Why is sustainability important?
One of the most used terms in today’s business world is sustainability. Simply said, sustainability refers to the balance between people, planet and profit, but what does it mean exactly? And why is everyone suddenly so focused on sustainability? In this article, we explain what it is, in which areas Root can help you, and why it is important that your company starts to take action as soon as possible.
PUBLISHED: 28 July 2022
WRITTEN BY: Gijs de Mol
What is sustainability?
The most often quoted definition for sustainability comes from the UN World Commission on Environment and Development: “sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” To this end, they have drawn up 17 Sustainable Development Goals (SDGs) based on the previously described sustainability pillars: people for social, planet for environmental and profit for economics. Once these goals are achieved, in theory, extreme poverty, injustice and climate change should be eliminated.
What is environmental sustainability?
Environmental sustainability covers the planet part of the three sustainability pillars. The aim is to preserve our quality of life within the limits of the Earth’s boundaries, meaning that the lives of future generations are not jeopardised. Translated into the SDGs, these are the goals that help mitigate the hazardous man-made effects on climate change (SDG 13), human health (SDG 3, 6, 11 and 15), biodiversity (SDG 14 and 15) and resource depletion (SDG 12). At Root, we contribute to this end by being able to translate all business activities into environmental impacts. This enables us to determine all of the impacts of the above-mentioned effects separately, which distinguishes the unique Root method.
Why should my business focus on sustainability?
Why should I act now?
If you want to future-proof your business, there is no other option but to be sustainable.
Meet customer demand. Millennials are the largest generation of the population and are more than twice as likely (75% vs. 34%) as Baby Boomers to say they are changing habits to reduce environmental impact, according to Nielsen’s sustainable consumer survey.
Add brand value. The same survey found that 90% of Millennials are willing to pay more for products that contain environmentally friendly or sustainable materials (vs. 61% of Baby Boomers) and 85% feel that companies should help improve the environment.
Attract talent. Around 75% of Millennials want a job where they feel there is a sense of purpose towards people and the planet, according to Deloitte’s annual survey.
Comply with regulations. The most recent change in related EU legislation is the Corporate Sustainability Reporting Directive (CSRD), requiring all large companies to publish regular reports on their environmental and social impact activities. Companies must submit their report aligning with the CSRD on 1 January 2024, for the 2023 financial year. Although this now only applies to large enterprises, it will not be long before all companies have to share their sustainability performance.
How can sustainability pay instead of cost?
For companies seeking a competitive edge, sustainability is one of the most certain paths to innovation.
Improved profitability. There is a significant correlation between your company’s resource efficiency and the strength of its financial performance. According to McKinsey & Company, a sustainability strategy can reduce costs substantially and can affect operating profits by as much as 60%.
Marketing advantage. Sustainability-marketed products grew more than 7 times faster than conventionally-marketed products between 2015 and 2019, according to a study on the sustainable market share index from NYE Stern.
The potential of the Circular Economy. Waste to Wealth, published by Palgrave Macmillan, presented research results from Accenture Strategy, showing that the Circular Economy has the potential to unlock $4.5 trillion in new market value by 2030, which could grow to as much as $25 trillion by 2050.
If you want to find out more about the benefits of the circular economy, click here.
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