Turn green into gold: Eight ways to drive business benefits from ESG

Date

July 12th, 2024

Category

Market Insights

Author

Paige Peters

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By Ross Teague, CEO, Nebula

As channel leaders, we know that every day brings a fresh set of challenges – from addressing client issues and securing deals to managing internal HR concerns and approving new marketing strategies, all while navigating investor and stakeholder expectations and dealing with competitive pressures.

The spice and variety in the channel are what keep us engaged but the thought of adding another responsibility to our already full plates sometimes feels like it might topple the lot.
Except when it comes to ESG, it’s no longer optional.

ESG isn’t just a buzzword. With the Corporate Sustainability Reporting Directive (CSRD) regulations coming into force, upcoming digital product passports, coupled with shifting buying behaviours, it means ESG needs to be at the top of your to-do list.

Instead of seeing ESG as another corporate burden, we’ve realised that embracing a more sustainable supply chain and acting more responsibly within our organisation and our community, has boosted our business. And there’s research to prove it: Companies that place their ESG strategy at the core of their values are 28% more likely to have seen increased profits in the past 12 months, according to B2B International.

Here are eight ways you can use ESG to drive business and boost your bottom line in the next 12 months:

1. Reduce operational costs
Start with simple measures such as upgrading to LED lighting, having fewer bins and switching energy suppliers to a renewable company to save on energy bills and recycling costs. We try to source everything such as office supplies, furniture and consumables locally to save on shipment costs.

Tracking things such as staff travel to work, how you ship products to customers, and packaging can also help identify areas for revenue leakage where more cost savings can be made.

2. Attract more capital and investors:
Attracting capital and investors is essential for most channel organisations, many of whom are private businesses that will one day seek investment or buyouts. According to the PwC 2021 Global Investor ESG Survey, 79% of investors say the way a company manages ESG is an important factor in their investment decision-making, a sentiment echoed by the UK CBI.

Having a strong ESG portfolio and showing your ESG initiatives can also give you better access to credit to expand your business. One recent study of UK-based lenders has shown that 85% said that a firm’s ESG status, or its ability to transition to net zero, influenced the credit risk assessment.

3. Enhance brand reputation…
Buying behaviour has changed. Today’s consumers and corporate buyers are increasingly making purchasing decisions based on a company’s ESG credentials. According to Finder, 76% of consumers will stop buying from companies that treat the environment poorly.
By shouting about your ESG credentials, conducting PR around your sustainability initiatives and ensuring your sales and marketing team are well-versed in your ESG vision, your brand recognition and reputation will grow. And your customers (and competitors) will notice.

4. …and win more deals
Research from The Enterprise Strategy Group, states 93% of IT decision-makers expect technology suppliers’ ESG commitments to increase in importance. With Gen-Z entering the workplace, this demand for ethical and responsible buying behaviour will only become more prevalent.
And businesses are already voting with their feet. A recent Microscope article claimed a third of customers would abandon a deal if a partner’s ESG credentials were not up to scratch. So, it’s not just about winning deals with enhanced brand reputation through sustainable practices, it’s about losing them too.

5. Get the competitive edge
It’s hard to measure directly, but given the data above about enhancing brand reputation and the emphasis customers are now placing on ESG – especially during the tender process – we’ve found that our ESG strategy has helped set us apart from competitors.

As our clients start to prioritise ESG in their procurement processes, having credentials you can refer to, such as Scope 1 and 2, or a social mobility or volunteering programme for example, and a vision for where your ESG strategy will go, can give you the edge over a competitor who has yet to set out their ESG stall.

6. Attract and retain talent
Employees are putting more emphasis on working for companies that demonstrate a commitment to ESG principles, especially those entering the workplace now. Getting them involved in your ESG strategy – whether that’s by having ESG Champions or asking them to choose a charity in your local community to support or volunteer with, improves employee morale and satisfaction which results in better retention.

Also, strong ESG credentials make your company more attractive to top talent who want to work for a company with values that align with their own.

7. Boost customer loyalty
Consumers – whether B2B or B2C – are increasingly loyal to brands that share their values. By committing to transparent and authentic ESG practices, you can build deeper connections with your customers. Research from Finder states that 88% of consumers will be more loyal to companies that support social and environmental initiatives.
Not only that, but customer loyalty, and sharing a passion for sustainability, not only ensures repeat business but also turns customers into brand advocates, driving word-of-mouth marketing and organic growth.

8. Avoid fines and penalties
While there are yet to be any major laws for small businesses around ESG, it’s only a matter of time. By being proactive and getting ahead of the legislation, you can stay ahead of regulatory requirements, avoiding potential fines and penalties that are likely to be enforced in the next few years.

ESG is not a panacea; if your business model is flawed, ESG alone won’t prevent underperformance. However, data consistently shows that organisations demonstrating commitment, vision, and investment in ESG reap significant rewards.

Investment is often a sticking point – it’s always challenging to find ‘spare’ cash for new initiatives, but even this is changing as banks loosen the purse strings. One recent study of UK lenders has shown that 93 per cent expect ESG-related lending in the mid-market to increase in the next few years.

The resources, information, and people are available to help you embark on your ESG journey. Isn’t it time to boost your business and turn eco into earnings?