If a study by the US researchers Barnett and Solomon is to be believed, it certainly does. Interestingly, however, the relationship between sustainability and financial performance turns out to be U-shaped. Roughly speaking this translates to this: if as a company you want to turn your commitment to sustainability into profits, you better go all in.
Adapted from Barnett and Solomon by the Network for Business Sustainability
Although already published several years ago, the study’s findings may have never carried more relevance than today. Case in point – according to a recent study by Unilever nowadays one third of consumers choose to buy brands based on their social and environmental impact. This is hardly a segment which companies can afford to overlook. And, to their credit, many companies today have started to slowly change their mind set about sustainability being simply a “nice to have”.
Manifestations of this trend are manifold, spanning from companies increasingly publicising their social and environmental performance, setting emissions reduction targets, and incorporating their commitment to sustainability into their company culture and brand identity.
What is less often acknowledged in this context, however, is the opportunity this trend presents specifically to B2B companies. In reality, B2B companies tend to only indirectly report on their social and environmental performance, by focusing on the sustainability of their supply chain. Drawing the attention towards suppliers and away from their own performance might cause less damage in any case of corporate social irresponsibility, but it also leads to reduced financial returns from sustainability efforts.
Additionally, from the point of view of B2B companies, sustainability provides an often overlooked opportunity, which is to use it as a tool to engage with customers over their particular (supply chain) needs and strengthening business relationships in the process.
Not only are strong business relationships particularly important in B2B markets where customers are usually fewer than in B2C, but in a world where 71% of B2B customers do not feel engaged with their B2B suppliers (according to the latest Gallup Poll), ways to overcome this gap become crucial. With environmental issues set to continue to gain in social, political, and economic relevance, using sustainability as a tool for customer (re-)engagement may therefore provide B2B companies with a particular opportunity in making sustainability pay off.