Thursday, July 11, 2024

The Green Blueprint: Using Sustainability Reports to Architect Business Development Success 

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A sustainability report is one of the many tools available to an organization to communicate its performance on non-financial aspects of the business; environment, social and governance (ESG). Globally, organizations are warming up to sustainability reporting, here’s how they can use it as a tool for business development success.

Governments everywhere are under increasing pressure to pass laws to mitigate the effects of climate change. Whether it’s banning single- use plastics or capping the amount of carbon emissions a company can produce, new regulations ordinarily have an impact on business. Non-compliance often results in penalties and fines, to say nothing of the damage to your company’s reputation. Sustainability reports ensure that organizations are compliant with regulations and standards. This not only assists organizations to mainstream disclosure and transparency but also enhance product innovations

Customers preference are strongly shifting in favor of sustainability. They want to know whether you treat employees well, source raw materials ethically, the packaging is environment friendly and the company’s efforts towards a safer and clean environment. They are also getting smarter especially when it comes to green washing. In order to win customers trust, don’t just talk the talk, walk it with a transparency, fairness and disclosures in line with your sustainability roadmap. This way a company can boosts customer loyalty and attract investors without splurging on marketing.

A sustainability report makes a company attractive to investors. Investing in sustainability shows that the company is looking to manage its long-term risks, making it more attractive to investors. SMEs in Africa should embrace reporting with the current increase in demand for sustainability reports as a prerequisite by investors. They should not shy away from reporting for lacking noteworthy efforts towards sustainability but use reporting as an avenue to elaborate a good strategy that will lure investors. SMEs should also ensure they report in line with their target investor standards, this way they will win their confidence. Consultants can effectively guide SMEs on how to implement this. A vital aspect of green finance is the disclosure of environmental impacts of business operations, green initiatives, and environmental risk management practices. This is because institutions that offer green financing require a commitment by the borrower that the funds will be channeled towards green projects. Business entities can only therefore use sustainability reports to best show commitment to investors.

In addition to traditional risks, modern businesses increasingly face environmental and social risks which manifest themselves in the long run and are in most cases outside the organizations’ control whereas they affect business. Managing such risks therefore requires making investment decisions in advance to enable capacity building and the development of adaptive strategies. A sustainability report outlines the risks a company is bound to face through the gaps identified and spells out the mitigation measures. It also helps the company on being more transparent about its impact thereby reducing the reputational risks associated with its operations including enhancing its social operating license.

You can’t develop an efficient business model if you are still trapped in avoidable expenses. Fortunately, with a sustainability report, it’s easy to point out areas a company can save costs on and develop adaptive strategies. The consumption of electricity in a manufacturing plant for instance might show an upward trend in the reports, this will raise alarm to the management as it raises operational costs. Hence prompting them to evaluate sustainable energy solutions such solar and bioenergy. In the jaws of an economic depression, the plant will still manage to keep its running cost low and direct the savings to business development projects. For other organizations, the report’s KPIs might indicate poor employee retention rate. This helps the organization map out the root causes and appropriately make amendments to enhance employee retention which ensures smooth running of the business.

The modern workforce wishes to work for companies that share their values and ethos. An employment relationship based on shared values is a fruitful one. Employees are growingly interested in how organizations manage their emissions and other sustainability aspects in business. Everyone wants to contribute towards a sustainable future thus evidence about emission reductions, employee welfare and respecting human rights in the reports will work as an effective employee motivation tool. By publishing sustainability reports, an organization builds its credibility as a socially and environmentally responsible company which makes it attractive to the best talent in the industry. With the best talent, the business is set for an upward trend.

In light of this, Businesses should treat sustainability as a critical part of the overall corporate reporting strategy as it is a proven tool for business development success.

 

Dr. Edward Mungai
Dr. Edward Mungaihttp://www.edwardmungai.com/
The writer, Dr. Edward Mungai, is a global sustainability expert. He is the Lead Consultant and Partner at Impact Africa Consulting Ltd (IACL), a leading sustainability and strategy advisory in Africa. He is also the Chief Editor at Africa Sustainability Matters. He can be contacted via mailto:edward@edwardmungai.com

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