The Sustainability Playbook
Gone are the days when sustainability was just a beautifully crafted statement on the corporate website. The thriving business of the future must respond to profit, people, and planet imperatives, expanding beyond accountability to shareholders to a broader stakeholder obligation. And more than ever, stakeholders demand demonstrable action. Consumers hold organizations accountable for their end-to-end operations and increasingly make their decision on which brand to choose based on how well the company can demonstrate its commitment to responsible business practices that contribute to communities and positively impact the environment. Those brands inevitably look to their supply chains to ensure their business models demonstrate sustainability and social responsibility.
A sustainability strategy with concrete Environmental, Social, and Governance (ESG) targets represents enormous commercial value for an organization. It enables it to attract and retain the best talent, generate investor interest, manage supply chain risk, ensure operational continuity, and create customer loyalty. Of more than 2,000 academic studies on the topic of sustainability, around 70 percent of them find a positive relationship between ESG scores and financial returns, whether measured by equity returns or profitability, or valuation multiples. A strong ESG proposition also translates to about 10% lower cost of capital because it reduces the risks that affect businesses’ ability to operate.