Sustainability and your bottom line: More related than you might think
When I started my career in the late 90s doing environmental impact assessments for pulp mills, mines and hydroelectric projects in Indonesia and Canada, I was fascinated by the importance of economic development.
People need jobs. They also need things to live, work and go about their everyday lives. And making and selling these creates jobs. How can we do this in a way that protects the environment and our communities?
Almost 25 years later—all spent in the sustainability space—I can say without a doubt that sustainability makes good business sense.
What is sustainability?
Sustainability is economic development that is socially inclusive and environmentally responsible. It’s an approach to business that balances economic, social and environmental components.
Sustainability is probably something you're already doing without thinking about it.
If you are meeting an economic need and contributing to the vitality of your community, that’s sustainability.
If you are providing good quality jobs to employees of different backgrounds, treating them well and paying them fairly, that’s social value and it’s a contribution to sustainability.
If you reduce waste, conserve water, or use less energy in your business, that’s environmental responsibility and it’s also sustainability.
Sustainability is not another item on your to-do list. It is an incredible opportunity to lead and differentiate your business.
Environmental leaders generate better financial performance
It’s not just me saying it. One of the most important findings in a 2021 BDC study on environmental practices was that businesses that are more advanced in adopting green practices enjoy better financial performance.
Environmental action is just one part of sustainability, but it shows that there is no contradiction between earning profits and building a sustainable business. In fact, it’s usually the opposite.
Graphic 1: Financial performance by environmental profile
Source: Ratté, Sylvie. A Transformation in Progress: How Canadian Entrepreneurs Are Taking on the Environmental Challenge (Montreal: BDC, 2021), 13.
Business benefits of sustainability
Sustainability is good business because, at its core, it comes down to considering the needs of all your stakeholders—your employees, customers, suppliers, partners, and investors. When you do that, you build a sustainable business, and you also maximize your chances for financial success.
Happy customers
People increasingly want to buy from companies that are good corporate citizens.
For consumer businesses, sustainable products are a marker of premium quality. Young consumers are also abandoning brands if these brands can’t answer basic questions such as:
- Where is this food from?
- What kind of packaging do you use?
- How do you treat your employees?
Socially responsible companies provide answers to these questions, so customers stick with them, buy more and pay more for what they buy.
If you supply to large corporations, you’ve probably noticed that many started using ESG (Environmental, Social and Governance) questionnaires to qualify other businesses as suppliers. You need to make sure you can answer those questions too if you plan on selling to these companies.
Magnet for job seekers
A recent IBM survey showed that one in three people who changed jobs in the last year accepted a lower salary to work for a more sustainable company.
In a very competitive job market, all things being equal, people are going to choose to work for the company that they feel proud to talk about at the dinner table. You need to make sure your company is THAT company. This will mean less hiring and onboarding, and happier employees.
Attractive for bankers and investors
Loyal customers and happy employees make your company attractive for bankers and investors. From a risk perspective, they want to know that you're mitigating all potential business risks before lending you money. Are you providing something that’s in demand? Are you treating your employees well? Are you keeping track of and mitigating your energy use and waste?
In short, employees want to work for, customers want to buy from, and investors want to invest in sustainable companies; companies that are a force for good.
Simple ways to get started with sustainability
Many of our clients are willing to up their game when it comes to sustainability, but they are also trying to figure out how to take what has been designed for much larger companies and make it work for smaller businesses. But what works on Bay Street does not necessarily work on Main Street.
If you run an SME, here are some basic things you can do to make your business more sustainable and gain the benefits that come with this.
Measure your current impact
One place to start is to take a free B Impact Assessment, which measures:
- How you run your company
- How you treat your workers
- How you interact with the community
- How you manage your environmental impact
- Whether or not what you sell has an inherent positive benefit
Measuring what you already do is not just a great way to prioritize areas for improvement, it can also pave the way to start talking about it publicly and letting stakeholders know that their needs are at the core of your business.
Make your workspaces energy efficient
If you haven't already done it, replace all the old-fashioned type of lighting with highly efficient LEDs.
When it's time to upgrade your building and your facilities, talk to someone who can advise you on the best windows, doors, heating, and cooling systems.
Take a look at transportation
If you're a manufacturer, a distributor or if you operate a fleet of trucks, have a look at your fuel consumption. If you can afford it and you want to go hybrid, that’s great, but you can also ask your drivers to adopt fuel-efficient driving techniques.
Reduce waste
One of my favourite quotes comes from one of BDC’s clients—Peter Olorundimu, owner of Calgary-based Harvest Recycling, a company that collects waste from companies such as 7-Eleven, Starbucks Coffee and Tim Hortons and takes it to the appropriate disposal sites.
“Often by making minor changes, like putting in recycling bins for plastics, a lot of material can be diverted from the landfill. It’s good for the environment, and businesses can save money,” he says.
A waste assessment and audit can be a good way to start reducing the amount of waste you produce and can have a really positive impact on your bottom line.
Treat your people right
Are you providing good working conditions? Decent pay? A good work-life balance? That’s a first step.
Then make sure your workforce represents diverse ways of thinking, which usually means people from different backgrounds, genders and ages. Create an inclusive workspace where all your employees feel safe, welcome and valued.
House of Cool—an animation studio in Toronto and a BDC client—is striving to build a diverse team in an “industry that has been a boys’ club for a long time.” First, they reached gender parity and are now looking at how they can make their team even more diverse. The owners of this successful Toronto-based studio see diversity as not only the right thing to do, but also a powerful business asset.
BDC can help your sustainability efforts
As Canada’s development bank, we aim to help business owners build more sustainable businesses. We are active in the cleantech space and committed to being net zero in our operations by 2025.
We recognize not everyone is starting from the same place. Systemic barriers, bias, and inequality pose hurdles to many entrepreneurs. Every day we work to empower entrepreneurs and provide access to the financing and resources they need to succeed.
We are building a roster of small business tools and advice in our bdc.ca sustainability section.
And, most importantly, we are on this journey with you. We just created our first corporate sustainability strategy to guide our actions. Let’s work together to build sustainable businesses across the country that are good for our economy, our communities, and our planet.