Businesses should Keep Tabs on Bottom Lines & SDGs

As I have often written in this blog, sustainability and business and profitability go hand in hand. If you’ve been following my articles, you’ve read my often repeated reference to an outstanding windfall that’s in store for businesses and industries when they become sustainable.

Businesses that incorporate some or all of the 17 Sustainable Development Goals (SDGs) developed by the UN into their business and marketing plans and become active in building sustainable industries will reap the benefit of greater revenue. The World Business Council for Sustainable Development anticipates that the sustainability windfall could be as high as $12 trillion a year and create as much as 380 million jobs in the course of the next decade. A slice of that would surely satisfy any business owner.

Sustainability, environmental protection and climate change are expected to remain on business agendas forever and affect established companies, startups, investors, funders and Wall Street. Not only should business owners mind their bottom lines but also the SDGs.

United Nations Call

In response to rapid global social-ecological changes — climate change, resource scarcity, social exclusion, change of customers’ demands, coronavirus — and the United Nations’ call for actions to attain the SDGs, many large and small businesses from a wide range of industries have risen to the challenges and taken actions to contribute to sustainable development.

To be sure, covid-19 has clearly taught us that we – humankind – are more connected than we have realized. We can transmit deadly viruses from one person to the next, from one town and state to the next, and from one country to the next. We can also convey around the world the positive effects of sustainability and detrimental influences of environmental pollution.

However, global sustainability challenges cannot be resolved with the effort of a single individual, business or sector. Just like covid-19 cannot be eradicated by one scientist or government. In addition to governments, social institutions and local communities, business leaders are stepping up and making contribution towards this important agenda.

According to Paul Polman, former CEO of Unilever and a passionate global spokesman for sustainability, “Business can, in fact, be a tremendous force for good and make a huge contribution to solving the biggest problems facing our people and planet. Actually, this is the only way for business to be accepted in society and it should always strive to have a net positive impact.”

Indeed, with consumers’ comprehensive buying power skyrocketing in all segments, businesses that accept their beneficial roles in sustainability, environmental protection and climate change will reap the benefits of their buyers’ purchases. Those that don’t, could soon find their destinies on the ash heap of history.

Ethical Conduct is Precondition

In an interview with Mongabay.com, Polman continued: “You simply cannot expect to build a business with longevity and resilience if you don’t embed ethical conduct in all you do. This is now a precondition for any successful company and if you do not move to a more responsible, sustainable and equitable way of doing business, then you don’t deserve to have any business at all.”

For sustainability in all of its 17 formulations to be achievable, its advocates must strive to fulfill two simple but necessary steps. Polman said he has observed that corporate leadership in this field can change the mindset of other companies. “Especially, in demonstrating the power of partnerships to drive system-level change, whether that’s taking bold climate action; transitioning to the circular economy; supporting ‘nature-based solutions’; or accelerating food systems’ transformation,” he said.

Furthermore, it is important for a company whose ownership and management are committed to the SDGs to demonstrate their dedication to all of the employees. In other words, buy-in is key to success. “I’m equally proud of the culture we helped to incubate, which was ultimately about helping people succeed. Something that would not have been possible without the enormous commitment and passion of many. A CEO’s responsibility is really about inspiring and uniting people behind a common purpose and then helping them to find their own clear sense of direction. Releasing energy in others.”

As an obvious, contemporary example of the potential of success of a concerted partnership, Polman cited the attempts to tackle coronavirus. “I think on balance the business community deserves huge credit for its response to the pandemic, as there are many examples of constructive collaboration across the private sector aimed at protecting lives and livelihoods. Whether that’s consumer goods manufacturers producing hand sanitizers, the fashion industry making masks, or the engineering sector building ventilators,” he said.

Employees of small and medium businesses (SMBs) feel strongly about their employers’ sustainability practices, revealed Salesforce Research. Three-quarters of the respondents from companies with 250 or less employees say corporate sustainability is a moral imperative. However, Salesforce Research found, SMBs are far less likely than larger companies to have an actual sustainability program or strategy. While 69% of respondents at companies with over 1,000 employees said their company had a sustainability program or plan, only 37% at companies with 250 or less employees said the same.

