We live in a time of exponential change. Whether leading through values or reacting to pressures, companies and their leaders must respond to the ever-increasing challenges of our times. 

Forces such as crowd sourcing, the Internet of Things, rising energy costs, carbon regulation, demographic trends and shifting consumer demands are impacting how products and services are designed, manufactured, delivered and disposed of.  These forces are driving a wholesale shift in the way businesses must plan, operate, engage with employees and stakeholders and create value. Business as usual is no longer an option.  The good news: shifting to a triple-bottom-line strategy is good for business.

The advantages of sustainability 

Sustainability — the ability to perform well over the long term through a business model that addresses people, the planet and profits —is becoming a core strategy for the world’s most forward-thinking companies. By thriving and working holistically through rapid change, these leaders are redefining business—and reaping the benefits. The six key benefits of adopting sustainability are:

  1. Increased revenue and market share.
  2. Enhanced brand value and reputation.
  3. Reduced risk and easier financing.
  4. Improved relations with external stakeholders and the communities who grant social license to operate.
  5. Easier recruiting, higher retention and increased productivity of people.
  6. Reduced manufacturing and site operation costs.

In his ground-breaking book The Sustainability Advantage, author Bob Willard estimates that embedding sustainability principles across a company’s operations can lead to a 30-40% improvement in the bottom line.

Short-term benefits include reduced material, energy and waste disposal costs. Long-term benefits include enhanced brand value and reputation, an engaged and productive work force, new product lines, reduced regulatory risk, enduring license to operate and greater resiliency in the face of change.

The 2013 UN Global Compact-Accenture Study on Sustainability surveyed 1,000 global CEOs from 27 industries across 103 countries and found the following: 

  • 93% reported sustainability as key to the success of their business
  • 76% believe that embedding sustainability into core business will drive revenue growth and new opportunities
  • 63% expect sustainability to transform their business within five years

Sustainability’s effect on maximizing human capital

Let’s zoom in on how sustainability contributes to maximizing the potential of your firm’s human capital in three areas:

  • Ability to attract new employees, particularly millenials
  • Ability to retain employees
  • Employee productivity

There’s a growing body of evidence that points to the positive effect that sustainability has on employee productivity. One example –  a major study of over 5,000 French firms – found that those who had adopted environmental standards enjoyed labor productivity 16% – 21% greater than companies that had not.  The productivity increase was attributed to three factors:

  1. Implementing environmental standards requires an investment in training employees which tends to lift productivity.
  2. Environmental management projects and processes often involve cross-functional teams and require collaboration of employees at different levels and within different departments thereby breaking down silos.  This fosters increased communication among workers with diverse capabilities which can lead to knowledge transfer and innovation resulting in improved productivity.
  3. Finally, enhanced interpersonal relations can lead to a more positive work environment bringing increased productivity.

A landmark 2015 report by IO Sustainability and Babson College entitlted The ROI Project  details a number of HR benefits from sustainability, also known as Corporate Responsibility (CR). The chapter on HR benefits commences with the following statements from two articles.  The first is from an article by J. Meister that appeared in Forbes:

“…[C]orporate social responsibility…has quickly become a crucial part of any large company’s long-term strategy – not just in marketing, but in recruiting, too: …employees now want more from their employer than a paycheck. They want a sense of pride and fulfillment from their work, a purpose and importantly a companies whose values match their own.”

In a paper by V.C. Burbano published by the UCLA Anderson School of Management:

Research finds that strong corporate responsibility performance increases the commitment, affinity, and engagement of employees. This in turn enhances job performance, increases productivity, reduces turnover, lowers absenteeism, and even reduces the incidence of employee corruption.

The report’s authors looked at over 300 case studies.  Here are the key findings:

  • Productivity can increase up to 13%.
  • Reduces the annual employee turnover rate over time by 25-50% and the annual quit rate by 3-3.5%.
  • 71% of Americans want to work for a company whose CEO is actively involved in corporate responsibility and/or environmental issues.

Given that millenials will comprise 50% of the workforce by 2020, the following findings specific to their generation are of particular interest:

  • 72% said a job where “I can make an impact” was important to their happiness.
  • 45% would take a pay cut for a job that makes social or environmental impact.
  • 80% want to work for a company that cares about how it impacts and contributes to society. Over half would refuse to work for an irresponsible corporation.
  • 3 in 4 believe corporations should create economic value for society by addressing society’s needs.

Adopting a comprehensive sustainability strategy can deliver major bottom line benefits in attracting, retaining and bringing out the best in your people.

Contact us to learn more. 

Written by Dr. Mark Pezarro, Executive Coach and Business Case Advisor