What is a sustainability strategy?

In today’s business landscape, it is rare to find competitive and relevant organizations that don’t include sustainability as a key component of their strategy, demonstrating how significant it is. 

When talking about sustainability, we refer to three areas: the environment, society, and the business’ profit. Sustainability is used as a synonym for ESG, a well-known acronym for Environmental, Social and Governance.  

According to the World Economic Forum, 90% of executives believe sustainability is essential because organizations with a sustainability strategy can make long-term investments. Nowadays, an increasing number of organizations implement sustainability strategies. Thus, it’s evident that being a sustainable business is no longer optional but paramount. 

In a world facing unprecedented challenges, the role of sustainability strategies has evolved into a crucial element of corporate planning and business models. Translating these strategies into tangible actions across all parts of the business is imperative. BETTER FUTURE FACTORY emphasizes that sustainability is not simply a trend but a vital part of a business strategy. A sustainable business approach integrates economic, environmental, and social dimensions into the fundamental operations of an organization. Key elements include Environmental Responsibility, Social Commitment, and Governance Requirements. 

As KAIZEN mentions, a sustainability strategy takes into account the way the company’s activities affect issues like climate change, natural resource use, human rights, diversity and inclusion, business ethics, and transparency. A successful sustainability strategy mitigates risks, creates opportunities for innovation, growth, talent attraction, and retention, and improves reputation and brand value. To ensure its effectiveness, sustainability must be embedded in the company’s culture, from top management to every operational level. 

Drivers for sustainability strategies implementation. 

Here are some of the main factors compelling organizations to embrace and prioritize sustainability: 

1. Consumer demand/behavior: consumers’ demand for sustainable products continues to increase. Various research has shown that more and more consumers are willing to expend more on sustainable products and brands that prioritize ethical practices. 
    

2. Global Regulations: International policies, from the EU’s emission goals to Asia’s waste initiatives, push companies toward sustainable operations. Governments need to be stricter, as the Paris Agreement highlights. Many governments have already moved towards sustainability; therefore, organizations should also start to transform how they operate to become more sustainable and have better relations with regulatory bodies. 
    

3. Attracting and retaining talent: Being a sustainable business is essential to attracting talent, as people, especially the younger generation (millennials and Gen Z), make career choices based on their ethics. A sustainable company is more attractive. 
    

4. Investor demand: Investors’ considerable pressure shapes the shift to sustainability. Investors consider ESG factors in their investments to achieve long-term profit. 
    

5. Resource constraints: resources have become scarce, and the cost of raw materials has skyrocketed. Therefore, a need for efficient and sustainable sourcing and usage exists. 
    

 
Inspiring strategies for long-term business success. 

Environmental and social practices significantly impact the long-term success of businesses. Some businesses outperform others in this area, giving them a competitive advantage. Sustainable business development is crucial for long-term success, and the following strategies can aid companies to do that.  

Sustainable manufacturing, also known as green manufacturing or eco-friendly manufacturing. 

 
Sustainable manufacturing means producing goods in an environmentally responsible and resource-efficient manner, according to Ignitec. By implementing sustainable design principles from the initial stages, companies can have numerous benefits, like less negative environmental impact, cost savings, resource efficiency, competitive advantage, and consumer choice. Thoughtful/ sustainable design and development of products can end up in products that live long and can be repaired easily. Using sustainable materials can guarantee that the design process closes loops and facilitates repair and reuse to promote a more circular economy. In addition, sustainable packaging prioritization aims for recyclable or compostable materials. 
 

Implementation of LCA assessment 

 
Life Cycle Analysis serves as a tool for assessing products’ environmental impact throughout their lifespan, from creation to disposal. Its objective is to identify and prioritize areas that contribute the most to the environmental footprint. 
 

Resource efficiency maximization – implementation of circular economy principles (CE) 

 
Minimizing waste, transforming waste into useful resources, and using renewable energy for production processes can contribute to high efficiency while closing loops to promote a circular economy. For instance, processes like sustainable manufacturing can reduce solid waste, which would otherwise have ended up in landfills. Significant decreases in raw material consumption and natural resource preservation are also spotted. 
 

Improvement of energy efficiency 

 
Energy efficiency is high among companies’ most important priorities. Via energy initiatives, businesses can lessen operational costs by diminishing dependence on electricity and fossil fuels. A company can be energy efficient by insulating the building, choosing LED lightbulbs, buying Energy Star-certified equipment, using a fuel-efficient fleet and organizing freight transportation, as VLS Environmental Solutions highlights. 
  

Encourage remote work 

 
Only some businesses can support remote work; nevertheless, many can transition to a somewhat hybrid workforce model. This transition can result in energy usage reduction. By encouraging remote work, the company’s electricity bill can be lower, as less is spent on lighting, climate management and plugged-in headquarters equipment. Thus, the environmental strain will be less. Employees would still use electricity while working remotely from home, although, in this case, their environmental impact would be more negligible. Additionally, employees who do not have to drive to work are not releasing GHG emissions, reducing, this way, fossil fuels and saving money. 

