The growing importance of business sustainability

Written by Charlotte Hamilton on 20/05/2022

Increasingly consumers are demanding more sustainable practices from companies. Globally, 85% of people indicated a shift in the purchase behaviour to become more sustainable in the last five years (The Global Sustainability Study, 2021). Although attitudes do not always translate into behaviour and actions, the European Commission are also calling for harsher legalisation around climate change and sustainability to prevent companies from greenwashing (EU, 2022). This suggests a shift in sustainability from motivator factors to hygiene factors for business survival.

Companies with sustainability agendas are better positioned to anticipate and react to environmental, social, economic, and regulatory changes as they arise (Harvard Business Review, 2016). Supply chains also need better implementation of ESG metrics to improve risk management due to increasing extreme weather (UN, 2020). McKinsey reported the earnings before interest, taxes, depreciation and amortisation value is 70% at stake with sustainability concerns (McKinsey, 2022)

A systematic literature review from Arabesque and University of Oxford revealed out of 200 studies on corporate performance and sustainability:

  • 90% good ESG standards lower the cost of capital
  • 88% good ESG practices result in better operational performance
  • 80% good sustainability practices are significantly and positively correlated with stock price performance (Arabesque, 2015)

Despite tangible business performance benefits linked to improved sustainability and increased demand for organisational sustainability, we know improving a company’s sustainability can be difficult. It also raises the question of how companies measure and improve their sustainability performance. 

Osmii has been working with Workiva, an ESG software (SaaS) reporting company. Workiva is publicly listed (NYSE) and a Forrester Wave leader. Their solutions transform the way companies manage and report ESG data. Globally, people use their platform to seamlessly enable collaboration and integration into existing work streams to simplify Financial and ESG reporting. In September, they are even holding their own ESG event (Amplify) in Las Vegas with high profile sponsors such as PwC and attendants such as Google and Coca Cola.

References

Proposal for a Directive on empowering consumers for the green transition and annex by European Commission, 30th March 2022- Document retrieved from: https://ec.europa.eu/info/publications/proposal-empowering-consumer-green-transition-and-annex_en 

Un Office for Disaster Risk reduction, 2020- Document retrieved from: https://www.undrr.org/publication/human-cost-disasters-overview-last-20-years-2000-2019

From the stockholder to the stakeholder by Arabesque- Document retrieved from: https://arabesque.com/research/From_the_stockholder_to_the_stakeholder_web.pdf 

Global Sustainability Study 2021 by Simon Kucher- Document retrieved from: https://www.simon-kucher.com/sites/default/files/studies/Simon-Kucher_Global_Sustainability_Study_2021.pdf 

Comprehensive Business Case for Sustainability by Harvard Business School- Document retrieved from: https://hbr.org/2016/10/the-comprehensive-business-case-for-sustainability 

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