The Value of Being Sustainable
Now that businesses worldwide have had a few years to contemplate the importance of implementing sustainable practices like circularity, sustainable development goals (SDGs), or environmental, social, and governance (ESG) frameworks into their business strategies, leaders are still asking the question, what’s the value of being sustainable?
Sustainability—not your core value?
In the 21st century, the sentiment of rational, free-market economists is still one of greed. As a simplistic theory, greed motivates competition, which is essential for growth in a functioning market. Some leaders lean toward the rationale, why do I have to be sustainable? What’s in it for us? Or, how much is it going to cost to be sustainable?
The perception of greed as harmful extends to the mere act of profiting, which is of course the only way that capitalist markets can function. Lessons learned are straightforward—companies must not allow rational economic theory to override—that greed can be damaging, especially when it comes to protecting the environmental longevity of our planet.
Companies should work to make the consequences of their sustainable activities more obvious, hoping that seeing actual examples will inspire others to follow suit in opposing the self-interest realization that greedy behavior propels society forward—more simply, prosper but don’t destroy the planet while doing it.
Sustainability is easier than you think
Many companies are under the impression it costs a lot of money to transition their business to one that’s more sustainable. The reality is that companies are finding that the only financially responsible move is to avoid using non-renewables and unsustainable business practices.
Making sustainable changes can vary—by country, growth opportunities, needs, or local laws. Companies don’t have to completely overhaul their business model to be sustainable. They can make small, incremental changes over time—as simple as using recyclable plastic in product designs or cardboard in other product lines or helping suppliers move to renewables.
In a survey conducted by IBM in 2022, 51% of respondents said that sustainability is even more important than it was 12 months ago.1 Consumers are still paying attention to what brands are doing—brands shouldn’t make the mistake of assuming that this is no longer the case. Sustainable initiatives can determine whether a consumer becomes a devoted customer.
The value of sustainability from a corporate responsibility perspective
While many companies are addressing environmental or sustainable issues, emphasis can be placed on improving diversity, equity, and inclusion across a company’s value chain. For example, Target has committed to spending more than $2 billion on Black-owned businesses by 2025 to help the company create more equitable experiences for their Black guests and create economic opportunity for Black-owned businesses that extend outside of Target.2
This is an example of a company leveraging a combination of an ESG framework and utilizing two of the United Nation’s 17 Sustainable Development Goals (SDGs)—#8 Decent Work and Economic Growth and #9 Industry, Innovation, and Infrastructure.
Closing the sustainable disparity between the U.S. and Europe
During the ‘70s there was a strong consensus between Europe and the U.S.—environmental action needed to happen. Fifty years later, have the U.S. and Europe drifted apart on environmental issues? How do European perspectives differ from the U.S.?
Leading the way: Europe’s environmental consciousness surpasses the U.S. in sustainable development
Many Americans desire greener lifestyles, but Europeans still live more environmentally responsibly. Per capita, CO2 emissions are three times higher in the U.S. than in France.3 Despite the U.S.’s sincere and passionate commitment to being environmentally friendly, northern Europe is more environmentally conscious than the U.S.
Europe is home to respected, powerful global platforms such as the World Economic Forum and the World Business Council for Sustainable Development (WBCSD). European businesses lead on progressive environmental issues and leading multinational corporations based in Europe are playing instrumental roles in leading sustainable development.
Game-changing climate investment: President Biden signs historic Inflation Reduction Act (IRA)
In August 2022, President Biden signed a $750 billion health care, tax, and climate bill into law named the Inflation Reduction Act (IRA). The nearly $370 billion clean energy and climate package is the largest climate investment in U.S. history. It’s also the biggest victory for the environmental movement since the landmark Clean Air Act was signed in 1963. Research suggests the bill would help the U.S. reduce carbon emissions by up to 40% by 2030.4
Boosting global competitiveness: Implications of the IRA on Europe’s climate transition and economic landscape
The IRA may hurt Europe’s ability to compete, but it will probably benefit the rest of the world and Europe’s climate transition. The IRA could increase the competitiveness of the economy of the European Union (EU) and other nations in comparison to China by requiring supply chains to be reorganized. It may also initially slow the green transition. But in the long run, this effect should be outweighed by the reduction in the cost of clean tech driven by the IRA.
