Future Focus-Meet Enock Ebbah

Enock Ebbah, Sustainability Strategist

Creating systemic change in entrepreneurship is a mission that will see important short-term change, but the deepest impact will be felt by future generations who have access to radically new opportunities and possibilities. Green practices not only support the environment and the community but will also ensure that your brands and businesses flourish. In the Future Focus section of our blog, we will keep you updated on all things sustainability — our journey, founder stories, and useful, informative and actionable advice to address the needs of People, Planet and Profit. Stay tuned!

Sustainability for a business

Enock Ebbah is a Sustainability Strategist with many years of experience developing and delivering sustainability strategies for companies such as Bluefin Foundation, UK. He also advises on sustainability matters for companies such as GreenSwanLab, Israel. Enock has a best-selling Sustainability course hosted on the Udemy platform. This month, we welcome Enock to share his thoughts on Sustainability for a business.

Sustainability for a business is where an organisation’s social, and economic goals are balanced through sustainable development [1,2]. The social goals include the business’s impact on the people, such as having safe and healthy employees, customers, and local communities, alongside good governance, diversity, and inclusion. An example of the business economic impact includes new employment opportunities for employees, green market potential, reduced energy, water and waste costs and improved outputs from operations and processes. At the same time, the positive business environmental impact ensures reduced carbon emissions, resource reduction, waste minimisation, increased reuse, recycling, and remanufacturing with a longer lifecycle [1].

Thus, Sustainability is more than “doing good” — corporate social responsibility. A sustainable business has operations and practices that are more efficient, competitive, profitable, and positively impact the environment or climate.

Sustainability is great for business — as well as for the environment and society.

Most businesses know they need to apply NetZero carbon strategies to reduce carbon emissions in their organisation and their value chain. These reduced carbon emissions help to mitigate the climate emergency and the adverse effects of global warming. But there is more to the benefits of Sustainability than just reduced carbon emissions for businesses (NetZero).

There are many benefits of Sustainability to a business. Below is a summary of some of the significant benefits of Sustainability to an organisation:

1. Appealing to customers — A business becoming appealing to customers means attracting new customers with effective and fair marketing and increasing sales. Several surveys indicate that consumers care about the environment and look for organisations that positively impact the environment. Positive business actions that appeal to customers include using reusable materials, biodegradable materials, and less carbon-intensive material sources, to name a few. A survey conducted by the Lloyds bank UK suggests that 83% of people pick a brand with a better sustainability record [3]. Also, survey results from the Economist indicate a 71% rise in online searches for sustainable goods globally [4]. Moreover, a Forbes report suggests that 88% of customers will be more loyal to a company that supports social and environmental issues [5].
2. Supply chain NetZero needs — Purchasers and buyers of products and services are increasingly scrutinising the carbon footprint of their suppliers. As a result, buyers request suppliers’ sustainability key performance indicators, their commitment to reaching NetZero by 2050, and their carbon emissions sources, including scope 3 emissions [6]. As a result, suppliers need to present data-based targets rather than some passive pledges, which were sufficient in the past.
3. Attract, engage, and retain talents — There is an ongoing trend of mass resignation popularly known as the Great Resignation (the Big Quit or the Great Reshuffle). Thus, businesses must intentionally put strategies in place to attract, engage and retain talents. Sustainable businesses can use Sustainability to attract and retain skills. For example, 53% of the UK’s workforce consider Sustainability when choosing a company to work for, as reported in the Anthesis survey results [7]. Also, in a separate survey by ICIMS, 66% of respondents say they must personally align with the company’s mission and core values when applying for a job [8].
4. Reduce energy consumption — due to the high fuel inflation in recent years; sustainable companies benefit from reduced energy consumption and costs. A typical business in the UK would pay £634/ MWh in October 2022, four times (4x) the 2020 energy prices [9]. Sustainable companies implement energy-saving measures such as installing energy-efficient equipment and integrating renewable energy systems with favourable payback periods. In other words, sustainable companies deliver adequate human thermal comfort and increased productivity at a reduced energy cost compared to competitors with less energy-efficient systems amid rising energy costs.
5. Reduce waste and consume fewer materials — sustainable companies use recyclable materials as a commodity and design out waste from manufacturing products because they reduce material costs, improve long-term resiliency to supply chain issues and protect health and biodiversity.
6. Resilience to climate change risks — “If you look at climate change insurance premiums for some types of property, they have gone through the roof in the last few years, just because of the effects of flooding” [10]. This statement by Mike Fox, the head of UK sustainable investments, is becoming a common trend in the insurance and financial industry. Banks and lenders are starting to ask companies to indicate how climate change impacts their businesses. Business insurance is factoring in climate change and the climate emergency, while sustainable companies are prepared towards these climate change risks.
7. Sustainability drives innovation in the business — for businesses to develop new products and services that have a positive environmental and social impact, they must drive innovation in the process, market, development, and brand. For example, a manufacturing company finds new ways to reuse, reduce, and recycle materials that otherwise would have landed in a landfill. Market innovation will improve the entry to the market of sustainable products and services such as heat pumps, hydrogen, biofuels, and sustainable building materials [11]. Also, strategic innovation allows sustainable companies to pioneer research and advancement of new technology.
8. Attract investment and raise capital from ESG focussed funds — asset owners are increasingly embracing sustainable investing [12]. More investors are interested in investing in companies with favourable ESG (environment, social and governance) metrics. For example, a report from EY indicates that by 2024, globally, ESG-mandated assets could constitute up to half of all professionally managed assets. “Investors are looking for reassurance that companies understand the linkages between the non-financial performance of the business and the successful delivery of the business strategy,” says Doug Johnston, EY [13,14].

