by James Thorniley
We have seen over the past few years that every business has needed its own tech story. From food producers to cosmetic brands, every organisation has had to prove its tech credentials. Failure to have a clear and strong message on tech would see businesses lose out on investment, staff, and customers. Now in 2021, the same is true of sustainability and the environment as we all become increasingly aware of our impact on the planet.
The new vote winner
Raising awareness towards environmental issues that are impacting our planet are already dominating the agenda in world politics. During the past few elections alone, we have seen sustainability and environmental protection policy become key issues and battlegrounds. For instance, during the last UK General Election, the Conservative Party put a clear focus on reducing carbon emissions. In the US too during November’s election, President-elect Joe Biden put the environment and green issues high on his agenda, pledging an investment of $2 trillion in clean energy and a commitment for 100% emissions-free power by 2035. We are also seeing a similar trend in the EU and Asia. In Europe, the EU launched the Green Public Procurement initiative and China has committed to being carbon neutral by 2060. Achieving these goals will undoubtedly require changes, with the arrival of new policies, regulations, and financial penalties being brought in for businesses that fall foul.
This can sound scary to business leaders. However, the environmental and sustainable awareness that politicians are reacting to is one that businesses equally need to be focused on. The science is clear that climate change is happening, and it threatens all of us. Now though, there is a heightened realisation. Pew Research data from the 2020 US election found that the environment was a very important issue to 42% of voters. It may have taken time to happen, but the need to become sustainable has firmly broken through to being a top political issue and vote winner.
Going green is good for business
It is not just the ballot box where sustainability votes are being cast either. Consumers are voting with their wallets too. In the consumer space, we are seeing brands that have an authentic, clear message around sustainability are winning customers, particularly in the highly sort after millennial and Gen Z age profiles. Research from McKinsey has found that these two profiles are increasingly keen to buy from businesses that communicate their sustainable message. Buying products from sustainable brands has become a status symbol, that consumer brands should be tapping into if they are to grow their customer base.
It is a similar story in the B2B space too. Increasingly, enterprises are looking to work with suppliers that have proven sustainable credentials. With industries such as fashion and construction under increasing regulatory pressure to operate sustainably, there is a natural desire to pick suppliers that have a proven track record of operating in an environmentally friendly way. Besides, selecting suppliers who are clear on sustainability reduces the risk of reputational damage now and in the future. In much the same way that we have seen in the cybersecurity sector, businesses that select suppliers who fall short in providing adequate protection and taking the necessary steps, leave themselves open for criticism. To counter this, suppliers are going to come under extra scrutiny for their sustainable credentials during the RFP phase. This will also become another hurdle to clear with procurement departments too. Inevitably, failing to properly prepare for the environmental checks that businesses will carry out at this stage will lead to delays and possible exclusion from bids.
Similar hold-ups can also be expected for those going through investment rounds or looking at completing an M&A. In some cases, failing to have a clear position on sustainability will mean that some investors will simply overlook a business as it does not fit their criteria. Those that do successfully proceed to the due diligence phase may well experience delays as their position on sustainability is reviewed and interrogated. While M&A levels in the UK fell in 2020, there has been an increase in sustainable investing. In the US for example, over $17 trillion is now invested in sustainable assets – a growth of 42% since 2018. As many businesses look for investment to power their growth, failing to have a clear sustainable position will be seen in the same way as lacking a tech story.
Sustainability attracts talent
The sustainability story is also a key deciding factor for new hires and employees too. While consumers increasingly want to buy from sustainable brands, they also want to work for them too. Research from Deloitte found that the environment is the number one concern from millennials and Gen Z, being rated higher than unemployment, economic growth, and crime prevention. Businesses looking to increase their workforce and reduce staff churn need to be clear on their sustainability position if they are to ensure employees see them acting in line with their primary concern. By lacking a clear message or worst not having one at all, can lead to bigger issues than increased staff churn too. Employees are not afraid to speak out if they feel a business has not upheld the right values. We saw this last year with employees walking out of businesses as part of the Black Lives Matter movement. It is not a question of being on trend either, in 2021 businesses that are vague or unambiguous in their position on the environment and sustainability will struggle to build and maintain a strong workforce.
2020 was a big year for businesses, and 2021 will be too. No business or organisation can continue to overlook its sustainability position. From startups to scale-ups and through to multinational enterprises, this year every business needs to get its story straight.