Growth in the Sustainability Solutions market is set to continue in the coming years as Companies seek to reduce their environmental and societal impacts, reduce costs and to protect their reputations.
Increasing legislative pressures, in the UK and European Union, as well as other regions, ensures that operational performance is made transparent and public to investors and other stakeholders. Increasing consumer, employee and investor interest in corporate responsibility, governance, sustainability and environmental impact creates both compliance and reputational risks for all affected Companies.
Significant C-Suite interest, for Chief Executive Officers (CEOs), Chief Financial Officers (CFOs) Chief Marketing Officers (CMOs) and CIOs is being be catalysed by the need to ensure compliance and to improve these new metrics of business performance. These executives are now reviewing their business to determine how they can transition to a more sustainable business model.
This market evolution is depicted in the chart above.
There is growing evidence that sustainable business practices are not only desirable, but indeed necessary for sustained profitability in both the short and long term.
Adoption of sustainable business practices offers the opportunity to reduce costs, meet rising stakeholder expectations and to also generate new business opportunities. These business benefits are being demonstrated by a rapidly growing list of individual company case studies amongst leading early adopters of sustainability across all industry sectors.
A 2013 study by Harvard Business School verified sustainability’s profit potential (see graphic opposite).
This research examined the financial performance of companies that had voluntarily adopted corporate-level sustainability policies against companies that hadn’t. This involved a long 16 year study that compared the performance of “high-sustainability” versus “low-sustainability” companies from 1993 to 2009. This study found that high-sustainability companies significantly outperformed their counterparts. It discovered that anyone that had invested $1 in a portfolio of high-sustainability companies in 1993, that investment would have grown to $22.60 by 2010. That same $1 invested in a low-sustainability portfolio would have delivered only $15.40.
The search for sustainable profitability is set to drive the markets for sustainability solutions, but businesses seeking to capitalise on this trend need to choose their market with care.