The Return on Investment (ROI) of Sustainable Business Practices
Not sure why “going green” matters for your business?
If you’ve been running your company the same way forever without any green initiatives, you’re not alone. Maybe you’ve been sticking to what’s been working– even if that means using printed brochures for marketing or skipping the whole recycling thing.
Hey, if your business has remained successful, it makes sense to feel wary of rocking the boat.
Or maybe you’re just starting a new sustainable business and you have NO idea how to incorporate best practices into your eco-friendly plan. That’s understandable, too.
Perhaps the term “sustainability” also just seems way too vague to grasp. Without any proper context, it’s an idea that’s easily ignored.
What exactly does all this mean? And what’s in it for you?
Let’s be honest: Sometimes sustainable messaging feels a bit lofty, like it’s all talk but no proof.
But here’s the thing: Sustainability CAN produce some very straightforward, tangible benefits for businesses in many different ways.
Helping the environment matters, but once you recognize how your business can thrive as a result of green initiatives, you’ll feel more motivated to utilize sustainable business practices.
So even if things are working for your business, making some changes could help, and eco-consciousness can be viewed from a practical lens.
Why not elevate your business from good to great?
Let’s tackle those doubts and explore the real benefits of sustainability for your business. Keep reading to see how easily you can stay informed.
How Can Sustainable Business Practices Reduce Costs?
At first, reducing costs on things such as paper or printer cartridges may not seem like a big deal, but believe it or not, these things can really add up.
Did you know that a business can save on average up to $48,000 per year by not using paper?
WHOA…
Here are some more examples of why sustainability in business matters:
LED energy-efficient lights cost less money and last longer than conventional ones, which can reduce energy usage by up to 80%.
Water-saving devices such as low-flow faucets or dishwashers require less water, which can save thousands of gallons per year.
Using local supply chain companies can ensure a smaller carbon footprint and more streamlined routes.
Think about it this way:
Incandescent light bulbs: 1,752 kWh × $0.13 = $227.76/year
LED bulbs: 263 kWh × $0.13 = $34.19/year
Annual savings: $227.76 - $34.19 = $193.57
Upfront cost of LED: 20 bulbs × $3 = $60
ROI formula: ROI =(AnnualSavings×LifespanYears−UpfrontCost)/UpfrontCost × 100
ROI = [($193.57 × 10 - $60) / $60] × 100 = (1,875.70 / 60) × 100 ≈ 3,126%
Payback period: $60 / $193.57 ≈ 0.31 years ≈ 3.7 months
An ROI of over 3,000%?! Heck yeah.
Sustainable business practices can also decrease tax costs. Companies that engage in recycling and renewable energy could be eligible for Investment Tax Credits (ITC).
Think of these changes as drops in a bucket. They may seem minor individually, but together they can drastically increase savings.
Sustainability often means using fewer natural resources and energy, which is great for your bottom line. Check out my last blog where I highlight 7 ways sustainability can boost your bottom line.
Subscribe to my email list to discover even more ways sustainable practices can minimize your expenses.
How Can Sustainability Increase My Brand Reputation?
Stumped on how you can differentiate your brand from the rest in your industry?
Sometimes a final flourish is all you need to make your brand more memorable. Keep in mind that “sustainability” has become such a buzzword that it can automatically enhance the appeal of your brand.
Once you establish that your brand has a solid belief system aimed at improving the world, people will start to associate your business with good morals and high integrity.
Think about it: If you’re selling organic baby food, people may feel more confident in trusting your brand as healthier and more nutritious. Similarly, a clothing company that uses organic cotton may attract consumers who would rather feel less guilty when shopping for clothes.
Tapping into your audience’s feelings around ethical matters is a powerful tool to capture their interest.
If you’re going to use the word “sustainable” in your branding, be sure to follow through. Customers hate greenwashing and can spot it a mile away.
Strengthening your brand’s reputation is just one way to increase your ROI. This includes customer retention, media coverage, and attracting potential business collaborators.
Take Ben & Jerry’s, for example: in 1988, Ben set out to put one percent of the defense
budget for America towards peaceful projects and activities– the 1% For Peace was born.
Imagine how much ROI your business can generate by adopting a project like this one.
Can Eco-Friendly Government Regulation Work In My Business's Favor?
All businesses must comply with certain governmental laws and regulations. This can be at the local or federal level, depending on the type of business and industry.
This includes environmental guidelines. Such guidelines usually pertain to things like carbon-emission amounts, eco-friendly packaging, or energy efficiency.
