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The Shift Towards Sustainability While maintaining high Profitability
- Sustainability and profitability are closely linked in the current business landscape.
- Achieving sustainability requires a significant transformation, including understanding new technologies, engaging stakeholders, and making substantial investments.
- Leading companies demonstrate that sustainable strategies create real competitive advantages and contribute to long-term profitability.
The shift towards sustainability is gaining popularity. However, many are still doubtful about the benefits it may give, especially since shifting towards it entails a huge investment. Thus, many are not yet ready as they do not think that the costs do not justify the gains.
We, at procurement tactics, will tackle how you can transform into a sustainable business while maintaining a high margin or profitability. We will tell you ways to have a sustainable business.
We will also show you companies that gain a lot of benefits after integrating sustainability into their business. So without further ado, let us dive into the topic.
Transforming Into a Sustainable Business While Maintaining a High Margin
Sustainability and profitability are closely tied together due to the business landscape nowadays and are continuously growing in the coming years. Thus it is a top priority for many CEOs.
Transforming into a sustainable business demands a drastic change in the entirety of a business. It is one of the major disruptors for organizations as it is driven by environmental, financial, and societal pressures.
Sustainability transformation necessitates a great understanding of new technologies, strong engagement with stakeholders and suppliers, and huge investments in sustainability.
Although sustainability has many requirements, leading companies continue to prove that sustainable strategy and operations create real competitive advantages that include high profitability for businesses in the long term.
How Can You do it?
Businesses stuck in traditional ways can still switch to sustainability if they will commit. However, once they commit, these traditional businesses must embrace these 5 key principles:
Nothing can start without someone leading the whole crew. You must lead with a bold vision that aligns your business model with sustainability.
To effectively align business objectives to sustainability, you must be able to take bold actions that will start sustainability initiatives in your business.
2. Sustainable execution
Of course, once you align your objectives to sustainability, you must drive actions by integrating them deep within your organization.
You must be able to communicate your sustainable strategy or plans internally and externally. As this will allow you to know how everyone can contribute to sustainability initiatives.
3. Aligning stakeholders to sustainable objectives
You must align people in your organization by delivering your promise of sustainability. They must know what sustainability is and how you can implement it within the organization.
You must persuade them that it is now the time to embrace sustainability and that the benefits outweigh the costs.
4. Collaboration with your partners
As a business, you have suppliers that support your goal. They are one of the support functions that you can rely on. Collaboration is important for a successful business, especially if you want to achieve sustainability.
Through collaboration, you can communicate your sustainable initiatives to your suppliers, partners, and customers. Including them in your plan will efficiently help you achieve sustainability.
Additionally, collaboration allows you to partner with responsible suppliers that can help you shift towards sustainability easier.
5. Follow up on your actions
You have your strategy and have executed what you are planning. However, how would you know if you are on the right track?
Thus, it is important to have realistic targets, follow up on your actions, document your results, and compare them with other sustainable initiatives to know if you are achieving your goal.
How to Incorporate Sustainability Into Your Business?
If you’re curious about incorporating sustainability into your business then check out the list below on how to do so!
1. Create clear sustainable objectives
Corporate sustainability is only achievable by having a sustainable plan and strategy within their corporate agenda. In doing this, you should appoint a sustainability leader who has the vast knowledge, talent, and experience to lead the company’s sustainability efforts.
Multinational companies have started to create specific positions such as chief sustainability officers to ensure that sustainability efforts are met.
2. Collaborate with business partners
You can do everything but still not attain sustainability. You can only advance in your sustainability initiatives if you align your sustainability objectives and goals with your distributors, suppliers, and other members in your value chain.
Effective collaboration is the key to accelerating your sustainable initiatives across your value chain. This collaboration will help you and other businesses in the same industry to reduce the negative impact of all your operations and potentially create new processes to streamline your business activities.
3. Engage customers about the need for sustainability
The customers are what makes your business run. Without them, the business cannot thrive. Hence, if they are unwilling to buy products perceived to be eco-friendly, integrating sustainability will be difficult.
As customers are now aware of how they can affect the environment through their purchases, you need to engage with your suppliers more and convince them to commit to recycling and responsible consumption.
4. Communicate sustainability within your organization
It is significant that you be able to design your sustainability initiatives that can be easily understood by everyone in your organization. Each individual in your company must understand and embrace sustainability.
5. Set a long-term vision for sustainability
You must know that sustainability is more than just a response to attract customers who are conscious about how their purchases can impact the environment.
Sustainable businesses set targets that are studied thoroughly and attainable. This includes expanding education opportunities for individuals in the organization or initiating sustainability efforts within the supply chain.
