People, planet and profit are essential factors that drive sustainability in business. But often, implementing sustainable practices involves significant investments that affect short-term profits and this puts many businesses off. On the other hand, we have seen instances of thriving businesses that embrace such practices. How does sustainability really impact businesses and profits?
Sustainability is a big buzzword in today's corporate environment. Financial Times Lexicon defines business sustainability as "a process by which companies manage their financial, social, and environmental risks, obligations and opportunities."
Although the words "sustainable" and "environment" are often used interchangeably, they are not the same thing. Being environmentally friendly may involve the discontinued use of plastic cups in the office for instance. A sustainable business however involves "long-term, strategic planning that allies business growth with positive environmental and societal continuity," according to The Times article. Essentially, it is about ensuring the longevity of a business in a way that benefits the business, its stakeholders and the environment
Why should businesses care about sustainability
A 2014 McKinsey & Co report, "Profits with purpose: How organizing for sustainability can benefit the bottom line," revealed that "an investment of $1 at the beginning of 1993 in a value-weighted portfolio of high-sustainability companies would have grown to $22.60 by the end of 2010, compared to $15.40 for the portfolio of low-sustainability companies."
Considering the positive findings, why are some companies still reluctant to embrace sustainable business models?
Myth 1: Only big companies can afford to adopt sustainable practices
A common misconception is that only large companies have the financial means to implement sustainability practices. Numi Organic Tea proves this assumption wrong.
Founded in Oakland, California by siblings Ahmed and Reem Rahim in 1999, Numi Organic Tea started off in a small 750 square feet apartment and was built on a sustainable business model from the start. All of their organic tea and herbs are biodegradable and Fair Trade certified. Their products are packed in an eco-responsible packaging printed with soy-based inks. The company also works with environmentally friendly business partners to offset carbon emissions.
From its humble beginnings, Numi Organic Tea has become one of the world's largest importers of Fair Trade certified tea, and it generates upwards of $20 million in sales annually. It is a standout example of a business striking the perfect balance between people, planet and profit
Myth 2: Nobody cares if businesses adopt sustainable practices
A 2013 Procter & Gamble study, How Top Companies Are Creating Sustainable Brands, shows that 70 percent of consumers will buy environmentally sustainable products if the product's performance, value and price meet their needs. We can infer that an overwhelming majority of consumers do care that companies embrace sustainable practices, although they prioritize it after their own needs...
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