Regardless of the significant cultural differences, Europeans and Americans share some similar viewpoints on environmental issues.
What’s the value of sustainability?
Every company has the potential to create solutions that can help drive sustainable change. A growing body of evidence shows an effective sustainability strategy will boost profits and create new opportunities.
ESG champions: Sustainable companies outperforming the market with impressive returns
The 2021 Morningstar U.S. Sustainability Leaders Index representing the 50 U.S. companies with the best ESG scores as measured by Sustainalytics (a division of Morningstar) returned 33.3% for the year, beating the broader U.S. market by more than 8%.5
The Brand Finance Sustainability Perceptions Index 2023, released in association with the International Advertising Association at the World Economic Forum in Davos, reveals that Amazon has the most at stake with a sustainability perception value of $19.9 billion.
Other notable brands at the top of the ranking include Tesla $17.8 billion, Apple $14.65 billion, and Google $14.6 billon. Tesla is seen as one of the most sustainable brands, with sustainability driving 26.9% of value for the electric vehicle (EV) manufacturer.6
Driving sustainability through technology: Empowering companies for a green future
Technology is a fundamental driver of sustainability for companies and their employees. The right technology can accelerate sustainability initiatives across an organization. Investing in sustainable technology allows companies to improve their financial performance while creating greater operational resiliency by optimizing energy, costs, and increasing asset utilization.
Accelerating sustainable transformation: Unleashing the power of digital technology for business success
Companies looking to transform their business models and value chains sustainably should be looking at undergoing two major transformations in parallel—digital and sustainable transformation. Digital technology has the capacity to make businesses more efficient, profitable, agile, and smarter with the flexibility to adjust to consumer needs and changing market conditions.
At the same time, business leaders need to do their part in decarbonization—by relying on technical innovations such as generative design software, product designers can create hundreds of alternative designs from the same concept or deploy lightweighting, a technique that allows alternative variations to reduce component or assembly weight to produce greener and more cost-effective products.
Sustainable transformation: Cloud PLM empowers global manufacturing for a circular economy
Global manufacturing companies are discovering how making cloud product lifecycle management (PLM) software part of the digital transformation can help them make more informed decisions about the environmental impacts of their products and take steps to minimize those impacts throughout the product’s lifecycle. A strategic PLM plan that integrates sustainability in the product lifecycle is vital. It helps companies establish ways to reduce the environmental impact of their products and services.
Innovating for a circular economy: AMP Robotics Corp. and Trilliant lead the way with sustainable solutions
AMP Robotics Corp. uses high-speed automated robotic systems to sort recyclables and relies on Arena PLM to increase their production speed while providing more efficiency and scalability to the company. As the demand for robotics to retrofit existing recycling infrastructure continues, AMP’s efforts to modernize and expand will aid society’s path to a circular economy.
Trilliant is a leading international provider of solutions for advanced metering infrastructure, smart grids, and smart cities. Arena’s Cloud PLM solution helps Trilliant reduce their products’ impact on the environment and achieve a more circular economy. By tracking and sharing RoHS, WEEE, and REACH compliance information with supply chain partners, Trilliant can address sustainability requirements earlier in their design phases by keeping everyone in synch and developing greener, more sustainable products.
It’s time to recognize the value of being sustainable
There is a clear threat when it comes to climate change. Environmental problems are costing society real money and the cost of doing nothing is rising. The challenges we face are no longer up for debate—they are here. What’s the value of being sustainable? It’s meeting the needs of your customers and the satisfaction that future generations will have a clean planet.
Learn how to jump-start your sustainability initiatives.
- How Consumer Shopping Behavior Has Changed in 2023
- Inside Target’s Plans to Spend More Than $2 Billion with Black-Owned Businesses by 2025
- How Do Perspectives in Environmental Science in Europe Compare to the U.S.
- Senate Passes Democrats’ Sweeping Health Care and Climate Bill
- Why Sustainable Strategies Outperformed in 2021
- Brand Finance Sustainability Perceptions Index 2023