This is where sustainable businesses have an advantage because they’re all set to abide by these environmental laws from the get-go.
Businesses that aren’t already set up this way need to scramble to catch up. This could lead to environmental risks and milestone setbacks.
An example of this would be an oil spill (whether intentional or unintentional), which harms marine life. Another example would be purchasing equipment with poor air quality control.
If a business gets audited and isn’t following the rules, it could face fines, penalties, or even be forced to shut down.
Emission Reduction Credits (ERCs) mean you’ve lowered your carbon emissions. These can have real value. You can sell them to other businesses that need to lower or offset their carbon emissions.
Will My Employees Stay More Engaged With Sustainable Business Practices?
People are usually driven by their work when they are invested in the underlying mission. A purpose-driven workplace atmosphere also makes for a more uplifting work environment. It also boosts employee morale and satisfaction.
When your employees feel connected to the company culture, it pays off.
If practicing sustainability is a key element of the company, employees will feel more driven to do their part.
Not only for the cause, but to feel included within the company. They may even feel inclined to bring their ideas to the table, such as staff volunteering events for green causes or opting for more eco-friendly office supplies.
Group engagement is key to propel any unselfish initiative, so creating this kind of dynamic in the office will bring together employees and drive a noble cause.
Happy employees tend to perform better in their roles because of increased confidence and willingness to engage in teamwork. This benefits company productivity and efficiency.
On the flip side, employees who are more withdrawn and unhappy tend not to put as much effort into their tasks, likely stalling or decreasing company growth and proficiency.
Need some extra help with brainstorming how to merge sustainable practices with employee engagement? Subscribe to my email list– I’ve got you covered.
Also, stay tuned for my next blog, where I take a deep dive into this subject.
How Can Thinking Creatively and Remaining Adaptable Boost Business?
Practicing sustainability offers boundless potential. Every day, people are discovering new ways to reduce waste, pollution, and energy use.
While some businesses may believe that sticking to the same routine and operational practices is the ideal goal in terms of convenience, this approach is far from ideal in terms of achieving long-term success.
The great thing about practicing sustainability?
It encourages businesses to think outside the box. It pushes them to be more creative and open to new ideas. These qualities are invaluable for any business to stay afloat, no matter how market trends fluctuate.
Amazon is a great example of adaptability. They started as a book company in 1994 and now they’re one of the largest online retailers in the world.
Without creative thinking and adapting to change, they would have lost the rat race.
How Can Investor Relations Improve My Sustainable Business?
For all of the above reasons, investors love sustainable businesses. Given their expertise in scaling companies, they understand from first-hand experience that sustainable businesses are more resilient and adaptable.
As a result, utilizing investors will ensure long-term stability for each stage of growth for the company. A business that operates sustainably might also have an easier time attaining green grants, thanks to the financial backing of investors.
Embracing sustainability allows businesses to gain more support from investors in furthering their sustainable practices or any other positive strategic goals.
Sometimes businesses can’t get started without an investor, which is why incorporating sustainable practices into your business plan from the start is important. That’s why focusing on your business’s environmental, social, and governance (ESG) factors is crucial to attracting the right partners.
Subscribe to my email list to find out how to get on the investors’ good side through showcasing your commitment to sustainability.
The Payoff Makes the ROI Worth It
Going green can feel a little overwhelming at first, especially if you don’t even know where to begin.
Still, figuring out how to tailor sustainability to your unique business may feel daunting. It would take careful thought and consideration to determine which practices could truly align with your specific operations. It’s not a one-size-fits-all situation.
And yes, purchasing LED lights can cost more than regular ones, and environmental certifications can be pricey.
But as they say, you have to spend money to make money. In the long run, these investments will pay off and strengthen your company’s long-term future.
For example, LED lights may cost more, but they last longer than conventional light bulbs. Environmental certifications can last for years and keep your business in good standing.
The best part?
Even if sustainability isn’t a big focus in your industry, incorporating it could still make your business stand out in a crowded market.
For example, a law firm could showcase its dedication to utilizing sustainable office supplies, even if it does not focus on environmental cases. A jewelry store could produce beautiful accessories with recycled silver and gold. It’s not hard for the public to pick up on a company’s strong ethics.
Incorporating sustainability doesn’t need to be stressful, complicated, or limited in options. The ROI of sustainable business practices is worth it.
Learn more about how your business can benefit from sustainable business practices. Subscribe to my email list here.
What’s Your Next Move to Increase Your Business’s ROI?
Let me know in the comments.
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