Rick Crawford
Climate change is the greatest economic opportunity of the 21st Century. Smart businesses who position themselves as innovators by improving the environmental performance of their operations and products have everything to gain and little to lose, especially with the growing number of conscious consumers who want to buy products that align with their values. As someone who has helped many companies on their sustainability journey and held multiple roles in the sustainability field over the last ten years doing everything from installing solar panels to helping commercial building product manufacturers market sustainability and now running a sustainability consulting business, the most common question I hear from owners, executives and marketing teams is, “what is the business case for sustainability?” In a nutshell, companies who are credibly and effectively implementing sustainable business practices: mitigate risks, increase competitive advantage & innovation, grow customer loyalty, attract & retain talent and improve financial performance.
Mitigate Risks
Climate change is not only the single greatest economic opportunity of the 21st century, but is also the single greatest threat to fisheries around the world. As a result, companies in the outdoor and fly fishing industries are at a significant risk due to the increases in extreme weather events around the world such as drought, sea level rise and flooding. All of these weather events can wreak havoc on businesses. Just consider what hurricanes and accompanying flooding alone have done to retailers and guides from Florida to Texas over the last few years, and the impact it has on revenue for brands as dealers are forced to cancel their orders as they rebuild, not to mention all of the supply chain disruptions. Businesses that work to reduce their own greenhouse gas emissions, and even go carbon neutral (Patagonia just announced a goal of carbon neutrality by 2025) will be saving their own livelihoods by not contributing to climate change.
Another risk to all businesses is population. As human population continues to grow, so does our demand for natural resources, which is why conserving resources like water is a responsible business decision. Additionally, businesses who rely heavily on water in their manufacturing processes are especially at risk. Conserving water not only saves money, but will likely become a requirement in the decades to come.
The challenge most businesses have is quantifying the risk of climate change and population, but it doesn’t take a climate scientist or economist to figure out that our natural resources are dwindling and our planet is warming. Businesses who choose to do nothing are putting their company’s image, reputation and existence on the line.
Increase Competitive Advantage & Innovation
Sustainability is an excellent way to increase competitive advantage by way of not only differentiating your brand or product, but also a key for driving innovation. For example, I believe that in the next five years the majority of products and apparel we consume will be made from recycled plastic, but smart companies like Flood Tide Co. are getting a first-mover advantage by introducing goods made from recycled plastic. Flood Tide Co. is now making their t-shirts and solar shirts from recycled plastic bottles.
The recent increase in companies using recycled plastic in their products is an excellent example of the Diffusion of Innovation theory that was developed E.M. Rogers and “it originated in communication to explain how, over time, an idea or product gains momentum and diffuses (or spreads) through a specific population or social system. The end result of this diffusion is that people, as part of a social system, adopt a new idea, behavior, or product.” For example, Patagonia started using recycled materials in their products first and are definitely innovators and now we are beginning to see more companies also use recycled materials so I believe we are somewhere in between innovator and early adopter and by 2025, if you aren’t using recycled material in your products you will most definitely be considered a laggard.
With so many brands competing against each other on price, quality and design, sustainability is an excellent way to further differentiate a brand or product. Sustainability is clearly driving innovation that is not only good for the economic bottom line as consumers are increasingly demanding more sustainable products, but is also good for the planet.
Grow Customer Loyalty
Consumers want to buy products that align with their own values. In fact, according to a recent survey by Futerra of 1,000 participants in the US and UK discovered that 88% want brands to be more sustainable.
Image Source: Futerra
Additionally, one of the key performance indicators I use with my clients is measuring their customer loyalty. I can tell you from personal experience that after implementing a sustainability strategy, we always see a significant increase in customer loyalty meaning that same customer buys multiple products instead of being a one-time buyer because the brand is helping them live more sustainable lives. For example, RepYourWater has worked diligently to not only go zero waste to landfill, but have also offset 100% of their greenhouse gas emissions from the warehouse/HQ. Sharing their sustainability journey with their customers through an Annual Sustainability Report has paid off because they know their customers care, and as a result, have seen major increases in customer loyalty.
“I would say the number one value is recruitment and retention. Young people increasingly are only willing to work for companies committed transparently to shared value, and employees remain at companies longer when the companies are aligned with their personal values.”
Rick Ridgeway, Patagonia
Attract & Retain Talent
Consumers aren’t just interested in buying products that align with their values, they also want to work for those companies. Patagonia is probably the best example out there. In Let My People Go Surfing, Yvon Chouinard says they receive thousands of applicants for every job they post because of their stance on the environment. I had an opportunity to meet Patagonia’s VP of Environmental Initiative, Rick Ridgeway and asked him, “aside from minimizing Patagonia’s impact on the environment, what would you say is the greatest business benefit of sustainability?” Ridgeway responded, ” I would say the number one value is recruitment and retention. Young people increasingly are only willing to work for companies committed transparently to shared value, and employees remain at companies longer when the companies are aligned with their personal values.” That pretty much sums it up, but I can also personally attest to the large volume of employment inquiries I receive from people who want to work for a company that is helping to save the planet and I have also witnessed this happen with my clients as new hires come to them because if their environmental stance.
Improve Financial Performance
One of the most common responses I hear from my clients is that they had no idea that improving the environmental performance of their operations and products helped to also improve their financial performance. There are many ways to reduce operational expenses by conserving energy through installing better insulation, LED’s or solar, but that’s not the only way. Many businesses also save money through water conservation measures such as rainwater harvesting or installing plumbing fixtures that conserve water. Some companies have even created new revenue streams by finding buyers for their waste, which keeps those “squandered corporate assets” out of the landfill and makes them more profitable.
“Who knew doing good could have economic upside! We hired Emerger Strategies to conduct a sustainability assessment for Abaco and Bair’s Lodge, and to develop a sustainability strategy. Rick’s sustainable business expertise has not only improved our environmental performance, but has also reduced our operational costs, which you simply can’t beat. I highly recommend Emerger Strategies to any business or lodge, we all have an obligation to do better – Rick helps make it easy.”
Oliver White, Owner, Abaco and Bair’s Lodge
Reducing waste is yet another way to improve environmental and financial performance. In fact, I fished with Avery Gillett, a guide out of Mosquito Lagoon who saved about $800 per year by eliminating single-use plastics from his guiding operation, and Abaco Lodge and Bair’s Lodge Owner, Oliver White kicked plastic at both his lodge’s, which keeps roughly 80,000 water bottles out of the landfill as there is nowhere to recycle them on Abaco and Andros Islands. You can do the math, but kicking plastic has also saved him thousands of dollars and a perfect example of improving environmental and social performance.
Conclusion
In short, businesses who implement sustainable business practices are more profitable and simply perform better than those who don’t. They manage risks better, drive innovation, benefit from loyal customers, attract and retain talent, all while improving their environmental performance. At the end of the day, the greatest brands in the world do one thing well: cause an emotional response. In the case of sustainability, it’s a positive emotional response that makes their customer feel good.
What’s not to like?