Integrating sustainability in your business means that there are needed changes in your business strategies. Thus, innovations can help you to adjust the businesses towards greater sustainability which includes:
- Empowering stakeholders to focus on sustainability and drive execution
- Strategically plan your sustainability
- Market products that evoke sustainable choices from consumers
Examples of Companies That Maintained High Profitability After Integrating Sustainability
Leading from examples, here are some companies that maintained high profitability after integrating sustainability.
Example 1: Tesla
Most present government policies are requesting automakers to decrease the environmental footprint caused by engines and increase their energy efficiency. To simplify, they demand automakers produce cars that pollute less and consume fewer energy resources.
However, Tesla was not happy with the approach as the policies only lessen environmental problems and not fix them which is far from focusing on producing less harm.
Tesla decided from the beginning to adopt a big-picture approach to addressing two sustainability imperatives which are the shift to a carbon-neutral economy and the urgent need for a new sustainable business model for the transportation industry based on zero emissions.
Although some are still in doubt about its sustainability initiatives, it has continued to pursue its mission which is to accelerate the world’s transition to sustainable energy. Additionally, it has gone on with creating its own brand as the most compelling car company of the 21st century by transitioning to electric vehicles.
What Can We Learn From it?
Far from focusing on short-term goals, Tesla has broken the norm as it is focused on the future rather than immediate growth. Tesla was founded with a long-term business model and understands societal demand for sustainability.
In 2017, it reached a market value of $50.84 billion which surpassed the market value of General motors. Thus, we can learn that sustainability in the long term can increase profitability and make it higher as years pass by.
Example: 2: Apple
It is estimated that 90% of all humanity’s digital data has only taken 2 years to be generated in the digital world. This puts immense pressure on the planet to supply the resources and energy to upload and store all this data.
Additionally, data centers powered by fossil fuels worldwide contributed to 2% of the overall CO2 emissions. Furthermore, the Apple products that people love are created from rare earth metals that are cheaply mined in parts of Asia and Africa.
With this, it is surprising how the products that we love and a well-known brand can severely affect the environment.
Apple has changed its views regarding its environmental goals. It now aims to be 100% carbon neutral by 2030. That is why it has removed the charger and earpods from the iPhone 12 boxes.
This has caused a huge discussion and annoyed many of its loyal customers. However, it has defended its actions by saying that people already have apple chargers and earpods in their houses and they have multiple ones. Thus, it is not the right thing to do in terms of targeting its sustainability goals.
After many months, many of its customers understand where Apple is coming from. Thus, they remained loyal to the Tech Giant. A report by DailMail has revealed that through this move, Apple has saved up to $6.5 billion.
What Can We Learn From it?
Apple’s bold move has caused a lot of confusion to its loyal customers. However, it has demonstrated the effectiveness of communicating your sustainable objectives to your customers.
Additionally, this bold move has not just made their customers more engaged in saving the planet. It also has a lot of positive impact on Apple’s profitability by cost-savings through removing chargers and headphones when selling its iPhones.
Example 3: Adidas
Polyester is often used in the fashion industry. However, its usage is not good for the environment. Adidas is a well-known brand for footwear and clothing and the second-largest sportswear manufacturer after Nike. Currently. Over 50% of Adidas products consist of polyester.
By 2024, Adidas is striving to rely on 100% recycled polyester. This ambitious goal is transforming the brand’s reputation with consumers around the world. It has also encouraged other sportswear businesses to source more sustainably.
One of its notable initiatives is the Parley Ocean Plastic plan which uses plastic waste from the oceans to create recycled shoes.
In 2019, it has reported that it produced over 11 million shoes made of plastic gathered from beaches and shorelines. It has been reported that Adidas sold more than one million pairs of sneakers made from recycled materials.
What Can We Learn From it?
Adidas is striving to be sustainable by sourcing ethically and committing to relying on 100% recycled polyester. It has shown many companies, in all shapes and sizes, that it is not too late to start sustainable initiatives. That you can always change the way you operate in order to be sustainable while also maintaining a high-profit margin.
Example 4: Dr. Bronner’s
Soap helps us clean ourselves, that is why we do not expect that it can harm the environment. We may not realize it but some ingredients in it and the way it is manufactured have some side effects on the environment. However, many personal care brands are making their products environmentally friendly just like Dr. Bronner’s.
From the start of its establishment, it has been making socially and environmentally responsible products and dedicating some of its profits to help make the world better.
In its early days, Emanuel Bronner’s marketing strategy was to spread his values. He did not create the label to sell more products. Instead, he used his products to spread the message on the label.
Nowadays, it has become a popular brand that is known to care for the environment and its workforce. In 2020, the company’s revenue was about $188 million which dubbed itself as the top-selling natural soap in the US despite COVID-19 at that time.
What Can We Learn From it?
