What Big Companies Can Teach Small Business Owners About Sustainability
For much of modern corporate life, companies only concerned themselves with protecting the interests of their owners -- and those interests were only measured in financial terms. Anything that wasn’t motivated by or at least justified by the bottom line wasn’t even contemplated. Sustainability efforts fell firmly outside of consideration.
Times have changed. Today, companies embrace many constituencies, most notably their customers and employees. Yet there’s still a prevalent misconception that environmental and sustainability goals are at odds with the bottom line.
The truth is that some of the biggest and most profitable companies in the world have built sustainability into their business practices. What’s more, they’ve discovered that sustainability doesn’t have to come at a cost to owners or shareholders, and it often comes with a PR boost.
Peter Seligmann, former CEO and founder of Conservation International, has worked with companies such as Starbucks, Walmart, Gap, Disney and McDonald’s to improve their sustainable practices. Not only does he believe sustainability efforts don’t hurt profits, but he also says they’ll soon drive them.
“How do we make certain how we produce, how we gather supplies, how we communicate, how we distribute our goods, is done in an open, fair, nonexploitative, enlightened way?” he writes in a blog post for Humanature. “The companies that figure that out are the ones that will flourish.”
The leading companies focused on sustainability have already begun figuring out those challenges, and their experiences offer valuable insights for the rest of us. These are five sustainability lessons you can learn from top corporations:
1. Find vendors with shared values.
Starbucks brewed up record profits last year, in no small part based on its reputation for serving high-quality coffee that’s ethically sourced. Long a commitment of the company, more than 99 percent of its coffee is now ethically sourced.
Starbucks doesn’t have to twist anyone’s arm to produce these beans; it simply partners with vendors already aligned with its vision. This allows the brand to spread the responsibility, minimize its risk and maximize its returns.
2. Partner in research
McDonald’s, which has had sustainability goals on the books since 2014, recently announced a research partnership to study ways to improve sustainability across the U.S. beef supply chain. The company also announced a $4.5 million initiative to test new grazing practices that could actually capture more carbon than is released. The decision comes on top of a 2015 move to cage-free eggs, which prompted copycat moves across the industry.
The company consistently beats profit estimates and has pushed its stock to all-time highs.
3. Bring your employees on board.
The Walt Disney Company is committed to sustainability and conservation across a number of fronts, dating back to its pioneering of nature documentaries with the “True-Life Adventures” series. Today, the company imposes internal carbon prices on its business units, has an aggressive 2020 greenhouse reduction goal and celebrates Earth Day for an entire month.
Disney, which is also renowned for its company culture, has brought the sustainability commitment to the grass roots: its employees. The company encourages its employees to conserve fuel, electricity, water, paper and other resources. It then celebrates the notable achievements of individual employees during “Earth Month” in April, which also includes webinars and other chances to learn how to do more for the environment.
The top-to-bottom approach ensures everyone is working toward the same goals. Meanwhile, the blue chip’s bottom line remains strong, with company profits down only slightly from record highs in 2016.
4. Get angry
Gap Inc. isn’t new to sustainability. The company set its first greenhouse gas reduction target in 2008. It committed to reducing its emissions by 20 percent by 2015 -- a goal it nearly doubled, reducing emissions by almost 37 percent during that time.
So it might seem strange that company CEO Art Peck would publish a letter in 2016 saying, “Frankly, I’m not satisfied with where the apparel industry, including Gap Inc., is today on a variety of social and environmental issues.”
Peck wasn’t just venting. The letter went on to announce a litany of Gap initiatives aimed at improving the environment and labor conditions throughout the company and its supply chain.
5. Accept that you have to start somewhere.
When then-Walmart CEO Lee Scott first announced the company’s sustainability efforts in 2005, he caught some flak from sustainability advocates for not putting firm targets behind them. There was no timeline, but the company went on the record expressing a goal to use 100 percent renewable energy, produce zero waste and sell products that sustain people and the environment.
Walmart continued to refine that commitment and put firm numbers behind it. In 2010, leadership set a goal of cutting 20 million metric tons of greenhouse gas emissions from its global supply chain. By 2015, it had cut 28.2 million tons, in part by doubling the fuel efficiency of its vehicle fleet. The measures saved the company $1 billion in the first five years.
In 2016, the company added 2025 benchmarks to all three of its 2005 goals, the same year it announced surging profits and lower prices.
No going back
Businesses are forward-facing. To succeed, they must meet the needs of today and prepare for the needs of tomorrow. Today’s consumer already wants to purchase sustainably produced products, and that trend is only intensifying. In a 2015 global survey, Nielsen found that 66 percent of people are willing to pay more for a product that’s sustainably produced. That percentage jumped to 72 percent among young people.
Companies would do well to learn from these efforts underway to help lead the way to a more sustainable future in their own industries.