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4 Key Aspects Investors Look for In Companies That Claim to Be Sustainable

 

July 6, 2021 (Investorideas.com Newswire) In January this year, the U.S. government took the stand and revealed that the world is dealing with a profound climate crisis, deeming it an issue that affects individuals, businesses, and governments alike. If we want this crisis to at least get a chance at being tackled, we need to work together towards sustainability.

In the briefing, President Joe Biden refers to the climate crisis as an important element of the country's foreign policy and national security and announces an assertive plan to reduce the country's carbon emissions. In the following months, he has continued to push world leaders to step up against climate change and take the necessary measures to reduce the impact humans and their industries have on the planet.

Besides governmental efforts, consumers are also more and more interested in doing business with companies that have shown they care for environmental change and adjusted their business processes to reduce carbon footprints. Even if there are no clear regulations to follow, consumer demand is one of the main aspects that influence businesses' agenda, as they are the ones who, after all, spend money on those products.

Another faction that has the power to hold companies to a higher standard when it comes to sustainability are investors. Investors pour money into companies they believe in and have started taking sustainability very seriously when screening companies that are worthy of their financial resources. Besides taking into account the profitability of a company, investors are now looking for startups that understand sustainability is something that needs to be factored in from the beginning instead of making changes along the way.

This means that companies interested in business success can no longer overlook sustainable growth. But what exactly are investors looking for when it comes to sustainability?

Image source: https://unsplash.com/photos/D0xQQsZovws

A customer-centered approach

As a business, it's easy to say you value your consumers and understand their needs. Actively working to prove this, however, is an entirely different subject. Investors are no longer interested in companies that promise things, but rather companies that D.O. things.

Investors today expect businesses to have specially created platforms and solutions that allow them to hear and respond to their consumers' requirements. A few examples include chats, customer relationship management tools, polling programs, and review channels. Without these solutions clearly implemented, a company's sustainability efforts may seem just empty talk.

This applies even to companies that don't seem to have a direct connection to the end-user, such as packaging manufacturers. One example is a Nevada-based company that produces recyclable packaging suited for perishable, cold, and pharmaceutical goods. Consumers that receive their goods in these sustainable packages report it is much easier for them to dispose of the waste without causing harm to the environment, all while conforming to recycling requirements. This is just one example of how a packaging company, which sits miles away from the end-user on the supply chain, can better the life of consumers.

A public commitment to their goals

Younger generations have started taking the stand and demand brands to be transparent in their sustainability efforts, especially in the past few years. As purchasing power starts to grow among Gen-Zers and Millennials, these generations become the consumer voice brands need to listen to. This prompts investors to look for companies that are clean in what their sustainability goals are, how they plan to achieve them, and what they have succeeded to do by now.

Taking their sustainability goals public and making commitments to the public demonstrates that a company is striving to become a next-generation business. Investors are interested in companies that follow S.M.A.R.T. goals, which should be well-thought-out and prove entrepreneurs have a very clear understanding of what their company can and will achieve. They may also demand progress reports on a regular basis to ensure transparency.

A sustainable partners ecosystem

In today's world, companies are judged not only on their own actions but also on those of their partners. Investors will want to know that, as companies engage in new contacts or expand to work with new suppliers, these partners also correspond with their sustainability beliefs.

Before entering new partnerships, companies should check the reputation of their potential new suppliers or vendors, taking into account precisely the aspects we have been talking about today. If they don't do this and consumers find out these partners may not be the most sustainable option, they won't think twice before holding the companies accountable for overseeing this aspect.

One of the biggest issues companies face when trying to meet their sustainability goals is handling waste. Besides teaching employees the importance of recycling plastic, how to recycle properly, and what they can do to minimize waste on an individual level, businesses need to provide their staff with the means to store and dispose of the waste properly. One of the best solutions is to partner up with a company that provides waste management solutions, which helps tackle waste in a less hazardous way, benefiting both the workplace and the environment.

Purpose-driven company values

Without a strong culture that ensures both the leaders and staff of a company align to their sustainability approach, even the most thoughtful sustainability plan will fall short. If sustainability isn't rooted in a company's culture, from the least important staff member to the board of directors, there is going to be a lot to risk.

In some cases, doing what's right may even come against company profits in the short run, but these efforts are going to pay out in the end. For example, a digital lending company that provides credit to unbanked candidates went against the current in 2019 and urged Kenyan consumers to avoid taking out loans during the holiday season and think twice when it comes to consumerism.

So, while their competitors were battling each other to encourage holiday shopping, this company took it to social media and their other digital channels to teach consumers how to budget for the holidays and spend their money on things that are truly essential. This showed their consumers are valued and not used for the company's profits.


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