Good Business is Being Good to the Environment
Updated: Nov 26, 2021
For a couple of decades, businesses have nodded to their environmental responsibilities with their various Corporate & Social Responsibility (CSR) programmes. Many boards have made themselves feel better by ‘giving something back’ and have wanted to appear to their customers that they have purpose aside from benefiting their shareholders. But from a legal standpoint most businesses are constituted purely to benefit their owners and shareholders.
A definition of success for directors of companies, large and small, has been profitability, with no measure or responsibility for the damage they may have done environmentally or socially. Indeed, both planet and people have been viewed as commodities from which to extract resources and time to add to the large profits already being made. Indeed, the very phrase ‘giving something back’ implies they have taken things that weren’t theirs to take in the first place. This is close to the truth.
Behaviour like this is no longer good business and companies failing to respect the environment are already feeling the pinch as their customers, particularly in the post-Covid world, expect better. In fact, a research paper by the Capgemini Research Institute in 2020 (How Sustainability is Fundamentally Changing Consumer Preferences) showed that businesses are lagging behind what consumers view as ‘good’ in sustainability. In an extensive survey including 7,500 consumers and 750 businesses, Capgemini found that,
“A significant majority of consumers (79%) are changing their purchase preferences based on sustainability. This contrasts sharply with the 36% of organisations who believe consumers are willing to make this change in their choices/preferences based on social or environmental impact. Such a gap represents a risk of ~6% of brands and retailers’ revenue if unaddressed.”
In other words, companies are not as good environmentally as consumers want them to be and customers are increasingly voting with their feet. To put it more starkly, if companies don’t get their act together in this area, they will haemorrhage revenue and may not exist in years to come. It is no longer good enough to tag on some CSR or ‘give something back’ from time to time; sustainability and being good for the environment must be a vital part of our company’s strategies. Being good for the planet needs to be completely embedded within the cultural DNA of our organisations.
When our company, Cotswold Fayre Ltd, became a B Corp back in 2015, this is exactly what we started to do. In addition to passing a rigorous certification process to measure how good we were for the world; we changed our Company Articles. Legally we no longer exist purely to benefit our shareholders, but we now exist to benefit all stakeholders; these include our workers, the local community, our supply chain and, of course, the environment and planet. Around 650 other companies in the UK have done exactly the same.
Last week I had a productive meeting with a government minister as over 700 companies try to get the Better Business Act through the UK Parliament. This act would ensure that businesses could no longer act for profits resulting in social or environment damage and that all businesses would have to produce an Impact Report each year telling the world what they had done to improve it according to the UN SDGs.
As a B Corp, we produce an Impact Report each year and send it to our stakeholders and over the past two years this 20-page document has become one of our best sales tools. Customers really do increasingly want to deal with good companies that are doing their utmost for positive impact. As a company we have secured two large chunks of business within the last year worth several million pounds where our position and action on environment issues was a significant factor for those making the buying decisions.
With around half the workforce now being Gen X or Gen Y, companies that are taking radical steps forward on the environment will also attract the best young talent in the employee pool. These younger generations want to work for companies that are making a difference and are motivated to make a difference in this area. We have also seen this during the last two years during which we have taken on over 60 new employees, many of whom are extremely motivated to make a difference. (It never was very motivating to go to work to make rich shareholders even richer.)
In August 2019, as part of the longer term aim to become net zero for carbon by 2030 (20 years earlier than the UK government) we became carbon neutral. We did this by reducing our carbon emissions by 46% and offsetting the rest. As a distribution company delivering around 1.5 million cases of product a year, this was a large offset bill which will reduce as we completely eliminate carbon from our supply chain. Yes, it is true that being better for the environment does cost money, but in 2021, with consumers making more better choices this extra money spent will be recouped in many cases. It certainly has for us; in those two year our revenues increased by more than 50% and our profits more than doubled.
When companies put people and planet before profits, maybe paradoxically for some, extra profits follow. That is not to say that company directors can secretly only really want more profits and look more sustainable. When companies do this, consumers, workers, and everyone else involved with a company will detect this on their BS radar. However, if genuinely compassionate leaders putting others and the planet before their own needs for material wealth and status come to the fore, we will have better, more successful businesses and may manage to avert the climate emergency disaster that is surely coming otherwise.
Better business is not just better for the planet but profits too.
Paul Hargreaves is CEO of Cotswold Fayre a UK speciality food wholesaler and Flourish, a new foodhall and kitchen. He is also an ambassador for the B Corp movement and has written two books on the new way of doing business, Forces for Good & The Fourth Bottom Line.