What does it take for a company to grow? For a company to scale at a successful rate and establish itself as a player in the market, what is needed? It has traditionally been offered that the main elements for success are a clear vision, market access, a good product, a sound and scalable business model, high productivity, customer centricity, and great performance measurements.
Unfortunately, when thinking about growth, sustainability might not be the most immediate element businesses think about. Often, decision makers go in the opposite direction and associate sustainable development with a slower, or unviable, model. However, this mindset couldn’t be further from the truth, as in reality “businesses are leaving profit on the table by failing to invest in sustainability” confirms D. Blaseby, Chief Growth Officer at Wunderman Thompson Commerce and Technology UK.
What is obvious is that, for decades now, many countries have found a way to prosper through economic growth. This rapid development, however, has often been at the expense of the environment and society with dire consequences such as pollution, deforestation, and Greenhouse Gas (GHG) emissions that have contributed to the acceleration of climate change. From a societal point of view, traditional economic growth has been “elevating” the standard of living for some, creating a wider middle class, but has also negatively affected society with increased social and financial inequality for others. For this reason, it is important to see economic growth as imperatively sustainable, so that it doesn’t only benefit with short term gains but takes longer-term consequences into account as well.
Deloitte’s 2023 CxO Sustainability Report confirms that while the vast majority of C-level executives surveyed agree that “the world can achieve global economic growth while also reaching climate change goals, there continues to be a gap between actions and impact as organizations are slower to implement the needle-moving actions that embed sustainability into the core of their strategies, operations, and cultures”.
What is sustainable growth?
Forbes defines sustainable growth as “growth that is repeatable, ethical, and responsible to, and for, current and future communities. And it’s key to the long-term success of any business”. Moreover, the International Growth Centre (IGC) says the vision behind sustainable growth is that “the tension between promoting growth and preserving the environment should not be zero-sum”.
A sustainable approach to growth provides economic opportunities for the less wealthy and prepares low-income and lower-middle-income countries while limiting their current contribution to it. In essence, sustainable growth is the smartest way ahead to stay resilient and future-forward.
How does sustainability affect and boost business growth?
Business growth and environmental sustainability are not in tension but are actually a great recipe for success. Here are six reasons why.
- Sustainability as an advantage: Turning non-sustainable solutions, strategies, and facilities into sustainable ones involves the deconstruction of the current systems and mentality. Sustainability can be an advantage for anyone that wishes to engage with it, and it can foster new opportunities through risk mitigation of incoming regulations on carbon, or through new revenue streams within circular supply chains.
- Technology and innovation: Traditionally, economic growth has been mostly powered by fossil fuels, but new technologies are the answer to improve business development while minimizing the impact on the environment. These days, companies must be agile to change and jump-start their technological advancement, considering the available climate technology that can be used for and by their business. Examples of these innovations can be electric power, innovative materials, compostable parts, and decarbonization technology such as alternative fuels, solar panels, wind technology and more. Once the most polluting parts of a business are identified, these cutting-edge solutions can be implemented into production operations, and supply chains by making their logistics more sustainable.
- Profitability: Choosing to be sustainable can mean making a profitable choice. From capitalizing with a great reverse logistics strategy, to choosing to invest in sustainability and integrate it into the main business strategy. Designing, founding, and developing green solutions can be the key to business growth and prosperity in the long run. Whether it’s a supporting industry player like a solar panel production company - that creates climate positive products and ensures environmental, social, and corporate governance (ESG) issues are taken care of (e.g., working rights) - or a company looking to make existing offers more sustainable through implementing climate impact reduced supply chains, sustainability can bring opportunities for new revenue streams for companies.
- Customer-backing: strong transparency on actions towards sustainability can benefit brand’s reputation, and help their businesses grow and flourish. This is particularly true with the new generation of consumers. In 2023, several companies feel the “pressure to act on climate change from many different stakeholder groups—from the board/management to customers to employees” confirms Deloitte’s latest Sustainability Report. In the case of online retail, according to Wunderman Thompson, “65% of global consumers said ethics and morals play an important role in their online purchase decision making” and in their buying “43% of consumers claim to have opted for environmentally friendly delivery options”. These statistics are an indication that there is a move towards favoring business that meaningfully engage with sustainability over polluting ones, and that consumers, armed with the instant power of social media, can determine if a business can grow or struggle to survive.
- Investments: Growth of a business lays in being able to invest towards a long-term future and not only chasing after immediate gains. According to Forbes, “profitable growers are more committed to environmental, social, and governance (ESG) objectives”. Deloitte’s report affirms that about 75% of global C-level executives claim, “their organizations have increased their sustainability investments over the past year” showing the desire of businesses to increase their engagement with sustainability, and to do so as part of their core strategy. Moreover, the transparency of such investments is key. It paints a realistic picture of a business’ efforts, enhancing their growth trajectory.
- Growth-fueled partnerships: Real change can be achieved through sustainability partnerships. Particularly for logistic supply chains, sustainable solutions that improve business and growth, can be achieved through partnerships. These partnerships can be established among players of the same industry, or even different entities such as non-profits, governments, and logistics providers that all share the same values.
Sustainability and growth of business
Without a doubt, for long term, resilient, and sustained growth all businesses should embrace sustainability. For businesses to grow in this new landscape, there is no more time for inaction or backwards strategies.
Companies that don’t act now to implement more sustainable growth into their business models will experience higher consequences and costs later. Research from Deloitte has found that in the long run “climate inaction could cost the global economy 178 trillion USD over the next 50 years. On the other hand, it could gain 43 trillion USD over the same period by rapidly accelerating the transition to net-zero”. As highlighted by Katundu Imasiku, PhD, MBA and BEng. specializing in Renewable Energy, accomplishing this balance requires “financing business opportunities that enhance economic growth and create more employment opportunities, while emphasizing the reinforcement of environmental protection.”
As D. Blaseby’s explains, “taking a sustainable approach to commerce is good for business, good for consumers, and good for the planet”. This approach requires buy-in from all of the business’ stakeholders, and thus, engaging the board is therefore necessary, making sure the leadership of a business is involved, finds adequate balance between sustainability and growth, and ensures it is embedded within their respective organizations in all daily activities from all levels (taking the decisions out of the board room solely).
In addition to current C-level leaders, this change must also be embraced by those that are entering the market and require growth the most - a generation of future business owners that is looking for ways to grow fast and make their mark. This demographic is already attuned to the importance of sustainable growth, according to Stanford’s Social Innovation Review, “88% of business school students think that learning about social and environmental issues in business is now a priority”.
Finally, given the environmental weight that transportation and logistics is having on the planet all businesses should find a logistics partner that shares their mindset and enables integrated solutions that are sustainable across the entirety of supply chains. As Anders Woggsborg, Commercial Sustainability Manager at Maersk notes, “there is a growing interest from businesses looking to take concrete action to decarbonize their supply chains and explore how logistics providers can be a true partner in helping them meet their sustainability goals.”
Overall, research and customer behavior show that to achieve healthy long-term business growth, a mix of sustainability and resilience can help companies with their development ambitions, regardless of the size or maturity that they start from.
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