Start-ups can use Sustainability to succeed and gain a competitive advantage.

All large, medium, or small companies, including start-ups, can achieve the benefits of Sustainability outlined above. Start-ups have a unique position to achieve Sustainability to succeed as a business and, more importantly, gain a competitive advantage. Below are vital pointers for start-ups to gain a competitive advantage.

1. Reactive to proactive — fundamentally, most start-ups must compete with existing players in the respective business sector. Existing companies work hard to be ahead of the competition. However, history has shown that well-established companies must respond to new opportunities and strategic thinking. For example, Google was not the first search engine company, iPhone was not the first mobile phone company, and Facebook was not the first social media company. These example companies innovated when the established companies in their respective sectors needed to be faster to react. A start-up can use sustainability strategies to innovate and differentiate from competitors. Start-ups usually have an excellent opportunity to be proactive with modern Sustainability to achieve sustainable development and positive social, economic, and environmental impact.
2. Company culture — Start-ups must grasp the opportunity to innovate and devise new ideas to succeed and compete and employ Sustainability as part of the organisation’s culture. Successful businesses have established their culture over the years, and most must adapt to embed Sustainability as part of their culture.
3. Engage the board — start-ups have a unique opportunity to attract and engage their board and leadership team that is abreast with Sustainability.

Common risks and challenges sustainable start-ups need to beware of.

Despite the opportunities for companies to benefit from becoming sustainable businesses, some risks and challenges remain that companies must be mindful of. The risks and challenges include:

1. Greenwashing risks. According to the EU Taxonomy Regulation, Greenwashing refers to “the practice of gaining an unfair competitive advantage by marketing a financial product as environmentally friendly, when basic environmental standards have not been met.” There is an increasing number of companies getting fined for overstating green claims. Thus, there is tighter scrutiny on companies, including start-ups. For example, a review of online green claims reveals that 40% of claims could be misleading, found by the UK Competition and Markets Authority (CMA) [15]. Start-ups must ensure that any claims or marketing campaigns do not risk fines or damage their reputation.
2. Regulation and compliance. There are requirements for companies to be transparent and consistent when completing ESG data reporting. Regulatory changes and conditions are gaining momentum in the UK, the US, the EU, and the rest of the world. For example, the sustainability disclosure requirement and investment label regulation are being implemented in the UK [16]. In contrast, the EU corporate sustainability reporting directive has an implementation date of January 2024 [14]. These regulations mean companies must meet compliance. Nonetheless, the legislations present opportunities for businesses to make a positive impact.

How can start-ups get support to build a sustainable business

As investors plan to increase their investments in ESG funds, start-ups must look for ways to develop their businesses to be sustainable. Some ways start-ups can get support to build sustainable enterprises include the following.

