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Implementing sustainable practices in your business isn’t just about recycling, going paperless or minimizing plastic use (although those things are great) – it means developing a strategy that improves the environment and generates value across multiple areas of the business .
Here are seven strategies companies can use to stay sustainable and profitable.
Related: Why We Need To Build An Environmentally Sustainable Web3 World
1. Focus on creating value, not just revenue
Many companies focus on generating revenue first and then on creating value. But it should be the other way around. Leading with your values and delivering consistent results builds consumer loyalty and ultimately sales.
So what do consumers value? Almost 80 percent said they consider sustainability (of a product, retailer or brand) when making at least some purchases.
And it’s not just about the quality of the product or service. How a company acquires new customers, chooses suppliers, prioritizes data privacy, and improves customer experiences is increasingly becoming a vital factor in customer loyalty.
2. Speak up about your passions
A humanistic approach to customer experience goes a long way. Consumers have social, environmental, health and other causes that they are passionate about. If their values align with your company’s, they are more likely to work with you.
Need proof? Eighty-seven percent of American consumers will make a purchase from a company because they are advocating for a problem they care about, so these efforts are likely to turn into revenue.
Several companies have incorporated eco-friendly practices directly into their brand. For example, Macy’s has long been an education advocate and recently announced this commitment to spend $5 billion by 2025 on its efforts to create a more sustainable and equitable futureincluding raising the minimum wage and fully funding a college for employees.
Lush Cosmetics also puts sustainability at its heart, from natural product ingredients to eliminating animal testing to rewarding customers for using reusable tubs. By involving customers in the process, sustainability becomes easier to achieve and loyalty dramatically increases.
3. Limit overproduction
No company wants to see a surplus. As soon as there is a discrepancy between what the market is asking for and what your company is providing, overproduction is imminent, which is the cause of waste.
For example, the US throws away nearly 11.3 million tons of textile waste every year. In 2018, H&M reported that they $4.3 billion in unsold clothing. Other top global brands, such as Nestlé, Coca-Cola and PepsiCo, have been mentioned the world’s largest plastic polluters three years in a row by environmental watchdog Earth.org.
But overproduction and overstocking are manageable conditions that companies can help avoid by listening to customers, conducting risk assessments, and consistently evaluating supplier relationships.
Related: This founder was appalled by food waste in the restaurant industry, so she started a zero-waste grocery line that now hosts events for Nike
4. Spend more now to spend less later
When there is a demand for something fast, companies usually sacrifice quality for efficiency. From fast food to fast fashion, they will use goods that are harmful to the environment but cheap to produce.
When businesses are strapped for cash or want to maximize their spending, it’s easy to default to cheaper options because of the instant gratification. But they must recognize that sustainable production can also be cheaper. Yes, the initial cost may be higher up front, but there may be better options for long-term costs.
Customers want resilience. Sixty-six percent of the global consumers said they are willing to pay more for durable goods. If a good is of better quality and has a longer lifespan, customers can make more use of it and are likely to trust that company again when goods are needed in the future.
For sustainability, initial investments using more expensive materials and methods will lead to greater long-term savings. Companies have to work with big steps and give new processes time to work.
5. Measure everything as often as possible
Data should be at the center of any business strategy, plan or project. Analytics helps you understand the market, analyze supplier performance, forecast demand and improve the customer journey.
The proof is the pudding. About two-thirds of companies those who have big data initiatives experienced lower operational costs.
Companies must continuously measure the three main pillars of sustainability:
- Environment: what is the impact on the environment
- Social: how are employees and other people affected
- Economic: where is the value that translates into wealth
Customers expect sustainable companies to be aware of their impact on the environment and have a plan to improve it. These companies are also expected to thoroughly understand social justice and care for the balance and happiness of employees.
Each leader must be involved, support the initiatives and play an active role in producing positive sustainability outcomes. By capturing these efforts through data, companies know what works and what areas need improvement.
6. Stay in touch with the public
The idea of ”If it ain’t broke, don’t fix it” is not valid in business. That’s because companies should always be looking to improve everything they do – from the way goods are produced to customer engagement to employee retention.
Businesses need to stay connected to the public and be aware of their concerns and interests so they know how best to fulfill their requests. Sixty-two percent of customers feel emotionally connected to the brands they buy the most. Companies need to return the favor and show customers that the feeling is mutual.
Employees also want a voice. Leaders who make sure they are heard will think more diversely, which promotes knowledge sharing and can lead to better decision making.
7. Keep innovating and reinventing
The world is constantly changing. To keep up, companies need to be flexible with their processes and technology. Companies must be able to run without serious consequences for the organization. When companies have models that prioritize innovation, they can become resilient to unexpected circumstances.
Ninety-two percent of small businesses in the US reported reinventing themselves in 2020.
Some of the longest-established brands we see today – Visa, Costco, Madonna – have the same thing in common: a consistent successful reinvention of the brand. Whether it’s a new look, product or expansion into new markets, established brands and companies prioritize reinvention and keep innovation alive.
A shift in priorities
A culture and mindset change needs to take place to create a sustainable and profitable business. Leaders must accept plans and lead by example. They also need to diversify the voices involved in decision-making so that new ways of thinking and innovation can take root.
The cost of goods, delivery and returns are all areas that can help improve profits. The same goes for corporate culture. If employees are happy and their needs are met, they are likely to remain loyal to a company. This reduces the costs of recruiting, onboarding and leaving employees.
According to the Harvard Business Review, turnover can be up to 20% due to corporate social responsibility practices, so caring for employees and prioritizing their experience can also trickle down into the customer experience.
A good example is Neutrogena, which has an average employee retention rate of 10.2 years. The company focuses on maintaining a positive work culture and has a strong commitment to sustainability. This quarter, Neutrongena’s parent company, Johnson and Johnson, reported a 21.6% increase in earnings.