Business sustainability after COVID-19
By: Natalia Sosa
There has never been a more appropriate time to talk about sustainability than now. The global pandemic made us all reflect on our impact on the environment, society, and other living beings. A growing number of companies are realizing the huge power they have to lead the change towards a more sustainable way of making business. This is why this article aims to explain what is happening in business sustainability after COVID-19.
But, what does business sustainability means?
According to an article published by Harvard Business School (HBS), this concept refers to practising business “…without negatively impacting the environment, community, or society as a whole” 1. To achieve this, companies have to identify how and whom they are affecting in every step of their business processes to make decisions and measure their impact.
Nowadays, sustainability is not only a matter of ethics or responsibility, it is also a concept used by investors to assess business through metrics like ESG (environmental, social, and governance). According to the HBS, companies with high ESG ratings tend to have more financial returns and a lower cost of debt and equity. This means that companies can benefit from practising business sustainability after COVID-19.
In fact, this unleashes a new concept called “shared value opportunity” where business connects profitability with sustainability in all their practices through methods like the triple bottom line. This method posits that firms must measure their impact and performance in the three “Ps”: profit, people, and the planet.
Rebecca Henderson, professor of HBS said in an article that “Indeed, there’s good reason to believe that solving the world’s problems presents trillions of dollars worth of economic opportunity”2. This affirmation is supported by a Nielsen research that found that 48 percent of US consumers would change their consumption habits to lessen their impact on the environment. And in 2018 this sentiment translated to 128.5 billion in sales of sustainable, fast-moving consumer goods3
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What reports show on business sustainability –
A report published by KPMG shows the sustainability report rate in the top 100 companies of 52 countries has risen by 68% from 1993 to 2020, and it is expected to continue to climb in coming years (see graph: “Growth in global sustainability reporting rates since 1993: N100 and G250”.
Simultaneously, companies from the G250 group also presented a jump in the percentage of sustainability report rate from 35% in 1999 to 96% in 2021. The survey revealed that the following countries saw a growth spurt in sustainability reporting: Kazakhstan (+34 percentage points), Slovakia (+21 percentage points), and Germany (+19 percentage points).
KPMG also found that North and Latin America lead the list of regions in sustainable reporting with 90% of the top 100 companies reporting, followed by the Asia Pacific with 84%, Europe 77%, and the Middle East and Africa 59%. This impressive result of the Americas disaggregated by the main countries of the region shows the following results: México (100%), US (98%), Canada(92%), Brazil (85%, Argentina(83%), Colombia(83%).
Examples of business sustainability in the environmental area
Many big companies are leading business sustainability after COVID-19 change by investing in different programs to tackle specific environmental and societal problems.
Shopify is one of them, it is betting about $5 million annually to find innovative clean technologies for ocean sequestration also known as blue carbon. This issue has not been known for many people until recently, but it is one of the most important problematics on the sustainability agenda because oceans absorb more carbon than forests and soils combined.
One of the projects Shopify intends to fund is from Running Tide, a company based on the coast of Maine. Their idea is to cultivate kelp at the bottom of the sea (lower than 1000 meters) to ensure the pressure is high enough to maintain the kelp down, that way “…it will turn into oil or sediment and it will be sequestered on the geologic timescale”5. Running Tide will measure the carbon on sequestered in the process and sell credits on the carbon markets.
A second project Shopify invested in is Planetary Hydrogen, a startup that attempts to generate green hydrogen whilst catching carbon and recover the ocean. The process begins with the production of hydrogen from water using renewable energy, then adding a mineral salt, which creates a waste product (mineral hydroxide) that binds with atmospheric carbon dioxide. A bicarbonate compound results from this and being an alkaline substance, it helps to counter the acidification provoked by climate. Planetary Hydrogen calculates that this process “…can capture and store 40 kilograms of carbon dioxide for every kilogram of hydrogen produced”6.
Another example of a big company that is betting on business sustainability after COVID-19 is Apple. The giant technology company is backing a project to bring back 27.000 acres of mangrove forest on the Caribbean coast of Colombia.
