- On July 20, 2021
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- business leaders, corporate responsibility, environmental benefits, green manufacturing, resilience, sustainability
Business Leaders Increase Resilience with Sustainable Business Practices
The global population is expected to reach 9.8 billion people by 2050. If resource consumption continues at the current pace, the United Nations estimates that three planets would be needed to sustain this growth (1)! It is no wonder why consumers and manufacturers alike are making sustainability a top priority. Companies are facing increasing pressure from consumers, legislation, employees, and personal integrity to increase sustainability in manufacturing. Business leaders are increasing sustainable business practices to boost resilience in times of disruption.
Covid-19: A Case Study in Sustainability and Resilience
Companies with a greater commitment to environmental, social and governance (ESG) benchmarking and reporting regimes continue to prove their ability to weather periods of uncertainty in the market better than their peers (3). According to a recent Blackrock report, despite the recent turmoil, companies with a record of good customer relations or robust corporate culture are demonstrating resilient financial performance. In fact, to date, more than 90% of sustainable indices have outperformed their parent benchmarks during the COVID-19 pandemic (3). Business leaders are recognizing that sustainable business practices have a twofold benefit and serve to make their company more resilient in times of supply chain disruption.
How Sustainability Boosts Resilience
Business leaders who introduce more sustainable business practices into their manufacturing firms are seeing increases in resilience for a multitude of reasons, including:
Localized Suppliers Protect Supply Chains Against Global Constraints
Local suppliers are less likely to be affected by border closures, trade wars, and travel restrictions as in the case of COVID-19. 69% of manufacturers are likely to reshore in the future (4). Shifting to more local suppliers also results in simplified logistics, meaning manufacturers have access to the necessary materials even when global logistics models are strained. This results in lower transportation costs and decreased emissions.
Recycled Materials Means Less Dependency on Raw Materials when Supply Chains are Stretched
Companies who use recycled materials or reuse byproducts to manufacture new products are less likely to face supply chain strains when raw materials and natural resources are strained due to issues like climate change and natural disasters. Business leaders who encourage the use of recycled byproducts, whether from partnered companies or internal production processes, can prepare for when natural resources are increasingly stretched as the population grows.
Attract Top Talent by Promoting Sustainability
Modern day employees, especially millennials, want to work for companies that are socially and environmentally responsible. 43% of business leaders site employee sustainability preferences as a driver for these initiatives (2). Attracting top talent can help companies stay viable against competition and overcome times of financial hardship by increasing efficiency and decreasing labor costs. Sustainability also benefits the economy overall. Nearly every state in the U.S. saw an increase in clean energy jobs in 2018, combining to add about 110,000 net new jobs (2).
Maintain a Loyal Customer Base with Sustainable Business Practices
Customer loyalty and retention is essential to keep a business afloat during times of economic hardship. Nearly 80% of executives pointed to an increase in customer loyalty as a key benefit from sustainability initiatives and 69% point to an increase in brand value (2). Sustainability means consumers will continue to choose you over your competitors. 70% of business leaders are implementing sustainable practices to keep up with pressure from the competition (2).
Besides being beneficial to the environment and society, sustainable business practices are intrinsically beneficial to manufacturing companies. Business leaders are implementing sustainable strategies into their companies to increase resilience during times of disruption and hardship. Going green is not only essential to preserve our planet, but it is a win-win for business.