Sustainability Steps aren’t Complicated

Designing a sustainability or climate change plan for a business is not that difficult. You’ve undertaken a similar exercise when you created your business plan. Knowledge is the first requirement. Conviction and passion the next two. Business owners, management and employees can contribute to the success of the program. Designate a sustainability leader, the employee or two who will constitute the cheering team. Find an executive sponsor and measure everything that you do. Create a vision, set your goals, strategize and then take action. Stay committed. Soon you’ll see that what you do in sustainability contributes to your bottom line and the success of your bottom line will reinforce your environmental efforts.

Share your vision, plan and successes with your trading partners and get them involved. Inform your customers who will be eager to know what you’re doing. Tell your elected officials and news media. Organize events.

While the numerous benefits of jumping on the sustainability bandwagon should be sufficient to convince businesses to do so, the downside of not doing so also has its persuasive powers. The World Economic Forum estimates that “even if we meet all the climate commitments of the Paris Agreement, temperatures can be expected to rise this century to 3.2C above pre-industrial levels, far above the 1.5C threshold to avoid the most severe climate impacts. While this may not seem like much, it can contribute to the manifestation of immense catastrophes, such as the ongoing wildfire crisis in Australia spurred by heatwaves and flash floods in Indonesia. We would be wise to prepare for this – and business is no exception.”

Climate change presents complex and interconnected risks to businesses, their suppliers, and to the employees and communities along their supply chains. Mitigation efforts—those focused on reducing greenhouse gas emissions—are vital to any company’s climate strategy and critical to global efforts to avoid unmanageable climate impacts. As the impacts of climate change are increasingly felt around the world, however, it has become clear that simultaneous efforts are necessary to increase adaptive capacity and build resilience.

Temperature Changes Cause Global Calamities

Calamities created by even slight climate changes and temperature fluctuations can considerably damage global and local commerce. The first step to better managing the growing climate risks that businesses face is understanding them. The potential economic costs of inaction are staggering. Damage done by climate-related disasters and extreme weather in 2018 alone cost the US around $160 billion, and the numbers are only expected to increase as hazards become more complex and unpredictable.

Businesses are also bracing themselves for direct impact to their bottom lines. In 2018, 215 of the world’s 500 biggest corporations, including giants like Apple, JPMorgan, Chase, Nestle and The 3M Company, reported climate-related financial risks of just under $1 trillion.

Then with around 80% of global trade embedded in supply chains, business leaders are increasingly aware of risks that could affect their ability to move through the world, including issues of cost, speed and responsiveness. In fact, CDP data reveals that 76% of suppliers have identified ways in which climate change could increase the risk of disruptions to their business.

In an article by Anthony Britterri, editor-in-chief of New Jersey Business Magazine, Catherine McCabe, commissioner of the New Jersey Department of Environmental Protection (DEP), reinforced the belief that good environmental policy and good business go hand in hand. “We all share a common goal in building a strong resilient New Jersey for the future, both economically and environmentally. The best way to ensure that is to maintain strong, open dialogues,” McCabe said at a virtual town hall meeting sponsored by the New Jersey Business & Industry Association and the New Jersey Chamber of Commerce.

McCabe admitted that the DEP’s greatest priority right now is climate change, which she called the “No.1 threat to New Jersey’s long-term future. We need to build our resiliency to ensure the state remains not only safe for its citizens, but also a hub for businesses,” she said.

McCabe discussed the state’s first Scientific Report on Climate Change, which she said serves as the foundation for policy decisions going forward. “Raising awareness (of climate change) is perhaps the most important thing we can do. Issuing the report is good for all academicians, policy people and business people,” McCabe pointed out. The most important message from the report is that climate change is already here as seen by higher temperatures, more severe storms and an increase in coastal and inland flooding,” McCabe said.

New Jersey businesses and residents should sit up and listen when they hear flooding. After all, the Garden State enjoys a 130-plus mile coast.

Every journey begins with the first step and that also includes a sustainable journey. After you’ve committed to following this course, even a few of the points, you should contact the New Jersey Sustainable Business Registry and inquire about meeting its criteria for joining the list of sustainable small businesses. Contact NJSBinfo@NJSBDC.com. An experienced sustainability consultant will be happy to speak with you in person, on-line, or by phone. You can also find out more about these programs by visiting the Sustainability Consulting page on NJSBDC’s website (http://www.njsbdc.com/sustainability-consulting/).