Why being environmentally responsible is a necessity for successful business

Whilst we are all well aware of the need to try and be green, reuse, recycle etc., it’s often easier to agree in principle than actually commit to changing your lifestyle. Who among us isn’t guilty of throwing a plastic container in the rubbish instead of the recycling because it was easier? We’re all busy and pretty sure that the planet can survive one more little piece of plastic.

This lax attitude to climate change in your personal life is between you and your conscience. However, when it comes to business, neglecting the environment can not only end up costing the planet but also your business’ bottom-line. Let me explain why:

Increase your financial performance and market value

A piece of recent research examined the reaction of the market to businesses environmental acts, interestingly; only two actions resulted in a significant positive market reaction. Both donating to environmental causes and becoming ISO 14001 certified resulted in business share prices rising. An ISO 14001 certification demonstrates a business has implemented an Environmental Management System (EMS), the positive market reaction was theorised to be due to the certification being internationally recognised and being a trade prerequisite.

Studies have also established there is a robust relationship between environmental responsibility and monetary performance of a business – improved environmental performance can lead to subsequent financial performance. Furthermore, another study found that proactive environmental management added to the competitiveness of the firm and this positively influenced a business’ financial performance. Essentially, if a company demonstrates its dedication to green issues (in the right way) it can lead to financial gains.

Cutting Costs

Often business will be wasting money because they are not utilising their resources efficiently - being wasteful and energy inefficient can be very costly to business. For instance a government report estimated that overall businesses could save an estimated £23 billion per year by improving their energy and water use and reducing waste. This can be particularly true for manufacturing industries, for example a 2012 study looked at the longitudinal effect of adopting an EMS within the fashion and textile industry. The results found that an EMS helped to increase profits, mostly due to cost efficiency improvements.

Be the type of business people want to work for

A recent article described how Gen Y’s attitude to work is more focused on a business’s values. The majority of students (60%) said they would rather have lower pay and work for an organisation in line with their values. Almost 75% said they saw climate change as a bigger threat to society than terrorism or war and almost all those questioned felt it was their main responsibility to “leave the world in better shape than their parents did”. Furthermore, the vast majority of students (84%) said when it comes to their careers they will look for socially responsible employment.

To make your business attractive to future young employees, it would be wise to take on board what appeals to them and it seems that having a socially and environmentally responsible business is a key to this. To continually grow your business it is important to bring in the new talented individuals – be the type of company someone wants to work for- making it more competitive and desirable to work for you. It isn’t just enough to pay well anymore, this new, up and coming generation has different priorities.

Get Guaranteed Return on Investment

There are various government schemes which offer guaranteed ROI, when investing in sustainable energy resources such as solar panels or ground source heat pumps. Examples of these schemes are the Feed-in-Tariffs, the Renewable Heat Incentive and the Rural Community Energy Fund. Although it should be noted that these are long term investments with money returned in regularly payments over an extended period (such as 20 years). However, these schemes provide a great opportunity to invest in a local community, helping to demonstrate social as well as environmental responsibility. An example of a company taking advantage of renewable energy government schemes and helping to power local communities with green energy is Brixton Energy.

If you don’t ensure your business is being environmentally responsible then you are most likely making your company less appealing to both potential employees and stakeholders, bypassing potential investments that guarantee a return and probably overspending due to not utilizing resources efficiently. So, really the question is, can your business really afford to not go green?