Corporate social responsibility is not a new concept. The idea that revenue-generating businesses have a duty to contribute positively to society has been around in concept for centuries and clearly defined since the 1950s. What is new, though, is the clear shift in the past few years from necessary responsibility to a beneficial opportunity.
Sustainability, at its core, means sustaining an ecological and societal balance. Rather than depleting one resource to create another, as businesses have traditionally done, it means sustaining a positive impact on society by leveraging the power, revenue, and impact of any major enterprise or governmental entity for the greater good.
That's a responsibility. But increasingly, it's also becoming a business opportunity that's impossible to ignore. The greater good, it turns out, can also lead to a greater good for the company itself. Sustainable business practices are becoming advantageous in more than just moral ways. That's where we enter the business of sustainability.
Some of this truth, of course, has been around for a while. Companies love to tout their environmental practices and crisis donations. The business of sustainability goes further though; it integrates CSR concepts into the core of the business, playing a major role in everything from strategic planning to daily operational meetings.
According to one recent academic study, employees at companies with sustainability at their core are 16% more productive. Workers in certified LEED buildings are both happier and healthier. And yet, only 25% of companies have made a comprehensive business case for sustainability.
We're at the turning point of that trend. In the next few years, corporations across the globe will begin to realize the true advantages of sustainability as a driver for both innovation and revenue, bringing with them the potential to drive society to new heights. This is why.
The societal benefits of sustainability are clear. The business benefits of the same concept are only just becoming so. It's worth outlining exactly what makes the business of sustainability such a change driver.
Let's start with the obvious: in many ways, sustainable business practices tend to pay for themselves. Lower reliance on water, increasingly a precious resource around the world, could have saved Coca Cola upwards of $50 million in India earlier this century. The global brand has now invested $2 billion in research on how to reduce its water use to prevent that from happening again.
Across the world, governments are also subsidizing major business loans when used for sustainable initiatives. The result: lower interest rates, more capital on hand, and better financial statements and company health. Increasingly, as energy costs for green sources drop, everyday business practices are moving to sustainability for simple cost benefits.
It's about more than just cost reduction, though. As a core piece of the business, sustainability can build and sustain competitive advantages that maximize your business opportunities in several ways.
First, and most obviously, the reputation benefits of sustainable companies have been well established. Research shows that customers are more likely to buy from companies with a strong CSR program, and are more willing to give it the benefit of the doubt in the event of a crisis. It's why brands like Subaru and Adidas lean into sustainability in their marketing efforts.
Sustainability also enables companies to attract top-end talent.
This is especially true among the millennial generation that will soon make up the largest part of the modern workforce. A recent PwC study found that much like their Western counterparts, Asian millennials tend to prioritize companies that match their personal values and strive for a good reputation and image. Enterprises that embrace sustainability can build a competitive advantage simply through attracting the right talent.
Finally, at its most comprehensive, a mission-driven sustainability emphasis allows companies to unlock new markets. One recent report showed that in Latin America, latent markets potentially worth up to $1 trillion could be a huge opportunity for companies looking to embrace sustainable business practices.
Innovation naturally matters both on a company-wide and a global scale. As a company, the status quo will not be enough to survive in competitive industries. In society, where global challenges range from climate change to famines and an aging population, companies and governments alike need to develop new ways to improve their communities.
The two, it turns out, are closely related. Prioritizing sustainability is a key driver of innovation, thanks to its need to reconsider the use of resources, adjust to changing human needs, and remain compliant with increasingly stringent government regulations across the world. Consider the case of 3M, which continuously invents new product variations and alternatives simply to reduce waste and pollution.
By building sustainability into a business-driving force, this innovation can become a key part of every aspect of the business. The community-wide goal to benefit and strengthen society begins to match the company's need to remain competitive, satisfy audience needs, and drive a profit.
At its most basic, sustainability is a responsibility for governments, large corporations, and startups alike. But it can be much more than that. We're already beginning to see what happens when global brands like 3M, Subaru, and Coca Cola embrace the concept as a business opportunity.
As of this writing, these brands tend to be outliers. But we are starting to see some shifts towards that trend throughout industries. McKinsey research has found that companies are becoming more active in pursuing sustainable business practices. Businesses are recognizing sustainability for its own merits rather than simply a code to comply with.
This gives us hope for a future that benefits everyone. A future with companies, governments, and citizens all working together to improve communities, their planet, and civil society as a whole. Sustainability can be a part of business - and the business of sustainability has powerful potential.