These trees are very important to combat climate change because they can store up to 10 times more carbon per unit area than land-based forests. Apple will purchase carbon credits generated by this project and doing so, will help to create a new income revenue for approximately 12.000 local people that depend on the mangroves for living.
Examples of business sustainability in the social area
But the environment is not the only topic in the sustainability agenda, there is also a social area that companies like Tyson Foods want to tackle. The company faces a labour shortage because their plants are mostly in rural areas and many of their team members are late immigrants. To face that challenge, the company launched the “Upward Academy” offering a variety of courses ranging from English lessons to financial literacy classes. Tyson Foods’ expectation with this program is to improve employee engagement and retention whilst strengthen the local community through business sustainability.
Similarly, companies like HSBC and PwC have integrated volunteering programs into their sustainable strategy where their employees are involved in educational initiatives during their work-time.
The companies that are involved in social sustainability projects are listed as “B Corporations”, a certificate that identifies them as businesses that comply with high standards of social and environmental performance, public transparency, and legal accountability to achieve shared value for all their stakeholders. This trend has particularly risen as a business sustainability strategy after COVID-19.
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How to create a sustainable business–
Now, you may probably wonder what steps are needed towards making your business sustainable. Here are some tips Forbes7 recommends ensuring sustainable growth, we outlined them, so you can start your business sustainability plan after COVID-19. But first, think about your company’s core values, since it is the base for all this process. Now that you have them clear, let’s start:
Have multiple growth plans: It is very important to project your sustainability plan, in the long run, to make sure you are tracking it at all times and that it can grow at the same pace as your company does.
Tie SMART goals and metrics: A good strategy needs good metrics to ensure success in the execution. An extra effort in the talent acquisition and onboarding plan may have a great impact on the accomplishment of the company’s success.
Evolve the organization’s story: To achieve sustainable growth, the organization needs to evolve by innovating its process without changing the original purpose of the company and of course, keeping it consistent with its core values.
Know your core values: Hire people that are aligned with the company’s core values and culture.
Have a standard operating procedure (SOP): The SOP permits that roles, activities, and procedures are well-defined and established step by step. It brings clarity, agility, and efficiency since it avoids redundancies and misunderstandings.
Let go of micromanaging: Focus on managing effectively providing scope for every activity. Quitting micromanaging will release you some time to answer questions and retrain.
Be an empowering leader: It is important to entrust the team and delegate tasks to promote creativity, innovation, and motivation among your subordinates.
Focus on your behaviours: Shaping the organization’s culture with your behaviour and the behaviour of your team is key to create a sustainable growth strategy.
Commit to ESG goals: Environmental, social and corporate governance (ESG) is now crucial to attract investors, employees, and customers. That is why companies must start to commit to ESG goals and also measure their impact to prove what they are doing for sustainability.
Ensure your hiring process is sustainable: Establish a sustainable hiring process: that is to say, equipping well your human resources team to find and attract the best employees. This way, the company saves productivity and employee attrition.
Focus on continued innovation: Innovation is essential to secure the sustainable growth of a company. Especially because we are in a constantly changing environment that requires easy and fast adaptability to survive and succeed as we just confirmed with the pandemic.
Nurture a learning culture: Continued learning is crucial to support the process of sustainable growth because it creates an atmosphere of continuous innovation.
Build relationships with universities: Young people are more likely to have fresh and new ideas for the sustainable growth you are looking for. Developing a career roadmap for them in the company can make a huge difference on your path to sustainability.
Find the right financial partner: Sustainable growth needs to be supported by a good financial partner that involves in the processes of the organization.
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Business sustainability after COVID-19 is shaping the new economic reality and so, you must give it great importance in your strategic plan to stay updated. This may condition businesses that succeed and those that don’t in the short run. For example, many businesses that changed to sustainability practices saw their sales growth at incredible numbers from last year.
That is the case of Farmbox Direct, a New York-based company that delivers fresh organic food to homes across the US. Ashley Tryner, its founder, says the sales soar more than 30 times last year, something they were not expecting because that growth typically comes after a few years and with lots of money invested in marketing.
