You're facing skepticism from a senior manager on sustainability ROI. How do you convince them of its value?

Of course we can explain ROI, if we value Natural Capital, Social Capital and Relationship Capital. The problem is that the current conventional metrics like ROI, GDP etc, does not value these. For ex. If you save 1 kWh of electricity, the conventional ROI will include only the cost of electricity. But in India, 1 unit saved is almost 2 units produced, that is almost 1.4 kg of Coal saved. If you consider 32% ash in that coal, it is that much pullution or dumping saved and add to that GHG emissions and other emissions and related cost of health impact. Now top it up with the environmental and social impact cost of mining coal.

3 key strategies come to my mind - 1) Highlight tangible benefits and align them with their focus on ROI. 2) Suggest sustainability gap assessment to identify opportunities and quantify the financial impact. 3) Present case studies on how cost savings, risk mitigation, revenue growth, enhanced brand value, talent attraction, and innovation opportunities can contribute to a strong ROI.

ROI in sustainability is like planting seeds that grow into a flourishing garden over time. While the benefits may not be immediate, sustainable practices sow seeds of efficiency, waste reduction, and lower energy use. These savings add up, boosting your bottom line and proving sustainability's value as an investment. Moreover, sustainability isn't just about numbers—it's a magnet for customers and talent who prioritize ethical practices, enhancing your brand and workforce. By nurturing sustainability, you cultivate a future where both your business and the planet thrive.

To convince a senior manager of the value of sustainability ROI, emphasize how sustainability initiatives can lead to significant cost savings through energy efficiency and waste reduction, generate new revenue streams from eco-friendly products, enhance company’s brand reputation, and attract loyal customers and top talent. Highlight importance of staying ahead of regulatory changes, mitigating risks related to supply chain disruptions. Present clear metrics and case studies demonstrating financial returns, stress the growing importance of sustainability to investors and stakeholders. By framing sustainability as strategic advantage that drives innovation and ensures long-term business viability, you can effectively communicate its value.

To convince a senior manager of the ROI on sustainability, present data-driven evidence and case studies that highlight successful outcomes. Start by showcasing examples of companies that have benefited financially from sustainable practices, citing increased efficiency, cost savings, and brand enhancement. Provide projections of long-term savings from reduced energy consumption and waste management. Highlight the growing consumer demand for environmentally responsible businesses, which can lead to increased market share and customer loyalty. Emphasise regulatory advantages and potential incentives. By demonstrating tangible financial benefits and aligning sustainability with business goals, you can effectively argue for its value.

The calculation of ROI on sustainability is complicated because of the public nature of returns from private investment. Conversely, some businesses have cornered the lion's share of returns depriving local communities of the share of benefits that should accrue to them. One way in which this can be resolved is to start consistently valuing natural capital (natural resources) in a consistent and fair manner. That is when, we can truly measure the ROI.

Emphasize that sustainability is an investment in the company's future, leading to significant cost savings. Highlight the importance of regulatory compliance and risk mitigation, attracting and retaining top talent, and appealing to investors who prioritize ESG criteria. Present clear metrics and compelling case studies to demonstrate financial returns, and stress the critical role of innovation and long-term business viability. Emphasize that sustainability provides a strategic advantage by ensuring resilience to market changes, future-proofing against resource scarcity, and maintaining a sustained competitive edge.

Understanding scepticism about sustainability is key for effective discussions about sustainability ROI. Many individuals don’t see immediate benefits, as they only become apparent in the future. However, investing in sustainability is investing in a company's future, helping mitigate medium-term risks. With increasing regulations, senior stakeholders must recognise sustainability's value for long-term success. Presenting a step-by-step roadmap with clear metrics and goals for implementation makes the process less daunting and more digestible. This approach provides detailed explanations of achievable goals and their necessity, avoiding the unsettling nature of sudden, drastic changes that are often unrealistic for companies.

Sustainability is like a smart long-term investment: the upfront costs might seem steep, but the payoffs can be substantial. Emphasize that embracing sustainability now helps companies dodge future regulatory fines and keeps them aligned with shifting consumer preferences, maintaining their competitive edge. It’s also a catalyst for innovation, sparking new products and market opportunities. Ultimately, sustainability isn’t just about being eco-friendly—it’s about future-proofing the business and uncovering new paths for growth.

Enfatize que práticas sustentáveis podem resultar em economia de energia, redução de resíduos e maior eficiência, gerando lucros sustentáveis.

