Nicholas Reichenbach is the Founder, Chairman & CEO of Flow Alkaline Spring Water. (TSX:FLOW).
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It may surprise you to learn that 61% of consumers say that a company's poor environmental practices make them less loyal to the brand, and 55% of consumers are prepared to pay more for environmentally responsible products. A strong majority of consumers today are conscious consumers, only purchasing products that align with their personal values, with sustainability being one of them.
So what exactly are the benefits of investing in sustainability as a business? As the founder and CEO of a sustainable beverage company since 2015, I’ve outlined a few long-term benefits for businesses looking to invest in sustainability as well as ways to emphasize these efforts.
Risk Mitigation
Unsustainable business models can have negative impacts on shared natural resources and the communities that rely on them. By proactively embracing sustainability as an opportunity instead of a cost, businesses can mitigate potential risks associated with climate change, resource scarcity and changing consumer preferences. Sustainable practices reduce reliance on finite resources, enhance resilience to environmental disruptions and future-proof the business against emerging challenges.
Climate Impact Reduction Within A Business
According to the former chairperson of the Intergovernmental Panel on Climate Change (IPCC), Hoesung Lee, "Our actions today will shape how people adapt and nature responds to increasing climate risks." I believe that the business community bears responsibility for its contributions to this global threat, and as a part of this, sustainably minded companies hold the keys to ushering in the low-carbon economy.
Sustainable brands are those that can identify, mitigate and ultimately eliminate their environmental and climate-related impacts. There are many ways that brands can bring those efforts to the forefront, including hiring a sustainability executive to oversee a brand’s sustainability and achieve its goals, designing green procurement processes to favor suppliers that adhere to greener standards in raw material sourcing and production, pursuing sustainable packaging innovation that lowers carbon impact by replacing fossil-fuel based materials with renewable resource-based materials, manufacturing with 100% renewable energy sourced through green power providers, and working with third-party sustainability verification bodies such as a B Corporation (B Corp) to provide accountability.
Together, sustainable brands can amplify each other’s efforts and achieve the reduction of climate impacts across an industry sector.
Competitive Advantage: Identifying And Aligning Your Business
Sustainability-focused businesses often gain a competitive edge in the marketplace. As consumers become more environmentally conscious, they are more likely to choose products and services from companies that demonstrate sustainable practices as noted earlier.
Aligning your company’s values with those of your consumers can lead to increased market share and customer loyalty. Embracing sustainability helps consumers feel good about purchasing products that are positive for them and their communities, and this resonates with investors, employees and the general public. Blackrock notes that sustainable portfolio assets more than doubled between 2019 to 2022, from $87 to $255 billion, and returns on such companies historically outperform the conventional market.
It’s important for customers and consumers to be able to easily identify you as a sustainable brand. In this connection, among other recognitions, becoming a certified B Corp is a way to show others that you meet "high standards of verified performance, accountability, and transparency on factors from employee benefits and charitable giving to supply chain practices and input materials."
Beyond this, B Corps can score in various categories (like water), allowing consumers to identify you as a verified sustainability leader. The Library of Congress also lists other certifications that may interest you, such as the ISO 14000 family, Green Business Bureau and adherence to GRI Standards.
Regulatory Compliance
Along with various certifications and standards, governments worldwide are increasingly implementing stricter environmental regulations and sustainability requirements, such as single-use plastic bans, which are becoming more common. Businesses that prioritize sustainability are better positioned to comply with these regulations, reducing the risk of fines, penalties and reputational damage associated with noncompliance.
Opportunity Versus Obligation
I believe that companies should embrace sustainability as an opportunity to become more efficient, reduce waste and identify and eliminate hidden costs. More than an obligation and just another thing you have to do, you can see it as a way to unlock shareholder value. Businesses that adopt sustainable practices can mitigate potential risks, foster innovation, gain a competitive advantage and comply with regulations.
I believe that sustainability is not only the responsible path to take but also the path that leads to long-term success and prosperity in an ever-evolving world of conscious consumers.
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