Why UK businesses are embracing corporate sustainability

Caring for the environment and green living have become a priority for the general public, so it’s no surprise that businesses have joined the drive towards a sustainable economy too.

Corporate or business sustainability places environmental and social responsibility at the core of organisational values, taking a proactive approach towards minimising ecological impact, increasing social well-being, and ensuring long-term viability.

Legislation has played a pivotal role in driving this shift. The UK Government’s plan to achieve carbon net zero by 2050 aims to produce a new green industrial revolution, promising to create and support up to 250,000 highly skilled green jobs by 2030. In this new sustainability-focus environment, companies are held accountable for their carbon emissions, waste management, and ethical sourcing of materials.

However, the reasons that UK businesses are embracing corporate sustainability go beyond simply improving their reputation and obeying the law.

 

Why are businesses interested in sustainability?

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There are many, often overlapping reasons why businesses are concentrating more on sustainability in 2023. Here are the key factors:

  Increased awareness of environmental issues

Awareness of environmental issues and the difference we can all make in protecting that environment has seen a steady and significant increase over the last few years. Whether it’s climate change, deforestation, damage caused by the use of fossil fuels, or resource depletion, it’s difficult to be ignorant of the challenges that our planet faces. This heightened awareness has put pressure on businesses to address their environmental impact and adopt sustainable practices.

  Consumer demand and investor pressure

Much of that pressure has come from consumers. More and more, consumers are prioritising sustainability when deciding which products and services to buy. They are more likely to buy from businesses that demonstrate a commitment to environmental and social responsibility. As a result, companies are recognizing the need to align their strategies with consumer values to remain competitive and retain customer loyalty.

Businesses aren’t only listening to their customers. Investors are increasingly including environmental factors in their investment decisions. Sustainability performance is seen as an indicator of long-term business viability and risk management. To attract and retain investors, companies are expected to disclose their green practices and demonstrate a commitment to sustainability.

  Regulatory and legal requirements

The UK Environment Act 2021 introduced new powers to improve air quality, restore natural habitats, increase biodiversity, reduce waste, and make better use of resources. The act is designed to play a key role in the way businesses manage and control their environmental impact.

The Companies Act 2006 requires that all UK quoted companies report on greenhouse gas emissions in their annual directors report, but this requirement may be extended to report on further environmental areas.

New rules published or likely to be introduced to UK legislation include the disclosure of environmental impact by certain large UK businesses and reporting on the type of packaging businesses use and supply to customers.

  Cost savings

There’s increasing evidence that sustainable practices can lead to cost savings for businesses. Research conducted by Defra (Department for Environment, Food & Rural Affairs) concluded that UK businesses could save over £20 billion each year by embracing sustainable practices. The biggest portion of that saving would be created by using raw materials more efficiently and reducing the production of waste. Energy and water efficiency would make up the remaining saving.

  Reputation and brand enhancement

Embracing sustainability can also enhance a company’s reputation and brand image. Demonstrating a green commitment can attract positive media coverage, improve customer perception, and attract investors who are interested in sustainability.

With a growing interest in environmental protection, a company that embraces sustainability is also more likely to attract top talent. This is especially true of Gen Z workers.

  Long term corporate resilience

Corporate resilience is the ability of a business to adapt to change and recover from disruptions, such as pandemics, cyber-attacks, and supply chain disruptions. It involves identifying and managing risks that could impact the business, building the capacity to respond to disruptions, and developing strategies to maintain or restore operations and reputation.

Business sustainability ensures long-term corporate resilience by reducing risks and increasing opportunities. It helps businesses to find and manage risks associated with environmental factors that could affect their operations, supply chains, and reputation. Building sustainable business models and supply chains can help ensure the longevity and adaptability of companies in a changing and often uncertain world.

 

Wrapping it up

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The growing trend of UK businesses to embrace corporate sustainability has been caused by a combination of factors: increased awareness of environmental issues, consumer demand and investor pressure, regulatory and legal requirements, the potential for cost savings, an improved reputation, and long term business resilience. These factors have encouraged businesses to prioritise sustainability and align their strategies with environmental and social responsibility.

As UK businesses begin to recognise the impact of their actions on the environment and society, many are taking proactive measures to minimise their environmental footprints, improve resource efficiency, and adopt sustainable practices. This shift is not only driven by the need to meet regulatory obligations but also by the desire to meet consumer expectations and secure investor confidence.

By prioritising sustainability, UK businesses are not only safeguarding the environment but also setting the stage for a thriving and resilient green economy that benefits both present and future generations.