How to reduce risk with a sustainable business model

risk assessment for a sustainable business model

Transitioning to a sustainable business model is only for those companies and organizations who are beginning to realize that it is the only path to long-term success. If you aren’t tracking and benchmarking your sustainability KPIs, then you may be at risk in very the near future. And if you want to know more about to get started, keep reading!

Sustainability is no longer a “nice-to-have” when you are extolling the virtues of your company. When the Pandemic disrupted the world’s supply chain, it demonstrated how vulnerable our systems are on a global scale. Coupled with billion-dollar weather events and a ground war in Europe, our future is now on shaky ground. 10, 5 or even just 2 years ago our collective course to the future looked much different than it does today.

Transitioning your business to a more sustainable business model can seem a daunting task. But there are new, easy, cost-effective solutions which will help you measure, manage, align and report non-financial KPIs for your specific strategic objectives. You may have already started to make changes, but without a proven roadmap in place, your reporting may lack the comprehensive view that consumers, partners and stakeholders are looking for. ESG the Report provides your business with a unique opportunity to transition to a sustainable business model and increase your resilience to an uncertain future.

What is a simple definition of sustainability?

Sustainability means meeting today’s needs without compromising the ability of future generations to meet their own needs.

What is a Value Mapping Tool for Sustainable Business Modelling?

A value mapping tool is an important tool for assessing the potential impacts of transitioning to a sustainable business model. It allows organizations to analyze their existing model, identify areas for improvement and set realistic goals for the transition process. The tool assesses the current model’s social, environmental, economic and ethical impact in order to provide baseline metrics and guidance on how to modify operations holistically. These tools can help guide organizations on understanding the full costs, risks and investments of sustainability initiatives in order to make smart, strategic decisions.

How we can help with transitioning to a sustainable business model

The ESG the Report team is proud to have joined forces with an array of firms and organizations across a wide number of industries. Our success is built on employing proven value mapping tools which are rooted in the United Nations Sustainable Development Goals and the top ESG frameworks. Our holistic approach will help you to:

  • Establish a baseline on which to build strategies.
  • Clearly define and measure your current successes.
  • Identify risks and vulnerabilities of your business.
  • Establish a clear set of goals and benchmarks.
  • Remove all guess-work from the transition process.
  • Simplify repetitive tasks with automated workflows.
  • Uncover the quickest opportunities for success.
  • Strengthen your long-term goals and objectives.
  • Produce an ESG Score based on P2P data.
  • Construct a road map for sustained success.
  • Provide 3rd party Assurance
  • Leverage your sustainability successes to engage and inspire your stakeholders.

It is our mission to equip all businesses, big or small, local or international, with the capacities needed to transition to a sustainable business model. Not only is it ethically sound, but investing in sustainability has countless economic advantages. It won’t be long before your stakeholders demand it, so Get the Checklist!

7 benefits to transitioning to a sustainable business model

1. Reduced costs associated with waste and resource use

2. Increased efficiency and productivity

3. Improved customer loyalty

4. Better access to capital markets

5. Enhanced brand reputation and visibility

6. Reduced risk of non-compliance with regulations

7. Greater stakeholder engagement and trust in the company

7 risks associated with not transitioning to a sustainable business model

1. Reduced profitability due to rising resource costs

2. Limited access to capital markets

3. Increased legal and regulatory liability

4. Potential reputation damage among current customers

5. Difficulty attracting new talent and customers

6. Decreased ability to adopt new technology solutions

7. Lower investment confidence in the company

7 Common Challenges to Transitioning to a Sustainable Business Model

1. Short-term costs associated with making changes

2. Difficulty engaging stakeholders in the transition process

3. Lack of training and resources for staff

4. Changes to existing infrastructure and systems

5. Uncertainty around expected outcomes and timelines

6. Risk of consumer backlash from disruptive changes

7. Inaccurate assumptions about what constitutes sustainability

FAQ

ESG vs Sustainability

When transitioning to a sustainable business model, it’s important to remember that ESG and sustainability are two different concepts. But they overlap in many ways.

Environmental, Social, and Governance (ESG) has gained popularity in recent years as consumers spend their money more intentionally. Companies are being pushed to meet higher standards across a range of topics including climate change, diversity, and human rights. These ESG criteria are important for driving social good and influencing policies in the right direction.

Sustainability entails looking at not only the environmental impact of companies, but also how they contribute to community economic development. It does not focus on the shareholders, but on the stakeholders of an organization. The people communities and environments in which they operate. It is a longer-term view that allows companies to benefit both the environment and societies, while still achieving financial success.

What is ESG marketing?

ESG marketing is the practice of promoting a company’s Environmental, Social and Governance standards to stakeholders. It involves incorporating sustainability messaging into marketing practices across all channels. It includes both traditional and digital media such as websites and social networks. ESG marketing can be used to build trust among stakeholders by highlighting how a company is driving values-based change. It also creates transparency into how a company operates, how it makes decisions, and what its values are. Leveraging ESG strategies can increase brand visibility and customer loyalty. It can also also lead to increased sales through a unique value proposition compared to the competition.

What is sustainability software?