1. Collaborate with other businesses that value Sustainability as a priority for their business. Start-ups who are new on their sustainability journey can learn from other companies who have already begun their sustainability journey by partnering to deliver projects for a common goal.
2. Apply to sustainability-focused accelerators. An accelerator will provide resources to help launch your business with mentoring, coaching, equipment and sometimes the opportunity to pitch in front of investors that value ESG-focussed funds. Sustainability-focused accelerators are likely to provide specialist resources, insights, and training to help organisations and businesses to become sustainable.
3. Grants or government funding. Some government grants aim at companies that use innovation, research, and development to address sustainability issues such as reduced waste, structural longevity, and green, clean systems and processes.
4. Engage with sustainability experts to align business strategy with sustainability strategy. Companies must ensure that the sustainability strategy and the business strategy are consistent. A sustainability expert will help organisations to develop an effective sustainability strategy with which associated policies can be created and a plan of action developed.

Sources:

[1] R. Mora-Contreras, L. E. Torres-Guevara, A. Mejia-Villa, M. Ormazabal, and V. Prieto-Sandoval, “Unraveling the effect of circular economy practices on companies’ sustainability performance: Evidence from a literature review,” Sustain Prod Consum, vol. 35, pp. 95–115, Jan. 2023, doi: 10.1016/j.spc.2022.10.022.

[2] “Global Green Skills Report 2022.” LinkedIn, accessed 21/11/2022.https://economicgraph.linkedin.com/content/dam/me/economicgraph/en-us/global-green-skills-report/global-green-skills-report-pdf/li-green-economy-report-2022-annex.pdf,

[3] Lloyds bank, Sustainable business, accessed 16/01/2023. https://www.lloydsbank.com/business/sustainability.html,

[4] World Economic Forum, The global eco-wakening: how consumers are driving Sustainability, https://www.weforum.org/agenda/2021/05/eco-wakening-consumers-driving-sustainability/, accessed 16/01/2023.

[5] Forbes, Do Customers Really Care About Your Environmental Impact? https://www.forbes.com/sites/forbesnycouncil/2018/11/21/do-customers-really-care-about-your-environmental-impact/?sh=5b879465240d, accessed 16/01/2023.

[6] The World Economic Forum (WEF), Net-Zero Challenge: The supply chain opportunity, https://www3.weforum.org/docs/WEF_Net_Zero_Challenge_The_Supply_Chain_Opportunity_2021.pdf, accessed 16/01/2023.

[7] Anthesis Group, Research Reveals Sustainability Is Vital for Employee Attraction and Retention,https://www.anthesisgroup.com/sustainability-vital-for-employee-attraction/, accessed 16/01/2023.

[8] ICIMS, 3 sustainability initiatives to help attract and retain talent, https://www.icims.com/en-gb/blog/3-sustainability-initiatives-to-help-attract-and-retain-talent/, accessed 16/01/2023.

[9] Financial Times, UK faces ‘cost of doing business’ crisis as energy bills rise fourfold, https://www.ft.com/content/8463707c-239a-4944-8d68-058a63e7898d, accessed 16/01/2023.

[10] The Guardian, https://www.theguardian.com/the-invested-generation/2021/nov/22/the-new-long-term-why-a-sustainable-business-approach-is-attracting-investors; accessed 12/07/2022.

[11] Scottish Enterprise, Sustainability-driven innovation: how it can help your business, https://www.scottish-enterprise.com/learning-zone/business-guides/components-folder/business-guides-listing/sustainability-driven-innovation-how-it-can-help-your-business, accessed 16/01/2023.

[12] Deloitte, Ingraining sustainability in the next era of ESG investing, https://www2.deloitte.com/uk/en/insights/industry/financial-services/esg-investing-and-sustainability.html; accessed 16/01/2023.

[13] Ernst & Young Global (EY), Why investors are putting Sustainability at the top of the agenda, https://www.ey.com/en_uk/power-utilities/why-investors-are-putting-sustainability-at-the-top-of-the-agenda, accessed 16/01/2023.

[14] Ernst & Young Global (EY), Greenwashing — key risks and issues in financial services, https://www.ey.com/en_lu/ipo/why-successful-investors-focus-on-sustainability-pre-and-post-ipo, accessed 16/01/2023.

[15] Allenovery, Greenwashing — key risks and issues in financial services, https://www.allenovery.com/en-gb/global/news-and-insights/publications/greenwashing-key-risks-and-issues-in-financial-services, accessed 16/01/2023

[16] Deloitte, Greenwashing risks in asset management, staying one step ahead

https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/financial-services/greenwashing-risks-in-asset-management.pdf, accessed 16/01/2023