Sustainability – A source of competitive advantage?

Can sustainability help us climb above the rest?

Why is sustainability important?

Over the past decade, sustainability has been rising on people's list of ‘must haves’ before they even think about purchasing a product or service. A report by Mckinsey & Company shows that green products can have a price premium of up to 30% as there is such a demand and still a willingness to buy. This has meant that sustainability within the business environment, whether that is B2B or B2C, is no longer a choice, but a must.

How the view on sustainability has changed?

Originally, as many of us have probably also thought, there was a stigma around converting your processes and practices such as manufacturing or even logistics to become more sustainable and environmentally friendly due to the substantial investment that was needed and the view that this would reduce profits and restrict options for your business, in turn hampering competitiveness. This mindset however has changed, and the view now is that sustainability plans are a source of innovation and make processes more efficient. This suggests that having a good sustainability plan can put you into an advantageous position compared to your competitors and Michael Porter who is often referred to as the father of modern business strategy even suggests that:  

“Strict environmental regulations do not inevitably hinder competitive advantage against rivals; indeed, they often enhance it”

Increasing legislation in and around sustainability for business’ has further ignited a view of the importance of sustainability to change and legislation around sustainability will only grow alongside the UK’s efforts to become net carbon zero by 2050.

Where to start?

“Hope is not a strategy”

Either hoping it will go away or hoping you’ll stumble on a sustainability policy or strategy isn’t going to make it a reality. The first step to making your business more sustainable is to assess where improved sustainability is possible but more importantly if it is viable for your business.

Internal barriers you may encounter

No reach for success comes without challenges and barriers to overcome and becoming a more sustainable business is no different. Luckily, many of these barriers have relatively straightforward answers, all you need is the commitment to overcome them.

The main barrier that needs to be overcome before anything else is often a reluctance to prioritise sustainability, especially at the leadership level. This is because many business leaders have not grasped the importance of sustainability and more importantly the fact that more and more people value this when spending money on products or services. This therefore means that the best way to overcome this barrier is by informing and educating reluctant leaders to ensure sustainability and the value it brings, isn’t underestimated or forgotten.

As supply chains start to look for more transparency and larger businesses are committed to sharing their net zero strategies all businesses will need to have a focus on sustainability to ensure they can not only compete and find a competitive advantage but soon it will be the criteria to even submit a tender.

So, if it’s no longer a choice and now a matter of need then today’s leaders will need to ensure they have communicated the importance across their businesses and teams and that it’s a fundamental part of their ongoing business plan and strategy.  A sustainability plan can allow your business to achieve its short and long-term sustainability objectives however without 100% commitment and buy-in from the wider team it will be a real uphill struggle.

An example of effective sustainability change

Patagonia are an American clothing company that produces outdoor clothing and since the mid 1990’s has heavily focused on using sustainability and social responsibility to gain a competitive advantage. This focus on sustainability began with a simple supply chain change from standard industrial cotton in their products to 100% organic cotton and slowly grew over time to optimising every process that they could to become more sustainable which in turn provided them with a competitive advantage as their sales increased alongside their sustainability efforts.

Since changing their processes in the bid to become one of the most sustainable businesses on the planet, Patagonia have started to focus on education around the state of our current environment over the use of marketing to increase sales, to inform consumers and businesses alike on what they can do to help this cause.

If you are interested in trying to leverage sustainability into a competitive advantage for your business then The Entrepreneur’s Centre is a great place to collaborate and share your thoughts and experiences with peers who are facing similar challenges as part of their business growth journey!

References: 

https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/b2b-growth-is-where-its-green