This is real evidence that the train of business sustainability has already departed and indeed, speed up after covid 19. So, the more your business stays out of it, the more slow and difficult it would be to catch up with the competence.
How sustainable businesses help to develop societies
Business sustainability after COVID-19 is becoming very relevant, particularly because the pandemic brought huge consumer awareness over environmentally friendly products. Despite the economic crisis it unleashed, COVID-19 filled us with concern about our planet and also motivated us to create a better and healthier world through our actions.
According to a survey made by the consultancy firm Accenture in 2020, 60% of consumers “were making more environmentally friendly, sustainable, or ethical purchases since the start of the pandemic”8. Another survey conducted by pollster Ipsos Mori found that 65% of global respondents thought it was important to prioritize climate change in business sustainability after COVID-19.
The number of people buying organic food is increasing. In the US, sales of organic food are expected to rise 9.5% which would mean approximately $252bn. There is also a tendency to choose local products made from small businesses above imported products. This trend reduces environmental impact by shortening the supply chain and promotes local economic development.
Simultaneously, the market of vegan food has also increased, Plant-Based Food Association, a US trade group, said that “during last year’s first lockdowns sales of vegan products rose by 90%”9. The cloth industry on the other side does not stand behind this common sustainable trend, Frigi, a children’s clothing firm which makes its clothes from organic cotton and recycled plastic said its sales rose 60% last year.
All of this happened as a result of many lockdown months during which people had the opportunity to spend more family time. A time when going outdoor to breathe fresh air and connect with nature became more precious than ever. People learn to enjoy the simplest things in life which promoted a change in consumption and lifestyle patterns. Which in turn levels up business sustainability after COVID-19 10 strategic plans.
Business and social sustainability after COVID
But sustainability does not only refer to environmental issues solely, it also comprises social matters that are linked to generate and support development. Social sustainability is about making societies more inclusive and creating opportunities for everybody by empowering people and make them resilient to survive in adversities. However, last year was pretty hard for social sustainability since the pandemic crisis made topics like poverty, unemployment, and inequality very steep.
According to an article published by the World Bank, the crisis unleashed by Covid-19 is “projected to increase extreme poverty by between 73 and 117 million people”9. Besides, protest against racism and persistent discrimination underscore not only social problems but also made clear that people were becoming less tolerant to this kind of behaviour.
According to the World Bank, “… with a growing awareness of the challenges of fragility, persistent inequality, and racial discrimination, social sustainability has been recognized as central to growth and poverty reduction”9. Research shows that discrimination and exclusion in societies are very expensive for people and economies. The World Bank made the following findings:
- “Globally the loss in human capital wealth due to gender inequality is estimated at 160.2 trillion”9.
- “Afro-descendants continue to experience significantly higher levels of poverty (2.5 times higher in Latin America)”9.
- “90 percent of children with disabilities in developing countries do not attend school”9
- “70 countries continue to criminalize homosexuality” 9.
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Why business sustainability after COVID-19 is crucial?
These data made it clear, social sustainability is an urgent topic to boost development, and it can be worked on hand in hand with environmental and economic sustainability as well. To better understand how to have an impact in this area, let’s make it clear that social sustainability is not based on grants but rather on the empowerment of people. This concept is the guidebook of the Community-Driven Development programs (CDD) that promote the World Bank. These programs aim to lead communities towards finding the solutions for their problems rather than wait for others to fix them
To end this article, I would like to give a clear example of how investing in social sustainability generates economic growth and this, in turn, helps to boost business. An article was written by the World Bank reported that this organization invested $300 million in practices aimed at addressing gender-based violence (GBV) in Kenya, Uganda, Ethiopia, and Djibouti. The “utilities” of this investment were 5500 schools, 4600 water systems, and 13000 kilometres of footpaths and access roads built or rehabilitated by the communities themselves. Besides, the investment generated 8.2 million days of labour with wages of 32.8 million paid (of which 36% was paid to women).
Now, that is proved that investing in sustainability can be a great advantage for your company in terms of reducing costs in the long run, drive economic growth and better off the quality of life of people(including your current and possible future customers) we believe this win to win strategy can be very positive for your business sustainability after COVID-19 strategy.
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