Convincing a senior manager of the ROI on sustainability involves presenting clear data and highlighting risk mitigation benefits. Show how sustainable practices can reduce costs, citing examples like a 20% decrease in energy expenses through efficiency upgrades. Emphasize risk mitigation, such as how 75% of companies with strong sustainability plans have lower regulatory risks (McKinsey). An unexpected fact: sustainable companies often see a 10% higher stock performance (Harvard Business Review). By demonstrating these financial and risk management benefits, you can make a compelling case for the value of sustainability investments.

1) A key tenet of Sustainability besides the obvious one towards a sustainable planet balanced by people and profit is to ensure corporate resilience towards enhanced risks faced in environmental, social and governance factors in our inter-connected, VUCA world. 2) Future proofing the company’s business to these risks means being proactive in dealing with Sustainability towards climate change, energy transition, changing aspirations of customers/clients, changing regulatory environment, and more. 3) Leading companies are proactively doing scenario analysis of key corporate risks and Sustainability-related ones are consistently figuring as the majority in their top 5 corporate risks.

Demonstre como a sustentabilidade pode proteger contra flutuações de preços de recursos, regulamentações ambientais e crises de reputação.

Sustainability is a savvy way to manage risks. It helps tackle challenges like climate change, resource shortages, and new regulations head-on. By adopting sustainable practices, companies can sidestep potential disruptions and keep operations smooth. This proactive approach not only cuts costs from unforeseen issues but also protects the company's reputation, making sure it stays strong and viable for the long haul. It’s about turning potential threats into opportunities for stability and growth.

By focusing on sustainability, we can really boost our brand image and strengthen loyalty among our customers, employees, and investors. This isn’t just about doing the right thing—it leads to increased sales, higher employee retention, and more investment opportunities. Plus, when we engage with our stakeholders on sustainability issues, we gain valuable insights that drive innovation and efficiency. Prioritizing sustainability helps us build trust and foster long-term relationships, setting us up for sustainable growth and success.

Mostre que iniciativas sustentáveis aumentam a confiança e fidelidade de clientes, investidores e parceiros, fortalecendo a marca.

Prioritizing sustainability isn’t just good for the planet; it boosts your brand's appeal to customers, employees, and investors. A strong commitment to sustainability enhances your brand image, fosters loyalty, and can translate into higher sales, better employee retention, and more investment opportunities. Engaging stakeholders on sustainability also uncovers valuable insights, driving both innovation and efficiency in your business. It’s about building trust and positioning your company as a forward-thinking leader.

Argumente que empresas sustentáveis atraem talentos, clientes e investidores que valorizam a responsabilidade social e ambiental.

Lo primero es que si todavía hoy, en pleno 2024, necesitamos convencer a un alto directivo en los beneficios de la sustentabilidad, bueno, quizás esa posición no está bien cubierta. Luego, si ese es el caso, el argumento debe construirse desde las personas y el talento. Y es que es complejo que personas con alto aporte de valor se inclinen por empresas que no invierten en sustentabilidad.

Investing in sustainable practices also brings advantage in the competitive world. Clients and investors are now asking sustaibale practives and goals before they use products or invest in the companies. Initially there could be add on cost for implementing sustainable practices and products but in longer run it will reap benefits in terms of less impact on climate and increased trust with the clients and investors.

Leveraging sustainability as a competitive advantage allows companies to set industry standards and shape customer expectations. Leaders in sustainability are often viewed as innovators, gaining positive attention and differentiating themselves from competitors. This reputation can translate into increased market share and opportunities for premium pricing. By investing in sustainability, your company not only contributes positively to the environment but also positions itself ahead of the competition, driving growth and profitability.

Discussing the financial incentives tied to sustainability is crucial. Governments and institutions frequently offer grants, tax breaks, and other incentives for adopting sustainable practices. These benefits can offset the initial costs, providing valuable resources for further sustainability initiatives or business development. By tapping into these incentives, companies can not only reduce expenses but also reinvest savings into growth, enhancing both their financial health and sustainability profile.

Destaque subsídios, incentivos fiscais e financiamentos preferenciais disponíveis para projetos sustentáveis que podem melhorar o ROI.

1) Sustainability like any complex, corporate initiative or focus area can never been be assessed in pure shades of financial gains or ROI. 2) In my experience, companies or managers who start with this premise, need to be educated on what is Sustainability and what is the triple bottom line - People, Planet and Profit. 3) Many factors - Corporate Resilience/ Longevity/ Adaptability, Risk Management, Changing Consumer Outlook (read more Sustainable Products/Services), Corporate Brand, Social License to Operate, and more - have to be seen in totality to present the pro-Sustainability case to a skeptical senior manager and anyone else.

Cite casos de sucesso de empresas que obtiveram benefícios financeiros significativos ao adotar práticas sustentáveis, como Unilever e Patagonia.