By Indiana Lee
In 2019, Fortune composed a list of companies they recognized as “Sustainability All Stars.” This list consists of renowned organizations like IBM, Walmart, Apple, and Salesforce. These leaders in sustainable practices are doing everything from making the best use of renewable energy to making their products from recyclable materials. However, while these things are great for the environment, do they really give businesses a competitive advantage?
This could be the case, seeing as a survey from Accenture found that 72% of respondents reported buying more environmentally friendly products than they did five years ago. This suggests that consumers care about how green a business is and one that is sustainable could be more appealing. Here’s how going green gives a business an edge over its competitors.
Reduce operational costs
Implementing sustainability initiatives can help businesses reduce operational costs helping them to compete more effectively. One primary example of a company reaping the benefits of sustainability is when United Airlines made their planes lighter to drive down the cost of fuel, and even went as far as ditching their paper stock for something lighter– saving $300,000!
Energy costs represent a huge operation expense to businesses so finding ways to be more energy efficient can help to money. Small businesses alone are estimated to spend $60 billion a year on energy. However, using solar energy could result in long-term savings. The reality is that actively investing in sustainable business practices can help businesses over time.
There are also supportive options to encourage businesses to embrace sustainability, such as green loans, which are private loans where the cost of the loan doesn’t go beyond the cost of the energy saved. Further, if a company invests in wind, solar, or geothermal systems, they could be eligible for energy-efficient tax credits too.
Since 2012, U.S. retail giants like Target, Walmart, and IKEA have increased their solar usage by 240%, according to SEIA. While the returns gained from investing in green energy are relative, these statistics show that businesses feel it’s still worthwhile to invest in it.
Customers are willing to pay more
Management teams are often concerned about the short and long term costs associated with implementing sustainability policies and practices but there is evidence that customers are willing to pay more to support a company’s sustainability efforts. A new survey released by video-conferencing company Tandberg even found that 53% of consumers would rather buy products and services from a company that has a reputation for being eco-friendly.
Fashion brands especially can use this opportunity to responsibly source eco-friendly materials and pay workers living wages, and communicate these supply chain improvements to explain price increases. With sustainability in fashion becoming a mainstream conversation with the likes of H&M offering a ‘Conscious Collection’ range, Wrangler introducing an ‘Indigood’ sustainable collection and fashion events such as Copenhagen Fashion Week announcing sustainability plans, businesses that transition quickly and communicate effectively will find themselves in the customer’s favor.
Furthermore, research by NYU Center for Sustainable Business (CSB) analyzing purchasing data on 71,000 products across 36 categories of consumer packaged goods found that “across virtually every category of consumer packaged goods (CPG), sustainability is where the growth is”.
This affirms consumer’s growing interest in sustainability and that embracing green initiatives could make one’s business more salient. In this consumer culture of heightened environmental awareness, even switching to eco-friendly tissue packaging could mean the difference between a prospective customer buying one product over another made of plastic.
Aligning with customer values
People often seek to associate themselves with brands that share similar values with them. Since more customers hold sustainability and environmental values than ever before, businesses that embrace these values will improve loyalty, gain new eco-conscious customers and gain a competitive advantage. In fact, the Corporate Executive Board conducted a study of 7,000 U.S. consumers who reported having a relationship with a brand and 64% stated that shared values was the primary reason for their continued loyalty. In short, if your business embodies eco values, you will build stronger relationships with customers who value the same thing. It’s common nowadays for shopping habits to reflect a customer’s values.
The bottom line is this: going green is good for business and now is the time to take sustainable action.
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- How Ecopel is Making Faux Fur Sustainable
- Fashion Platform Zilingo’s Ankiti Bose to Become First Indian Woman to Co-Found a Near $1 billion Start-Up – and She’s Only in her 20s
- New Report from Change.org Reveals Best Practices for Social Activists
Feature image by Noissue.