5 Reasons Sustainability Issues Are Vital Business Priorities

5 Reasons Sustainability Issues Are Vital Business Priorities

Business sustainability shouldn’t be an afterthought. It has an essential role to play in the fundamental operations of an organisation. Sustainability isn’t simply an important responsibility of any socially conscious company, it’s an increasingly vital element of business success.

In meeting the goals of achieving more sustainable business practice, procurement surely has a huge role to play. As a key strategic function, procurement operations are pivotal to success in addressing sustainability issues.

Nobody has an excuse to be ignorant of the facts about climate change in today’s environment. That’s a powerful argument for greener practice in itself. But here are 5 more reasons why sustainable practice is vital to your business success.

It has a positive impact on the bottom line

Sustainability isn’t just a clear social obligation of a responsible business, it’s a demonstrably powerful way to improve efficiency, reduce waste and deliver a positive impact on your bottom line. Companies with improved sustainability credentials are shown to offer a more competitive business model, with analysis indicating they are far more resilient to shocks.

Taking a high-value example, American chemical corporation Dow Chemicals has invested an estimated US$2 billion in improving resource efficiency by tackling energy use and waste since 1994, and has saved a reported US$9.8 billion as a result. In transportation sustainability, US firm Wal-Mart utilised improved insight and advanced technologies to save over US$11 million in fuel costs. Global IT multinational HP managed to reduce energy costs at its manufacturing site in Malaysia by 12%, a significant reduction in opex delivered through sustainable innovation.

It offers access to green government procurement

Delivering greener procurement strategies is a priority for governments around the world, and   Malaysia is no exception. The 11th Malaysia Plan targets that 20% of public procurement should be green government procurement(GGP) by 2020.

In 2016 alone GGP amounted to a value of RM482 million. With GGP due to be rolled out even more widely in future, the opportunity that businesses can access by enhancing their own sustainability performance could be substantial.

It helps attract investment

If you’re looking to generate new investment in your business, sustainability might be higher on the agenda than you might think. Increasingly investors are aware of both the social responsibility importance and business value of sustainability, and look to that understanding to inform their investment decisions.

In January this year, Blackrock, one of the world’s most influential investment funds, announced that social responsibility would be a determiner of key investment decisions going forward. In Europe, often seen as a trailblazer of global sustainability progress, legislation is even being discussed to mandate that sustainability factors be a consideration investors and asset managers in future.

It influences customers

Consumers are an increasingly informed group, able to discuss and explore company performance across the connected digital landscape. Sustainability issues and green credentials are widely accessible, and widely referenced to inform consumer decisions.

The 2015 Nielsen Corporate Social Responsibility Report shows the power of sustainability to influence customer decisions. The results show 69% of Malaysian consumers are willing to spend more on products or services produced by companies that are seen as sustainability and socially responsible. That opinion is reflected widely throughout the region, with 55% of Singaporeans, 78% of Indonesians, 79% of Thais, 83% of Filipinos and a massive 86% of Vietnamese sharing this sentiment.

It’s boosted by tax incentives and energy benefits

One of the benefits of sustainability is the significant government support that exists to assist in your adoption of this technology. That means sustainable transition isn’t just a business benefit, it’s a benefit your business can access at low costs.

Green technology projects and assets currently offer an attractive proposition in Malaysia, with significant tax incentives in place until 2020 that will mitigate the financial burden of adoption. Activities covered under this initiative include adoption of renewable energy technology, energy efficiency projects, green buildings or data centres, waste management, electric vehicles and other supporting services.

Businesses also benefit from lower electricity costs and avoid potential penalties through more sustainable energy use. These kinds of sustainable projects are huge potential catalysts for business innovation, efficiency improvements and greatly improved operational savings.

Here are other related articles you may be interested in