Boosting business through responsible growth
For midmarket companies, responsible growth is becoming increasingly important, and successful companies are making sustainability central to their growth strategies.
West Michigan is no stranger to this movement. A regional coalition of businesses, nonprofits and academia formed the West Michigan Sustainable Business Forum to promote business practices demonstrating environmental stewardship, economic vitality and social responsibility.
Beyond good corporate citizenship, successful companies recognize the intrinsic link between the strength of their business and that of the communities and economies in which they operate and the importance of attracting the top talent who increasingly view these as important business characteristics.
Leading your growth with those goals in mind builds resilience, better measurement tools and better solutions for the future:
Responsible growth companies perform better. Companies that consider the impact of risks and opportunities on the environment, local communities and society may produce better financial results than those that don’t.
Responsible growth companies attract investment. A 2017 study by MIT Sloan Management Review and the Boston Consulting Group surveyed 150 executives and managers. Findings revealed 90% of executives see sustainability as important, but only 60% of companies have a sustainability strategy in place. According to a recent Harvard Business Review article, 43% of institutional investors surveyed agree that a company’s sustainability performance is materially important to its investment decisions. In 2017, Russell 3000 companies received 144 shareholder proposals related to social, environmental and sustainability issues, indicating that these issues are becoming more mainstream to U.S. investors.
Responsible growth companies resonate with millennials. The next generation of employees, millennials, are more purposeful than other generations. They are in alignment with business strategies to support long-term financial success but do not support an emphasis on short-term profits. Eighty-two percent of millennials who believe their employers share their values intend to stay with their employer for at least another five years, according to a recent report by Deloitte.
Here are some ways companies can invest in sustainability and help improve business:
Set concrete goals: It’s important to outline firm, measurable goals tied to big, strategic sustainability goals. The Harvard Business Review piece provides an example of a clear objective set by a heavy-equipment manufacturer for achieving their big strategic goal of remanufacturing products and components to reuse materials, save customers money and extend product lifecycles. Tying executive incentives to growth in the percentage of revenues from remanufacturing and rebuilding is a clear and measurable goal.
Invest in talent: Recruiting bright, innovative employees will ensure your company will think outside the box when facing any challenge. Be mindful of company culture, as this is important for millennials when choosing a place to work. Lastly, know your industry segment but consider hiring those with expertise outside your silo; some of the best ideas and products come from unconventional corners.
Evaluate your supply chain: Building and updating a sustainable supply chain requires a complex review of corporate standards and issues. Evaluate whether processes could be more streamlined and where new methods and better suppliers are needed using the employment and diversity standards, and review benchmarks you want maintained throughout your business. Social compliance auditing, vigilant overview of subcontractors, providing living wages to employees and workers throughout the supply chain, and avoiding conflict industries or areas such as conflict minerals or war zones are four central areas to begin these complicated evaluations.
Be transparent: For the public, transparency will aid in maintaining reputation and trust in credibility. Internally, transparency will increase job satisfaction and communication. For example, when company SumAll started detailing every employee salary in a Google Doc, it found a tool for reducing gender pay inequities and turnover. Employees unhappy with their salaries felt free to speak up about their dissatisfaction and enter a negotiation instead of leaving the company.
Use incentives: Installing compensation incentives for executives keeps achieving sustainability goals in focus. For other partners, consider making sustainability an important factor in procuring vendors or manufacturers. According to the Harvard Business Review article, businesses are increasingly creating their own indices to evaluate factory and third-party performance.
Share the good news: Let your stakeholders and community know about your efforts to grow sustainably. You’ll attract more customers, investors and talent.
To achieve your company’s full potential in this era, responsible growth strategies must be integrated into company goals and communicated as such. When prioritized, becoming a more sustainable company can become a unifying factor for your entire workforce while also benefiting your larger community and your bottom line.
Scott DeMeester is business banking executive for Bank of America Merrill Lynch, and Renee Tabben is the Grand Rapids market president for Bank of America.