Many successful organisations today have evolved to see sustainability as more than just a compliance issue and rightly so. Regulatory compliance only scratches the surface of what sustainability has to offer. The multi-layered benefits reveal themselves when the languages of sustainability and business are translated. There is tangible business value in incorporating and implementing sustainability in core strategy that goes beyond just energy savings and a growing number of organisations recognise this. As sustainability experts, we at thinkstep-anz translate the business value of sustainability into a common language that can be understood by all.
Access lucrative green markets
Certified environmental credentials can directly help to increase revenue. One example is in the building industry where providing certified environmental information in form of Environmental Product Declarations (EPDs) directly supports higher Green Star ratings for buildings, thus expanding access to new markets. Green Star buildings also attract investment and finance opportunities such as green loans and sustainability-linked loans that are not available to non-certified assets and portfolios.
Attract investors as a responsible asset
When investors such as the NZ Superfund announce that they want to reduce the carbon footprint 
of their portfolio by 20%, the CEOs of those assets quickly realise they need to take sustainability seriously. Managing their carbon footprint then translates into tangible business value. A 2018 report by the Global Sustainable Investment Alliance found that New Zealand and Australia had the greatest proportion of responsible investment assets, with 63 percent of assets using a responsible investment approach. In 2019, the responsible investment market in New Zealand alone was worth $153.5 billion according to a report by the Responsible Investment Association Australasia (RIAA). The RIAA report shows that investment managers are catching up with consumer interest, with a doubling in frequency of investment managers applying screens to manage exposure to fossil fuel explorers, miners, and producers. This should hit home with CEOs and directors in the manufacturing sector as there are key opportunities to seize. The road to becoming a responsible investment asset will look different from company to company but will be marked by bold moves such as cleaning up sources of stationary thermal energy.
ESG and exclusive capital access
Sustainability is not only fundamental for survival today but also encourages growth. Environmental, Social and Governance (ESG) tracking and disclosure is opening the door to new business opportunities, with growing evidence that good ESG performance is linked to “less market volatility, lower risk, and better financial performance”. In fact, financial and ESG reporting combined enables investors to better assess the true value of a business, opening up new opportunities such as green financing, which has the potential to deliver both financial and reputational benefits. For example, Rabobank has better conditions for certified sustainable businesses with their green bonds and sustainability bonds. Rabobank takes documentation and management of ESG risks associated with a project into account in their evaluation and selection process for such bonds.
Brand matters
Authentic sustainability credentials clearly increase the brand value of businesses. We have experienced that recently ourselves. A fellow B Corp in New Zealand approached us for help with their own journey. Their clear message was that they wanted to work with businesses that share the same values and “use their business as a force for good”. As a certified B Corp, we hold ourselves to the highest standards of sustainability performance, transparency, and accountability. Another client of ours confirmed that they continue working with us not only because of the work we do, but also because we walk the talk and joined the Climate Leaders Coalition.
Attracting and retaining talent
Sustainability initiatives help to reduce energy and related costs, but the benefits also extend to significant savings in recruitment costs. Keeping millennials in the business reduces staff turnover and related costs while also motivating young people and increasing productivity. A Deloitte report found that even during a global pandemic, climate change and protecting the environment was still the dominant concern for Gen Z around the world, and a close second for millennials behind only healthcare and disease prevention. In New Zealand, 72% of youth note it is important that their future employer is socially and environmentally responsible. Unsurprisingly then, many of the projects at thinkstep-anz are initiated by CFOs and CEOs partially due to internal pressure from their employees.
Tackling the (in)visible problem
Mitigating risk is another key benefit of sustainability with extensive global supply chains providing an increasingly visible hotpot of risk. The coronavirus pandemic has turned the spotlight on gaps in global supply chains that are prone to disruption and exploitation. If not properly addressed, supply chain issues such as modern slavery, illegal logging, and unsustainable plantations of palm oil can pose a serious business risk and endanger an organisation’s Social License to Operate (SLO). The pandemic then presents significant opportunities to pause and re-evaluate the reliance on a traditional global supply chain. Some businesses and industries are localising their supply chains which provides a boost to the local economy, and vastly improves traceability as a precursor to transparency. Where localisation is not a feasible option, some are utilising a macro perspective with regionalisation or focusing on strengthening the visibility of their existing supply chain. While modern slavery legislation is currently not in place in New Zealand, Australia’s Modern Slavery Act will affect up to 500 NZ businesses directly or indirectly as they will need to comply with disclosure requirements. Taking a proactive stance towards a transparent supply chain, whether local, regional, or global, is the first step towards being prepared when the questions come.
By Barbara Nebel
This article was first published in NZ Manufacturer magazine, October 2020.