Why becoming a sustainable business will help your bottom line

Becoming a sustainable business

There are many reasons why a business would want to become sustainable. 

It may be because of regulations dictating business sustainability in the places where it operates. It could be to avail the several benefits that being sustainable can bring to the business. Or it could be driven by a feeling of moral obligation among the leadership and owners.

Whatever the reason may be, there are several benefits that your business will gain through your decision to become sustainable. Benefits that not only improve the perception of your business but can also be a source of competitive advantage. 

These benefits have to contribute to achieving your business goals. And if they do not, it might call for you to reconsider your goals to include sustainable action.

Improving the bottom line with business sustainability

The bottom line or the last line in the company’s income statement is an indicator of its financial strength. It is the net income of a business after all expenses have been deducted from the revenues.

There are different ways a business can try to increase its bottom line. 

It can try and increase the revenue (top line) by driving greater sales. Or it could try and reduce the costs incurred. Either way, improving the bottom line is a surefire method of making your business more attractive to investors. 

It can also be a source of competitive advantage. A business with a larger figure as its bottom line will have greater freedom to reinvest and improve itself. A more profitable business is at a position of strength compared to others that are not as profitable.

But how does sustainability help with the bottom line?

Business sustainability is usually seen as a top-line strategy that can help increase revenue, rather than something that’ll help reduce costs. Bottom-line activities or measures to increase net profits tend to involve the reduction of expenses. And it will benefit your business to know how you can use sustainability to improve your bottom line.

The Triple Bottom Line

“The triple bottom line is a business concept that posits firms should commit to measuring their social and environmental impact – in addition to their financial performance – rather than solely focusing on generating profit, or the standard bottom line.” – Harvard Business School

It encourages businesses to pay attention to issues beyond the size of their net profit figures. The triple bottom line is constituted by its ‘3 Ps’. Three factors that should form the bottom line of a business that cares about its sustainability.

In other words, the triple bottom line is the path forward for your business if you aim for ESG integration.

Profit

Profit is the primary motive for all businesses. It is what drives investments from owners, shareholders and other lenders into businesses. It drives the gains made by those who invest capital into a business.

And profits are a priority for any business that values its owners and investors as prominent stakeholders. 

This is where the goals of most businesses used to end. Everything else was secondary to the goal of making profits. But that should no longer be the case. And your business that integrates ESG and sustainability into its activities now has reason to care about more than just profits.

People

This is what drives the social aspects of a business’s ESG integration.

When people and the impact that a business will have on people form part of the bottom line, it has a strong reason to care about its social impacts and issues. Fair practices in employment and managing the employees is an important issue. So is the way the business manages the impacts that it may have on other stakeholders such as customers and community members.

It also means that businesses have to consider its impact on all their stakeholders rather than just the investors and owners. It is no longer just a matter of maximising profits and thereby returns for the investors. 

There is greater recognition of the several other stakeholders of a business. And steps being taken to keep their interests at heart as well.

Planet

Businesses are responsible for much of the adverse effects that we see on the planet today. This is especially true for businesses in the energy sector.

It has been found that 100 companies in the energy industry are responsible for around 71% of all industrial emissions.

This is also why businesses have the most power when it comes to saving the planet from further damage. Having the planet form part of the bottom line ensures the Environmental aspect of ESG is at the forefront of your business’s priorities.

Why you should implement a triple bottom line in your sustainable business

Adopting the triple bottom line is necessary for any business that wishes to become sustainable.

It ensures that the priorities of the business lie in other important factors besides simple profits. It drives your business to focus on social and environmental factors as priorities rather than afterthoughts. And the triple bottom line helps you improve your bottom line with business sustainability.

And thus, it helps make your business sustainable. 

Adopting the triple bottom line now would mean you are at the front line of businesses becoming sustainable. All businesses will have to integrate sustainability in some form within the next few years as stronger restrictions and regulations arise.

But adopting sustainability in your business now and making it a priority with the triple bottom line means you will be a market leader. This also means you will be better prepared for how business evolves in the future. You avoid the risks that come with being unsustainable and gain benefits that help your competitive strength by implementing sustainability in your business.

Communicating sustainability and triple bottom line

Communication is key to any business that is integrating sustainability into its strategies and operations. Being transparent and honest in your communication will be appreciated by all your stakeholders. 

The investors will demand structured communication of your sustainability data. This is done through annual reports, where your priorities are outlined and the progress towards achieving them are reported.

There are many organisations that offer guidelines to include sustainability information as part of your annual reports. Some organisations even recommend preparing a dedicated sustainability report to represent its importance to your business.

Other stakeholders such as customers and employees will demand proper communication of your sustainability efforts as well. This need not be as structured as what you present to your investors. Customers can be informed through articles and other forms of shorter content that appears on your digital channels.

You can use your sustainability communication to drive engagement from the stakeholders. Bring them along for your journey towards business sustainability. And engage on channels such as social media.

Once the decision has been made to adopt a triple bottom line in your business, you should begin communicating it to your stakeholders. Let them know that your priorities have evolved. And make them aware of what you have done to achieve those priorities.

How SUSTINARO can help with communicating sustainability

Your business will likely have its own marketing teams that engage in your communication efforts. You will likely also have finance professionals who will make sense of the numbers in sustainability issues. You could even have a dedicated person or team to drive your corporate social responsibility and sustainability efforts.

And there is much that you can achieve with these teams in place.

But strategising, planning and implementing sustainability communication is a new challenge for most businesses. And to start, we strongly advise engaging a firm that has the expertise in this domain.

SUSTINARO focuses on sustainability communication and how you can reach your stakeholders through your sustainability messages. Connect with us today, and bring your sustainability communication to the next level.