Achieving Sustainable Profitability

Achieving Sustainable Profitability

The Year 2020-2021 will be remembered as the year of pandemic, mega-wild-fires, and natural disasters – mainly caused and amplified by climate change. Natural disasters alone caused overall loss of $210 billion last year. However, it will also be known as a year when many corporations moved their sustainability strategy out of their CSR programs and incorporated it as a part of company’s core strategy for long term success. In fact, the number of companies where a Chief Sustainability Officer (CSO) has been appointed increased 228% among fortune 500 companies, from just 29 CSOs in 2011 to 95 CSOs in 2021; 31 of whom were hired in 2020 for the first time. We have travelled a long road since 2004, when Du Pont became the world’s first publicly traded company to appoint a CSO: Linda Fisher.

Year Company Appointed First CSO2

Natural catastrophes

But why should you care for sustainability? In short, because your consumers want it (A growing majority of young consumers not just prefer but are also willing to pay a premium for brands that care about the planet) and it makes financial sense (Sustainability focussed companies showed better financial results, even during 2020). Sustainability also attracts investments - ESG investing is now a $30 trillion market and as per Bloomberg, ESG assets will reach $53 trillion by 2025, one third of global assets under management (AUM).

You cannot improve what you don’t measure, hence the step towards being sustainable is to measure and be open about standard ESR reporting. The next step is look at sustainability as a part of company’s vision and core strategy. It cannot operate as a standalone program but rather be part of company’s fabric and every step right from planning to supply chain. Finally, ESG reporting should be more about ESG results than just ESG goals.