Terms like CSR, ESG, and concepts like sustainability may seem like buzzy new trends. Still, the practice of factoring socio-environmental implications into business goes back to this history of doing business. Even in biblical times, a religious code of conduct and cultural values drove responsible investing. The Seventh Generation principle of the Haudenosaunee (Iroquois) people of North America, a tradition that predates modern business, reminds us that the choices people and organisations make today should create a sustainable world for seven generations.
Given this logic, it’s quite easy to understand why sustainability is a good thing to do, but it is also a profitable thing to do. Why? Because it drives substantial financial, operational, and reputational benefits that fuel substantial business growth and long-term viability. Financially successful companies that integrate environmental, social, and governance (ESG) priorities into their growth strategies tend to outperform their peers. Let’s examine the ROI behind sustainability, a strategy that not only does good but also does well.
Financially, sustainability opens doors to capital and boosts performance. Investors increasingly favor companies with strong ESG practices, leading to better stock performance and lower borrowing costs through green financing options. By 2025, ESG assets will reach $53 trillion, one-third of all global assets. ESG investing has skyrocketed in recent years, and ESG active funds performed better through COVID-19 than those not involved.
Sustainable products attract eco-conscious consumers, helping brands stand out, tap into premium pricing, and grow in markets that prioritize sustainability. This translates directly into revenue growth and stronger market positioning. Many consumers are even ready to ditch brands that fail to commit to and emphasize sustainability.
Embedding sustainable practices helps companies position themselves as industry leaders. It strengthens stakeholder relationships by building trust with investors, customers, and communities. It drives innovation in products and services by tailoring products to evolving markets. On the talent side, sustainable business practices and culture resonate deeply with employees. Today’s talent wants jobs with sustainable companies. Companies that align with these values attract top talent, keep employees engaged, and improve productivity and retention, making sustainability a key aspect of any business strategy.
Since ESG investing tends to improve risk management, this, coupled with innovation, often increases returns. Sustainability reduces risks and boosts efficiency. It helps companies comply with regulations, build more resilient supply chains, cut energy costs, and optimize resources, all while enhancing operational processes. This has significant implications for the health and beauty industry, which will navigate an increasingly uncertain and volatile supply chain.
Through increasing regulation, the industry is also being held increasingly responsible for its environmental impacts.
Financially, sustainability drives revenue growth, appeals to investors, reduces borrowing costs, and enhances stock value. In the long term, it builds competitive advantage, fosters innovation, and strengthens stakeholder relationships. On the people side, it positions loyal customers an attracts and retains top-tier employees. Operationally, it mitigates risks, ensures regulatory compliance, enhances supply chain resilience, and cuts costs through resource optimization. Antonio Vizcaya-Abdo highlights this ROI well below.
While it may seem easy to write off sustainability as a trendy or greenwashing tactic, when approached authentically, sustainable business practices deliver significant, measurable value, making, and thus should be a crucial component of any corporate strategy. Sustainability goes beyond being good for the planet—companies that incorporate sustainability into their core strategy drive revenue, enhance operations and pave the way for long-term success by futureproofing their company. The ROI on sustainability is undeniable. It’s not just about doing the right thing—it’s about driving financial, operational, and reputational gains that fuel business growth.
Reach out to Fairglow today to see how we can help you boost your ESG strategy.
