Guides
ESG, sustainability, and the new profit dynamic
Staying in business is tough for companies of all sizes. Approximately 20% of all businesses fail in their first year.
Worse, 65.6% fail before they reach their tenth anniversary. And the average business lasts only 8.5 years.
Companies that survive and flourish for a decade or more must have multiple positive aspects working for them.
Among these attributes is their agility — their adaptability to changing conditions.
For today’s companies to succeed, they must prepare for the future. That means making their businesses as sustainable as possible.
Responsible environmental, social and governance (ESG) requires board directors and other business leaders to steer their businesses toward ecological, social, and economic responsibility for the long term.
These issues will be the most pressing challenges in the coming decades. Preparing for them now will help your company future-proof and allow it to thrive.
The businesses that do not adapt are almost certain to falter.
Ecological sustainability and business survival
The ecological crisis is here and raging in full force, despite the climate-change deniers and the Ostrich brigade.
Europe and the US suffered through multiple record-breaking heat waves. Canadian wildfires raged for months thanks to lightning strikes during hot, dry weather.
As a result, huge areas of the US suffered from dangerously poor air quality, which kept those with respiratory issues indoors, many without air conditioning.
Global warming severely affected the quality of life this year. The future looks even worse.
In turn, the heat and air quality adversely affect business.
Productivity suffers during extreme heat, along with employee health.
Those who work outdoors are subject to heat-related illnesses, including heat exhaustion and heat stroke.
These problems make it imperative for businesses to focus on sustainability, including lowering their impact on the environment.
Your company’s carbon footprint contributes to global warming, which harms your company’s profits.
More importantly, global warming threatens human existence.
If you want your business to have a future, you need to reduce your negative impact on the environment.
Your business’s role in the social structure
In the future, sustainable companies will play a greater role in shaping and protecting the social structure.
Adapting to new priorities now means your business can use future advances in technology to improve the lives of your employees, customers, and community members.
You’ll be able to positively affect their quality of life by giving them access to better communication systems, life-changing health breakthroughs, and more flexible work situations.
Your company will be ready to employ these technologies only if you revamp your business models to prioritise quality-of-life issues as well as profits.
Companies that embrace these philosophies will thrive because they’ll attract and retain the best talent and secure new clients as they adapt to new challenges.
Those corporations mired in the past will fail.
Sustainability’s effect on profits
Sustainable companies already see higher profits due to their responsible behaviour, an effect likely to increase in the future.
Sustainable companies in the S&P 500 have an 18% higher ROI than other businesses because they are already working to minimise climate change.
Researchers from the Harvard Business Review have studied the sustainability efforts of 30 large corporations and report that their “green” innovations are producing “bottom-line and top-line returns.”
The battle against climate change has not yet been won.
Experts believe humans must reach zero net carbon emissions by 2050 to escape the worst effects of global warming.
Companies that embrace sustainability now have a better chance to survive the economic changes that will worsen with increasingly severe climate conditions.
And, of course, they will also contribute to human survival.
Sustainable companies will see higher profits in both the short and long term while working to protect the environment and society in general.
Responsible governance increases profits
Corporate sustainability involves far more than just company profits, and yet it helps ensure a healthy return on your products and services.
The need for sustainable companies will only increase in the future, so embracing your role as a protector of the environment now is essential.
Going green with your manufacturing, packaging, and shipping is necessary to increase your sustainability.
You should reduce your company’s carbon footprint in any way possible throughout your organisation.
Sustainable companies will also use technology to improve the social order.
You’ll create company cultures that enhance the lives of employees, clients, and community members.
You will also offer new technologies that improve their health and well-being.
Profits are enhanced by adopting responsible corporate governance.
Sustainable companies already see a higher ROI than their competitors, and this advantage is set to grow in the future.
Companies that want to remain in business and stay competitive will fully commit to sustainability now.
Future-proof your company with the help of a university-approved Diploma in ESG