Embrace Sustainability (Reporting) and Profit

Until relatively recently, sustainability has not been high on the agendas of most large companies – but many of the world’s leading businesses now recognize that the companies that will thrive in the future are those that join the dots between people, planet and profit.

For companies who have truly put sustainability at the heart of their business model, the benefits are many and obvious – increased trust among customers, brand enhancement, more resilient supply chains, happier and more effective employees, improved relationships with stakeholders…the list is long and persuasive.

What has been less easy to define is the impact of sustainability practices on the balance sheet. This has led some skeptics to question whether it is possible to quantify the net contribution that sustainability makes to profitability – can doing the right thing be shown to have a tangible impact on the bottom line?

Today, the notion of ‘be-sustainable-and-profit’ is rapidly gaining ground and it was recently given another boost when MIT Sloan Management Review (MIT SMR) published a report that shows that sustainability is paying off for a growing number of companies.

The study, The Innovation Bottom Line, based on a survey of 2600 executives and managers from companies around the world, showed that the percentage of respondents reporting a profit from the implementation of sustainability practices rose by 23 percent in the last year, to 37 percent. The study found that the degree to which a company incorporates sustainability concerns into its business model often correlates with an increase in profit. GRI Organizational Stakeholders, AT&T, Dell and Nestlé are among the companies cited in the MIT SMR report. 

“It’s very positive to see studies like this surfacing,” says GRI’s Director Marketing & Communications, Marjolein Baghuis. “Companies are starting to understand that the monitoring and measuring of energy and water usage, waste, and human capital is good for business, and it is GRI’s mission to make this common practice among organizations of all types and sizes. As the old saying goes, what you measure you can manage, and good management means good business.”  

While many organizations now understand the need to demonstrate sustainability in their operations and the benefits that can come from doing so, the task of implementing sustainable strategies into core business processes is often considered a challenging one. 

A recent paper by the Institute of Chartered Accountants Australia and KPMG, 20 issues on building a sustainable business, addresses this challenge and takes a look at the practical measures involved in incorporating sustainability into a corporate context. 

In the paper, the authors argue that “sustainability has transitioned from an environmental issue to a serious business consideration,” and that most aspects of business can potentially be affected by sustainability issues. 

The paper offers guidance on Environmental, Social and Governance risk management, on how to implement a sustainable business plan internally, and on how to report on one’s sustainability performance. It notes that public disclosure of non-financial indicators is becoming an expectation and it mentions the GRI Guidelines as a good tool for organizations to use when developing sustainability reports.

As the business case for sustainability grows, the value of sustainability reporting becomes increasingly recognized. Being transparent and reporting helps companies to set goals, measure performance, and operate as efficiently and profitably as possible. 

By engaging with sustainability reporting as a standard practice, businesses can gain a three-dimensional view of profit and value. After all, if money is what makes the world go round, it’s in everyone’s interest for the economic bottom-line to be a sustainable one.

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