Sustainability software is a form of technology designed to help businesses and organizations in their efforts to reduce risk. It provides an analysis of current operations and future growth action plans that are tailored to meet sustainability objectives. Additionally, it can help identify potential opportunities and partnerships which may have been missed during normal operations. The best software can help companies automate the collection and correlation of their sustainability efforts. It can also provide a roadmap for companies to follow, based on their inputs.

What is a middle market company?

A middle market company is one that falls between a small business and larger corporation in terms of size. Generally, they have annual revenues of between $10-500 million with anywhere from 50-1999 employees. They are typically owned by a private investor or smaller investment firm and often do not have global footprints like larger corporations. Middle market companies play an important role in the economy as it is estimated that their combined global sales numbers exceed those of Fortune Global 500 companies. These companies are instrumental in creating local jobs, stimulating economic activity, and leading innovation on products and services for consumers around the world.

What is a low middle market company?

Low middle market companies typically provide essential goods and services to their local economies. These businesses generally have around 50-500 employees and are valued between $10 million and $500 million dollars. Low middle market companies typically focus on specific niches that generate steady demand but require minimal capital to maintain operations. They possess the agility to quickly adapt to trends or changes in the economy, allowing them to remain competitive in their respective markets. Many low middle market businesses have been instrumental in reshaping their industries and establishing themselves as a platform for entrepreneurs looking to make an impact in the social or economic space.

Is ESG required for private companies?

The importance of environmental, social, and governance (ESG) initiatives has been steadily increasing for decades. For publicly traded companies there have been reporting requirements in place for some time. But for private companies in the United States, there is obligation to report. While there is no legal requirement for ESG compliance for privately-held companies, those who do not consider these factors in their day-to-day operations may be at a disadvantage. The risk is when potential partners or customers assess who they will choose to do business with. Keep in mind that quantifying ESG criteria provides measurable feedback on organizational progress. This can enable valuable insights and vulnerabilities that businesses are neglecting while focussed on their core activities.

Why should small companies care about sustainability?

As small businesses try to maintain their competitive edge, sustainability is becoming part of the formula for success. In today’s world, both customers and investors are increasingly looking for companies with socially and environmentally friendly practices. They are looking for companies who align with their values before making their spending choices. For companies who take proactive steps towards improving sustainability, it can help reduce expenses and increase goodwill. Investing in sustainable development sends signals to stakeholders that a company recognizes their responsibility to the environment and society. And when done properly, it builds trust with stakeholders and increases customer loyalty.

How important is sustainability to a company’s bottom line?

It has been demonstrated that sustainability is an integral part of success in today’s business landscape, and good for the bottom line. If you know your customer, or buyer persona, then you know their values. By adhering to sustainable practices, you can align your values with your customer values. Companies can also save money through reduced energy and materials costs. They can create new markets and revenue streams for their products and services, and build stronger relationships with customers. Showing respect for the environment and the communities they serve, businesses can gain a competitive edge over their rivals. All of which are good for any bottom line.

Which companies need ESG?

The answer to this depends on where your head office is located and where your company operates. Different countries have different requirements. Nonetheless, every organization, regardless of size or industry, stands to benefit from embracing Environmental, Social and Governance (ESG) best practices. ESG covers a wide spectrum of topics ranging from climate initiatives to workforce development and standards to community-minded policies. Companies that proactively implement these policies tend to open doors to opportunities they may not have recognized before. As consumers become increasingly aware of the role companies play in enabling positive social change, an effective ESG strategy can open new markets. Internally, it can engage teams and attract better qualified employees. Adopting a sustainable business model has wide range of benefits for any company.

Is ESG mandatory in the US?

For publicly traded companies in the US, there have been reporting requirements in place for some time. But for private companies, there is no legal obligation to report on ESG initiatives. While this may seem like an unnecessary burden, those who do not consider these factors in their operations may be at a disadvantage. Companies that demonstrate environmental stewardship and social responsibility are increasingly attractive to customers, partners and investors.

Do stakeholders really care about ESG?

When the pandemic effectively destroyed the world’s supply chain, it made us all feel more vulnerable. With companies are increasingly held answerable for their sustainable behavior, it has become difficult for investors and stakeholders to ignore the hard facts about sustainability. As a result, stakeholders in companies large and small now employ an increased level of scrutiny when it comes to evaluating an organization’s commitment to ESG principles.

What is the GRI?

The Global Reporting Initiative (GRI) is a non-profit organization that develops sustainability reporting guidelines. They are used by organizations for measuring, disclosing and managing their impacts on the environment, economy, and society.

What is SASB?

The Sustainability Accounting Standards Board (SASB) is an independent standards-setting organization. Their mission is to create globally accepted standards for companies to use when measuring and disclosing their sustainability-related performance.

What are the UN SDGs?

The United Nations Sustainable Development Goals (SDGs) are 17 global goals set by the United Nations. Their aim is focussed on ending poverty, protecting the planet, and ensuring that all people enjoy peace and prosperity. The goals seek to create a better world for everyone by 2030. They will achieve this through improving education, healthcare, food security and gender equality. It will also include clean energy access, economic growth, reduced inequality and other sustainable development initiatives.

Author Bio

Research & Curation

Dean Emerick is a curator on sustainability issues with ESG The Report, an online resource for professionals focusing on ESG principles. Their primary goal is to provide resources to help middle market companies, SMEs and SMBs transition to a more sustainable future.