Sustainability and the Bottom Line

Climate change is, hands down, one of the biggest challenges of the 21st century but it is also an opportunity for businesses to participate in a wave of positive change. Climate action is certainly capital intensive but with changing consumer and investor behaviors, stricter government regulations, and soaring resource prices, being good has never been more profitable!

Reduces costs -

Greener operations are often also less resource-intensive which can help reduce costs. Consumer goods industries, for example, can reduce packaging costs by eliminating unnecessary primary and secondary packaging material. Lesser packaging also implies more efficient transportation thus reducing costs further. With the zero waste trend catching up, brands such as HUL have started looking into in-store vending machines that eliminate the need for packaging altogether. Through further innovations in design and material, waste generation can be reduced while also reducing costs.

Another way to reduce costs can be through recycling waste. Procuring fresh raw materials for industries requiring metals, paper, plastics, glass, etc. can at times be more expensive. Thus, by investing in waste collection infrastructure, costs can be reduced while reusing and recycling waste. These practices also help fulfill the company’s Extended Producer Responsibility (EPR).

Another potential area of improvement is that of energy resources. With prices of oil, gas, and coal skyrocketing, certain industries can get self-reliant by investing in renewables and battery storage systems. With several government incentives and impact-focused lenders, the upfront costs of installation can be well-managed.

All in all, every industry can look into ways in which its costs can be reduced by investing in cleantech. Environmental management tools such as life cycle assessment and impact assessment studies can be very helpful in identifying these potential alternatives. In the 21st century, a circular economy is the way to go!

Changing behaviors -

Research shows that concerned consumers are adopting a raft of different measures to shop and live more sustainably. With the discourse surrounding climate change getting more and more popular, consumers, especially Gen Z, are demanding sustainable retail and calling out corporate greenwashing more actively. Brands have started responding to this demand with carbon neutrality pledges and marketing more sustainable and ethically manufactured products.

On the employment front too, an IBM Survey states that 71% of job seekers want to work for environmentally sustainable companies after the pandemic. As a more aware and environmentally conscious Gen Z enters the workforce, going sustainable would be a good way to attract knowledge capital.

The trend of sustainability is also catching up with investors and financiers. The growth of ESG (Environmental, Social, and Governance) integration across the investment industry, even in the wake of a dampened economy in 2020, proves that investors are taking climate risks more seriously.

Companies with leading environmental credentials are likely to be at an advantage as the world ushers into an age of increased consumer and investor awareness. Companies can capitalize on sustainability to build strong brand equity and get an edge over their competitors.

New product development -

Climate change is a complex problem. It’s a mix of over-consumption, inefficient resource utilization, crony capitalism, and whatnot. The sheer number of levers that need to be pulled to win against climate change also reflects the massive number of opportunities that this problem presents. All that a business needs to do is identify a problem and fix it. The past few decades have witnessed rapid growth in the areas of renewables, energy storage, waste management, wastewater treatment, ocean pollution prevention, biodiversity protection, agriculture, etc.

With a more welcoming consumer base, government support and incentives, and investors keen on impact-focused investing, there has never been a more conducive environment for the development of sustainable products and solutions. While it is true that the response to climate change varies from one region to another, the world, as a whole, is responding to climate change faster than it ever has.

The stereotypical outlook on climate action is that it is expensive and will require businesses to compromise on their financial growth. This opinion, although not completely untrue, takes away from the fact that climate change mitigation, itself has huge economic potential and a potential to revamp our economy, as we know it, into a more equitable, just, and stable one. More importantly, acting against climate change is far less cheap than the cost of not acting on it. Even from an individual business’ perspective, climate change poses multiple financial risks and the best way to hedge against them is through action.

Our generation has been unlucky in having inherited this crisis but we also hold the power of turning this crisis around through prompt radical action. As a hopeless optimist myself, and less importantly, as a student of environmental science and business, I strongly believe that change is possible and I’m more than excited to be a part of it, in whatever little capacity I can. Encouraging ya’ll to join in too!