Inequality reduction, ex. Gender inequalities 

 
Nowadays, gender inequality remains a prominent social matter despite the improvements. According to AI Multiple, there are two common types of gender disparity in the workplace: gender pay discrepancy, which occurs when companies pay male employees more and provide better working conditions to male than female employees in the same position and occupational segregation, in which women are hired for non-technical jobs. At the same time, men hold most leadership roles. 

Invest in employees well-being  

 
BEYOND SAPIENS highlights that everything starts from each of us individually to deliver collective results. Research has shown that workers are more productive, engaged, and likely to stay in a company when they are content and healthy. Employee well-being is not merely about benefits. It is also about providing opportunities for professional development and career advancement, helping employees, this way, to feel more valued and fulfilled in their roles and helping the company retain top talent. 

 
Benefits from the adaptation of sustainable strategies. 

1. Strengthening of the brand reputation: Companies that actively pursue sustainability are viewed more favorably by consumers, leading to increased trust and brand loyalty, according to a report written by McKinsey. 
    

2. Promotion of innovation: Sustainability challenges force companies to think innovatively, leading to ingenious solutions that differentiate them from competitors. Innovation in processes, like product design and methods, can lead to new market opportunities and revenue streams. 
    

3. Reduction of operational costs: Sustainable practices can favor cost savings in areas like energy consumption, waste management, and supply chain management. 
    

4. Better risk management: Finally, implementing an ESG strategy can offer a valuable approach to risk management. By including standards related to environmental management, worker safety, human rights, and compliance with laws and regulations, enterprises can mitigate risks associated with legal actions and reputation damage and avoid fines. In addition, investors regard strong ESG policies within a company as indicators of effective risk management. 

Case studies/examples of companies with sustainable strategies.  

1. UPS improved its transportation efficiency: According to AI Multiple, transportation activities account for almost 30% of US greenhouse gas emissions. UPS is a company which allocates goods. Transportation activities make up the majority of GHG emissions. Thus, enhancing transport efficiency is paramount for organizations like UPS to remain sustainable. As a solution, UPS adopted an AI system called ORION, which is a route optimizer aiming to minimize the number of turns during the delivery. Initiation began in 2012, and UPS has been working on developing it up to today. ORION helps UPS save 10 million gallons of fuel per year, and it decreases UPS’s carbon footprint by 100,000 metric tonnes per year, which is the counterpart of withdrawing more than 20,000 cars from the streets, in addition to the financial benefits. 
    

2. H&M Let’s Close the Gap deposited a new scheme for gathering raw material: H&M’s “Let’s Close the Gap” project began in 2013 as a Circular Economy best practice that collects and categorizes unwanted apparel from consumers. They would restore the attire and find new owners if it is in proper condition. If a garment ends its useful life, H&M recycles and reuses it to create new goods. Customers who bring in their old clothes are rewarded with permits that can be used to get a discount at H&M shops. The incentivization of customers is what finalizes the complete Circular Economy loop. 
    

3. Gusto hired more female engineers to close the gender inequality gap in the company: At software firm Gusto, female engineers made up negligibly more than 5% of the engineering team at the beginning of 2015. Then, Gusto initiated an HR campaign to lessen gender inequality by prioritizing the recruitment of female engineers, forbidding female workers from scrolling, and deleting male job ads like “ninja rockstar coder.” Thanks to this campaign, Gusto improved its female engineer ratio to roughly 20% by the end of 2015. 
    

4. Airbus manufactured lighter planes with 3D printing: To use 3D printers practically, Airbus partnered with Materialise, a Belgium-based technology corporation that specializes in additive manufacturing. Airbus says additive manufacturing technology can lower an A320 plane’s annual GHG emissions by around 465,000 metric tons, approximately the same as eliminating 100,000 automobiles from the road yearly. 
    

5. The Green manufacturing success story of Patagonia: Patagonia is a California-based outdoor recreation apparel company with a long history of enforcing sustainability practices into its product design and company culture. They reduced their carbon footprint by swapping to renewable energy sources, implementing fair labor practices, and launching initiatives like “Worn Wear” to motivate customers to buy second-hand clothing. Patagonia also maintains top talent and is considered a leading social and environmental sustainability example. Notably, in 2022, Patagonia’s founder, Yvon Chouinard, announced that all the company’s profits would go into helping combat the climate crisis. 

By placing focus on societal impact, environmental conscience, and employee well-being, a company establishes the foundation for long-term success.  

Through proactive involvement in social causes and constructive contributions to communities, a corporation cultivates trust and loyalty among consumers who are progressively aligning their values with their purchasing choices. Moreover, adopting an environmentally conscious strategy not only reduces ecological damage but also promotes creativity, frequently resulting in financial savings and a competitive advantage.  

Placing employee wellbeing as a top priority boosts morale, productivity, and retention rates, resulting in a motivated staff that fosters innovation and customer pleasure. In the long run, this holistic approach not only has positive effects on society and the environment, but also fosters a resilient and successful organization that can adjust and flourish in a constantly changing market.