Sustainability is high on the corporate agenda right now, and for good reason. With the effects of climate change being felt across the globe, business leaders can see that sustainability and success go hand-in-hand.
In fact, between 2013 and 2019, companies with consistently high environmental, social, and governance (ESG) performance enjoyed 4.7x higher operating margins and lower volatility than low ESG performers over the same period.
What’s more, businesses are quickly realising that their future fortunes hinge on an ability to operate in a carbon-constrained world. No wonder the number of companies citing climate change as a ‘very significant’ sustainability focus has jumped dramatically – in Australia, 65% of CEOs now see climate change as a threat, compared to 43% in 2010.
Yet many still struggle to truly integrate sustainability into the core of their business. Moving from vision to action can often feel like a leap too far. The good news? There are some easy steps that every business can take to embed sustainability into a broader business strategy.
Build your business case for sustainability
Before you dive in with actions to become a more sustainable business, consider your reasoning. Building a business case will help you secure broader stakeholder support and leadership buy-in. It’s about switching from a ‘sustainability as cost’ to ‘sustainability as value creator mindset.
Typically, the businesses we deal with in food production are driven by three key market factors:
- Growing consumer and B2B pressure for safe and sustainable food
- Increasing demands for evidence of sustainability claims
- ESG investment policies add pressure on sustainability evaluation and disclosure
In Australia and around the world, challenges get in the way. For example:
- Governmental policies are historically not effective enough for broader incentivisation of industry change
- Business consortia-led initiatives have historically focused more on reputation than systemic change
- Collaboration across the supply chain is key but threatened by business confidentiality and competitiveness concerns
- Standards and methods for measurement not fully harmonised
Yet the challenges are certainly not insurmountable. Emerging technologies are providing the key to building more sustainable businesses, with tools like remote sensing, location tracking, and AI making it more affordable and achievable to monitor and work towards sustainability targets. What’s more, the growing strength of industry-led targets and initiatives – such as these are helping to build cohesion across industries and the world.
Take action in your business
To show your customers that you are taking action and to gain their trust in the sustainability of your business, you need proof of your actions. This can take the form of transparency into the quality, compliance, provenance, and sustainability of your products and raw materials. Two focus areas include:
1. Improving your product offer
- Whether off-the-shelf to the end consumer or to customers within your supply chain
- Improving product quality and consistency to boost customer satisfaction
- Reducing waste and increasing efficiency, which has the bonus of lowering your costs and driving competitive advantage
2. Protecting and differentiating your brand
- Collecting proof that you know where your products come from and they are safely and sustainably procured
- Using compliance data to differentiate your brand, gain a competitive advantage and increase market share