How sustainable business practices can ensure global success

Imagine the “industrial revolution” and you’ll quickly conjure up images of chimneys spewing black fumes into the sky – undoubtedly an ecological plague. Industries may have come a great distance from visual effects, and leading firms adopting sustainable methodologies are reaping significant advantages.

Sustainability is not only for large firms; small and medium-sized enterprises can and probably should incorporate sustainability efforts into their business models as a strategic growth opportunity.

The business case for sustainability

Corporate sustainability efforts discuss with practices that aim to reduce environmental impact. However, sustainable development can be used as an encompassing term for all elements of “ESG” (Environmental, Social Responsibility and Governance). Common sustainability practices include reducing waste, conserving energy, responsibly sourcing materials, and supporting ethical work practices.

The advantages of selecting sustainable business practices go far beyond their positive impact on the environment, and consumers are increasingly prioritizing firms that select environmentally friendly and socially responsible practices. Common 12 months 2023 McKinsey and NielsenIQ research analyzing 44,000 brands across 32 categories, it was found that products with ESG-related claims saw compounded growth of 28% on average over a five-year period, while competitors that made no ESG-related claims saw growth of only 20%. It is clear that customers are willing to pay more for sustainable products and brands that display environmental responsibility.

Adopting sustainable practices can strengthen any company’s competitive advantage. Enterprises have the opportunity to extend profitability in the following areas:

• Reduce operating costs: Through energy efficiency, waste reduction and improved supply chain management, businesses can increase profitability. The US Department of Energy reports that companies can save as much as 30% on energy costs by adopting energy-saving measures. Focusing on sustainable practices when producing, transporting and disposing of products can save firms money, provide a higher customer experience and minimize negative impacts on the environment. Companies can also profit from incentives similar to tax breaks or subsidies for sustainable practices.

• Build brand loyalty: Brands perceived as more sustainable can support more returning customers who are willing to pay for products, even if their price is higher than similar products. By focusing on cost-effective and environmentally friendly practices, these firms can stand out in crowded markets.

• Consumer satisfaction: Consumers, especially Generation Z, increasingly wish to know more about where their products come from and how they are made. It has been shown that Generation Z conscious consumers who will research and consider options before making a purchase decision, paying great attention to brand ethics and ESG.

Real-world success stories

Several firms exemplify how sustainability results in global success.

Unilever’s Sustainable Living Plan has significantly reduced its environmental impact while driving the company’s growth. Unilever’s “Purpose-Driven Sustainable Lifestyle Brands” that embrace sustainable sourcing and waste reduction principles have outperformed the remainder of Unilever’s portfolio. In 2019, Unilever announced that its sustainable brands grew 69% faster than the remainder of the company and accounted for 75% of the company’s growth. Seven of Unilever’s top 10 brands are sustainable lifestyle brands.

Patagonia is one other inspiring example. The outdoor clothing brand has built its identity around environmental responsibilitysupporting a loyal customer base who value ethical consumption. Their commitment to sustainable practices has significantly increased their global presence.

Lush is a mid-sized company known for its handmade cosmetics, ethical sourcing and cruelty-free products. Lush has introduced ‘naked’ packaging, with many of its products (e.g. soaps and shampoo bars) being manufactured without any packaging or sold with recycled and recyclable packaging materials. The company reports consistently strong revenue growth and has maintained financial stability even during the Covid-19 pandemic, indicating strong consumer demand for its products.

Practical suggestions for small and medium-sized firms

Incorporating sustainability into your business strategies doesn’t have to be difficult. Here are some practical suggestions for small and medium-sized businesses:

• Optimize your supply chains: Work with suppliers that prioritize sustainable practices, source products from sustainable firms/natural resources, and create the product as near where it is distributed as possible. This not only improves your overall sustainability profile, but can also reduce costs in the long term.

• Reduce resource consumption: Consider investing in renewable energy sources similar to solar or wind power to cut back your dependence on fossil fuels and lower energy costs, and make sure your organization has policies in place for recycling and energy efficiency in physical office setups.

• Lever technology: Where appropriate, consider providing virtual office solutions to each employees and customers. Enabling employees to work remotely can reduce the need for every day commuting and the need for a large office space. Virtual meetings for large firms can even be an environmentally friendly solution, as can digital solutions that reduce paper consumption and streamline operations.

A balance of growth and sustainability can be achieved through incremental changes that align with business goals.

Overcoming sustainability challenges

While the path to sustainability holds promise, it can be daunting resulting from complex government regulations and limited resources for small businesses. However, these obstacles can be overcome through strategic partnerships. Cooperation with firms similar to INS Global who understand easy methods to support firms in complying with local sustainability standards can help implement effective practices while ensuring compliance with vital regulations. Start small, measure your impact, and scale your efforts as resources allow.

Sustainable growth and expansion

When firms enter recent markets, it is necessary to comply with local sustainability standards. Understanding regional environmental regulations and consumer expectations is critical to success. Experienced partners can support firms in maintaining their sustainability goals as they expand internationally. Using Employer of Record (EOR) services can simplify compliance with local labor laws while ensuring compliance with sustainability initiatives across borders and assisting with ESG reporting.

Sustainability is not only a trend or a “feel good” option; this is a key factor in the long-term success of firms in search of global expansion. By weaving sustainable practices into existing growth strategies, firms can increase their competitive advantage and have an impact on the planet. As the global marketplace increasingly rewards responsible ESG practices, now is the time for firms to embrace sustainability and unlock their full potential for success.