbon emissions, scarcity, and wastage happen through them, and in turn, affect their businesses too. Companies are now investing and analyzing their production pattern and countering harmful business activities.
Walmart, between 2004 -- 2015, improved their transporting technology and workforce. Within a decade, 87 percent of their carbon emissions had been lowered by 2014 compared to 2004. Agrobased companies like Unilever and Nespresso have invested in Rainforest Alliance Certification to help farmers handle natural calamities and assist in healthy land practices to improve crop production.
Sustainable practices have huge economic payback. As the environmental impact is deflected, only a mere 60 percent of the companies adopt sustainable ethics and investments. Those who do, like Dow, Nike, Puma, and 3M, have fared better economically and have gained customer trust. Here's why we think the pathway of sustainability will lead you straight into a gold mine:
1. Customers Love It
Nowadays, customers make educated choices. They want high-quality products, practices that are gentle with nature, and value companies with transparency. Unilever claims to be sustainable according to its motto. From a report by Nielsen, about 81% of customers feel the need to purchase goods that are harmless to the environment. Price has become secondary, and ethical and premium quality products are primary. In fact, IKEA has made a revenue of a billion + dollars on LED sales.
2. A Grain of Gold now; Tomorrow, A Field
Investing an amount in combating natural issues seems irrelevant. But it's proven that such an investment increases company savings. The company Dow invested 2 Billion USD on using resources efficiently and earned a profit 5 times their investment. [Who knew that regular investments in environmental issues could improve your profits?]
3. Attracting Stakeholders
A large young crowd has become politically sensitive, wishing to partner with companies that do not harm communities and nature. A solid 40 percent would not mind a pay cut or other limitations if the company promises to be ethical and green. Besides, an important part of sustainability is ensuring every member of the company has a dignified share without compensating one category (workers) against the other (shareholders). Devising policies that safeguard all the rights and needs of each member is an essential practice to keep the reputation of a business clear and trustworthy.
4. The govt. is with you
The state and central government in India has invested 14.5 Billion USD in renewable energy, giving large discounts to companies who wish to use renewable energy. Green companies have lesser tax burdens too. New regulations were printed in 2021 to encourage the acquisition and use of renewable energy sources.
5. It Reduces Cost & Encourages Innovation
Companies can erect buildings with eco-friendly practices. Having built-in solar panels, analyzing carbon emissions from industries, and experimenting with water needs can do huge for the environment. That means companies can earn more with a judicious approach. Puma, for example, released a public report stating its carbon emissions and water use. They reduced 60% of their wasteful practices and gain customer traction.
Sustainability is the future. McKinsey reports a 70% high value excluding taxes, interest, and other factors in sustainability. Approximately 72 % of 8000 supplier companies interviewed worldwide felt that climate change had a huge impact on their production. The need to become ethical and green-friendly will only rise from here.
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