As the world in general becomes more aware of the need to live and operate sustainably pressure is increasing on businesses to prove their sustainability credentials to their customers and suppliers.
Paying a fine for non-compliance with environmental legislation was once considered the most serious risk a business ignoring sustainability best practice could face.
But this is no longer the case.
The consequences of getting it wrong
A case in point is the recent Volkswagen emissions scandal, which has resulted in the company coming under intense public scrutiny over its environmental standards and sustainability practices. The financial costs alone of this issue are staggering, with VW putting aside €6.7 billion to cover its liabilities. It’s estimated that the total costs of the scandal could be upwards of €30 billion, a figure set to have a 1% impact on the national economy of Hungary (22% of Hungary’s industrial production and 13% of the country’s total export depend on the car industry, and its VW plant is one of its biggest).
The financial cost is just one side of this story. VW has also had to deal with a major PR exercise, with consumers globally losing confidence in the brand.
For companies that don’t have the legacy or a financial pool as deep as VW’s, ignoring sustainability comes with it the risk of an entire business going under. Brand confidence and reputation is a major player in any competitive commercial field, and it is something consumers are increasingly guided by. Other impacts include share price knocks and loss of investor confidence.
In short, a company may risk a fine for poor environmental management practices. But the failure to identify or ignoring sustainability issues could impact the future profitability and existence of the entire business.
The benefits of getting it right
Consumer confidence in a brand is vital for business longevity, and sustainability is increasingly becoming a positive selling point for a number of businesses. Companies like Siemens and Dell for example are actively using sustainability to sell their brands as premium products.
This kind of eco-premium branding has major benefits for businesses of the future, to the extent that the EU has predicted a €10 billion per year revenue increase for manufacturers and retailers as a result of marketing benefits, clarity on compliance and a reduced administrative burden for businesses placing energy efficient product lines designed specifically with sustainability in mind under the revised EU energy-labelling scheme.
The costs involved in getting it right
Compared to the severe reputational and financial costs associated with getting sustainability wrong, the costs involved in ensuring a business is sustainable and meeting environmental standards are minimal. Whether companies bring on a consultant or choose to invest in environmental management and sustainability training, the costs will never be as high as either the damage to the brand or long term financial impact which can be incurred by operating unsustainably
The importance of training
Seeking training is an important first step for businesses wanting to actively safeguard a sustainable future, and choosing the right training partner is the second most important step. EEF is the only training provider to offer an internationally recognised Diploma in sustainable business practice (accredited by IEMA).