Sustainability is the new buzzword as the impact of things like climate change create an urgent need for change. Many organisations are seen adapting to the crisis by implementing different sustainable approaches to the way that they do business. Despite genuine interest, many still are left with questions on how a business can be rebuilt with sustainable processes. What does it even mean to be sustainable in 2022?
What is sustainability in business?
As we start considering sustainable business approaches, we need to first and foremost understand what sustainability truly is. Oftentimes sustainability is linked with being environmentally friendly; having a carbon-neutral footprint and focusing on the processes in shipping and logistics. This is of course a vital part of it, but it's certainly not all of it. Being sustainable means not only being able to do business without negatively impacting the environment, but without negatively impacting society as a whole.
Amongst all the organisations in the world, the successful ones are those that are driven by a strong purpose and a clear mission. That mission always includes having a positive impact in the world, being a driving-force for change. Is your mission crystal clear? How does that mission align with the needs of the world? First define the mission and the effective way to communicate it, only after building a strong foundation can we start creating the processes that effectively get us towards our goal.
Consumers demand sustainability actions
We live in a time of enlightened consumerism. The information age has given people the tools to seek answers to virtually anything in a matter of seconds. With new established awareness, a shift has been created where there is a demand for full transparency from businesses. As smaller brands with shorter supply chains and local sourcing have found it easier to adapt to this change, bigger corporations with complex supply chains have struggled. Change can be difficult, but compliance to the shift is necessary. The business that does not adhere to the current social values and refuses to aim for transparent ethical and sustainable practices, will struggle to thrive in the future.
According to Nielsen, 73% of global consumers are willing to change their consumption behaviour if it reduces negative impact on the environment. Therefore, being a sustainable business is now a competitive advantage in the marketplace.
Understanding the consumers will help to look at how to approach sustainability from different angles. Consumer trends in the past years have shown that people have a desire for healthier, organic, high-quality products. Examples of sustainable practice can mean educating the consumers of healthier lifestyle choices or being inclusive and taking a stance on social justice movements. Analysing the current market trends, staying alert to social issues, and direct communication with customers can give a clearer picture of what to aim towards. With a clear mission within the company combined with using data to understand the consumers, you can create an effective long-term strategy that generates growth.
Can business and ethics be combined?
Finding the right approach for an effective strategy for your business can be a headache and it can be difficult to see how to make profit with the assumption that sustainable production is more expensive. As Harvard Business Review puts it: The first step is to understand that the focus should no longer be on just lowering the costs, but increasing the efficiency of the system as a whole.
The next step from this is to innovate how this looks for your business.
A great example of a successful sustainable business is Kaiko, an ethical fashion brand who honed in on having a strong mission - social responsibility and equality in the fashion industry. With the fashion industry being known for poor working conditions, low-wages, and child labour - Kaiko wants to be a part of a change towards equality. As a part of their bold mission they provide their customers full transparency of production. They also donate annual profits to Women's bank, an organisation that helps lift women from poverty by providing support in women's sustainable entrepreneurship.
Another example is a company that revolutionised the retail industry. Singular Society by H&M group created a model where they offer high-quality products without high profit margins. To achieve this they created a subscription-based model, where a customer pays a monthly membership fee to receive high-quality items at production cost.
Subscription-based models are on the rise across different industries generating billions in sales. Additionally things like rental models have been on the rise. Many furniture companies like Oliver are cycling their furniture pieces back into as-new conditions. A growing number of consumers find it hard to commit to big purchases such as furniture as they move around frequently, therefore renting is a more viable option for them.
Every business is unique and finding the right approach can take time, however, now is the time to start thinking about the how. The good news is, you don't have to figure it all out on your own. If you are struggling, it's best to start networking and finding partners to build on the knowledge. With the help of partners and a large network, an organisation is much more likely to succeed with their objectives.
IMPLEMENTING ORGANISATIONAL CHANGE
The most important change comes from the mindset of the organisation, therefore an agile working method is necessary as those who are committed to change are the ones who are able to transform and thrive. It is important to acknowledge that you do not need to start out perfect, consumers are happy to see steps towards change and appreciate honesty.
“When it comes to traditional organisations, their biggest challenge is that they haven't acknowledged that they really need change management and they need an evaluation of fully new business models. The Direct to Consumer business model is one strategic tool to think about when building a new business model to support sustainability.” - Pinja Kuitunen, D2C & eCommerce Specialist.
When considering steps towards sustainable business, launching a D2C business model could be a part of an effective framework. Selling directly to customers can be a big advantage as the direct communication with them can help to understand their immediate needs and consider sustainable practises together.
By now there is already a lot to think about, to summarise the process keep in mind the following:
- Acknowledge that you need to make a change in the mindset of the organisation. Be clear on your values and on the objectives you want to achieve.
- Widen your network. Seek out guidance from experts and find the right partners to help you.
- Benchmark successful sustainable business models and find inspiration on what you can start implementing as an organisation.
- Start direct communication with your customers to better understand their needs.
- Take the first step, even if it is small and imperfect, a step forward is better than no step at all.
As a final note, it's crucial to remember that although sustainability in business is now seen as a competitive advantage in the market, it is not a marketing tactic. Performative sustainability or greenwashing can be seen across different corporations, where claims of sustainability are merely to look appealing. Consumers are aware of this and increasingly demand more for real change to take place. With consumers aware of their purchasing power, brands should realise that a genuine desire for positive impact is the way forward if they want to continue doing business and building loyal customer relationships.