Motivating Factors to Sustainable Investments

The outbreak of Covid-19 has propelled the need for change and innovation into the foreground and now more than ever, there has been a shift from short term wins to gains of long-term business strategies.

Companies are clearly seeing the need to integrate environmental and social concerns into business decisions, measuring and understanding their environmental impact leading to a boom of investments into more sustainable solutions. But why the sudden interest in sustainability? What motivates companies to consider this investment? Here are some motivating factors:

It is more than a trend

Climate awareness and environmental protection have become a priority to governments and citizens alike worldwide. Thus, sustainable investing is something business owners and investors can no longer afford to ignore as many are calling for socially responsible solutions to be implemented to protect our planet. Moreover, studies show that global growth in sustainable investment saw its assets more than double over the past seven years; meaning that soon enough “sustainable investing” will simply be considered “investing”.

Mitigating Business Risk

Another motivating factor taken into consideration is the mitigating of business risk. Companies that take time to comply with more sustainable solutions lessen the risks from the potential disruption of operations, supplies, and even damage to their reputation. For instance, a better understanding of your supply chain will lead to strategic alliances with suppliers who share common values and goals; this will result in optimized costs and efficiency.

Enhanced Reputation

Being known as a company that has a focus on healing society and protecting the environment brings positive results. A study by the New York Reputation Institute noted that as consumers we “choose 60% of products based on brand awareness and reputation”. Moreover, investing in sustainability will mean growth for your customer segment and customer retention, which ultimately will mean better performance. This also means in times of crisis, such as the ones we have faced this year, organizations that champion sustainability will have continued support from their customers and others that share the same values.

Additionally, CEOs worldwide have noted that adopting sustainable solutions meant their companies became more attractive to applicants, increasing the company’s talent pool, and investors alike.

Better Financial Performance

 Industries have long debated whether sustainability undermines or improves financial results. Recent studies have shown that corporations that actively engage in or have invested in sustainability secure higher ROI, lower volatility of earnings, and stronger dividends than their peers who have not. This focus on sustainable solutions means investing in things that aid business, which results in higher quality products (or services), greater employee satisfaction and productivity, and better customer recommendations which in turn leads to better earnings.

2020 gave businesses an opportunity to review how they function. Taking the steps to become a more sustainable organization, will ultimately create a better corporate atmosphere and help you to have a positive impact on society.