19 Jul 2024

How Sustainability Can Support Business Growth

Businesses have a key role to play in the fight against climate change, as they are collectively responsible for a significant proportion of the world’s emissions. This blog by Pledge shows us how sustainability can support business growth.

This is why new legislation is coming into force across the UK and EU, which will require companies of all sizes to make more thorough and detailed disclosures about their carbon emissions and what they are doing to reduce them. But while there’s no doubt that taking climate action as a business is good for the planet, there is also another significant benefit — and that’s sustainability’s contribution to business growth.

The triple bottom line

More and more companies are deciding to implement the triple bottom line approach, which means that they’re focusing on more than just profits (i.e. the traditional “bottom-line”) — they’re also measuring and addressing their environmental and societal impact. These are sometimes referred to as the ‘Three Ps’: people, planet, and profit. The triple bottom line was first introduced by entrepreneur and business writer John Elkington in 1994 while at the think tank SustainAbility. Companies which embraced the approach soon began to notice an increase in new business opportunities.

Sustainability can help businesses win more tenders

Sustainability has a direct, positive impact on the reputation of many businesses and is therefore a key contributor to their growth. Studies have shown that consumers have become more conscious about the type of products that they buy and the way in which respective sellers operate. The Global Sustainability Study 2021, conducted by Simon-Kucher & Partners, reveals that 85% of people globally have shifted their purchase behaviour towards being more sustainable in the past five years. This has in turn put pressure on retailers to evaluate their supply chains to ensure that they are offering more sustainable delivery options. It’s why an increasing number of logistics tenders now include demand for emissions data.

A good example of a company which is widely recognized for its sustainability efforts is Lego. Lego runs the Engage-to-Reduce program which aims to lower its suppliers’ carbon emissions. The program helps suppliers report data and identify carbon reduction projects specific to their business. Following the announcement of the program, the company’s reputation has grown exponentially, leading to new business which has also benefited its suppliers.

Sustainable partnerships can boost business growth

Effective partnerships are a key driver of business growth and they have been a core part of many organisations’ sustainability strategies for a number of years. A strong partnership can mean access to new customers and an opportunity to reach new markets. If the partnership actively supports the common goal of sustainability, it becomes more likely that these companies will invest together in long-term growth and development.

The UN’s Sustainable Development Goals (SDGs), are currently adopted by almost 2,000 companies through the UN Global Compact alone, and they are all underpinned by the 17th Goal — ‘Partnerships for the Goals.’ Measures must be implemented to ensure partnerships effectively deliver on sustainability goals, benefiting the involved businesses. This includes aligning all partnership businesses on common, measurable targets relevant to key stakeholders. It's crucial to regularly update stakeholders on target progress and adjust business responses if off track.

Sustainability drives investment

According to a study by Charles Schwab, which surveyed 1,000 individual investors, as many as 71% thought that companies with good sustainability strategies make good investments. In addition, 44% of respondents said that they consider ESG factors when making a new investment.

The number of investors looking to put their money into sustainable companies has grown significantly over the past 10 years. The creation of the Principles of Responsible Investment (PRI) supports this upward trend. Additionally, the PRI, leading responsible investment advocate, unites 2,300 institutional investors managing over US$80 trillion in assets. It encourages investors to use responsible investment to enhance returns and better manage risks, and is supported by the United Nations.

Sustainable actions can improve profit margins

How sustainability can support business growth? Companies which measure their carbon footprint are able to identify their top emitters and take the appropriate climate action. Often, this activity has a direct positive impact on profit margins due to the increased efficiencies that it generates. They result in fewer wasted miles, and fewer routes with empty or partially empty loads, leading to significant cost savings.

Using green vehicles reduces long-term fuel costs, benefiting companies in regions with high fuel prices. A study from the US Department of Energy has revealed that by 2030, nearly half of electric medium- and heavy-duty trucks will be cheaper to buy, operate, and maintain than diesel trucks. Companies such as Ford and Rivian are already paving the way for mass scale electric truck production.

Sustainability simply makes business sense

Sustainability doesn’t mean sacrificing profits or putting success on the backburner. Instead, it has become a crucial element of any organisation’s successful strategy. It helps companies of all sizes build competitive advantage, meet customer demands, attract investors, and improve profit margins.

Freyt World x Pledge Sustainability Partnership

Freyt World has partnered with Pledge to address logistics sustainability, driven by increasing consumer and governmental focus on net-zero emissions. The partnership aims to encourage freight companies to measure and reduce their carbon footprint, emphasizing proactive environmental responsibility. This sustainability initiative offers freight forwarders not just compliance but also new revenue-generating opportunities. By integrating automated emissions tracking and supporting sustainability strategies, freight forwarders can grow their customer base and charge premiums. The partnership with Pledge allows Freyt World members easily access tools for sustainable logistics and integrate sustainability into business growth. Freyt World’s Freight Emissions Calculation, powered by Pledge, provides an accessible way for members and the logistics industry to begin implementing sustainability practices in their businesses.