Dr. Bronner’s company has been aiming to be sustainable since it began its operation. Dr. Bronner’s donations and sponsorships for 2020 added up to more than $16 million.
Additionally, it ensures its employees’ safety and quality of life during the COVID-19 pandemic. It has disbursed $5,000 that is added to the bonuses of employees in 2020.
We can learn here that integrating sustainability from the start can still make you profitable. By sharing your values with your customers, they will also help you to stand out from the competition.
Additionally, by giving back to the community and nurturing your workforce, you can ensure that they will also do their part to make the company better.
Example 5: Allbirds
The fashion industry dumps 2.1 billion tons of carbon dioxide into the air every year. This is due to the fact that many industries love to use fossil fuels to power their factories, ship their products, and create materials.
To simplify, most of what we wear today is made of plastic, and plastic comes from oil which is a fossil fuel.
Allbirds, a fashion company, holds itself accountable for whatever impact it will make on the environment. It is taking a step to offset its emissions to help the environment.
Allbirds measure everything, from the factory floor to HQ lights, to know how much carbon footprint it produces. It is also working to reduce its emission beyond carbon neutrality. Allbirds is aiming to replace petroleum-based products with natural ones to ensure that all their products reduce their carbon footprint.
Additionally, you can see that Allbirds is transparent on its journey about sustainability. You can see that it is really serious about being socially and environmentally responsible in how it does its business.
What can we learn from it?
We can learn here that making sustainability the core of your business does not entail losing profits. Allbird’s net revenue in 2022 has increased to $59.3 million. Even though they have embraced sustainability, it does not mean that it will affect their profitability negatively.
Example 6: Tentree
Saving the planet is hard. Although many companies see the importance of being sustainable nowadays, they do not have the initiative to start as they see it as another investment that will take so much of their revenue. Additionally, as demands keep on increasing, many forests are converted into farmlands or even a place to build factories.
The sustainable clothing brand, Tentree, takes its name from what it does: plant 10 trees for every item they sell. It considers itself a tree-planting company that happens to sell clothing and not the other way around.
As of now, it already has planted 70 million trees. The company did not disclose its revenue. However, they shared that their revenue is more than £50 million which is proof that what they are doing is profitable.
What can we learn from it?
Nowadays, there is a growing number of people that expect more from the brands they support. Many demand the companies that they support in making a difference and putting sustainability at the core of their values.
Although Tentree is a tree-planting company that happens to sell clothing, its presence on the market is a testament that many consumers are now being mindful of how their actions can impact the world.
Thus, regardless of what pace the world is in, there will come a time when many will shift from helping the planet heal.
Example 7: The Green Corner Store
Most companies that we often see that are embracing sustainability are the large ones. We do not usually see many start-ups making sustainability their core value, but the number has been increasing significantly. This is due to the fact that many are focused on growth at the early stage of their development.
Shelley Green, the owner of The Green Corner Store, becomes an advocate for the connection between personal health and the well-being of the planet after working with individuals and non-profit organizations in preserving and protecting the environment.
Solutions to environmental issues can be seen as too complex, especially for many businesses that are just starting. However, once you see how your products can make a difference in protecting the market, you will start making sustainability one of the core values of your company just like what Shelley Green has done.
The Green Corner Store has generated over $4.1 million in revenue and is continually growing as it thrives in the market competition.
What can we learn from it?
The start of the journey in sustainability is hard. However, just like what Shelley Green did, making a difference and showing how a startup can be sustainable is a testament to how sustainability and profitability can go hand in hand.
It may seem like one business cannot make a difference. However, if you start showing your values to your customers, they will support you all the way as they can see that they also need to protect the planet.
This in-depth exploration navigates the landscape of sustainability in business, emphasizing the interconnectedness of sustainability and profitability. As organizations grapple with the challenges and opportunities of transitioning to sustainability, the article provides valuable insights into the principles and practices that facilitate this transformation while maintaining a high margin.
Drawing on examples of successful sustainability initiatives by prominent companies, it highlights key lessons and strategies for businesses seeking to integrate sustainability into their core values.
From leadership commitment and stakeholder alignment to collaboration, monitoring progress, and customer engagement, the article offers a comprehensive guide for businesses aiming to thrive in the evolving business ecosystem shaped by environmental, financial, and societal considerations.
What is sustainability?
Sustainability refers to the protection of the planet through its three pillars which are the environmental, social, and governmental pillars.
Why is it important nowadays?
Sustainability allows companies to take responsibility for how their operation affects the environment and society. Therefore, It is important to protect the environment and the well-being of their workforce and their surrounding community.
What do you need to transform into a sustainable business?
Transforming into a sustainable business requires a great understanding of new technologies, strong engagement with stakeholders and suppliers, and huge investments in sustainability.
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.