How Clarity Creates Capital

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It’s becoming a bit of a pattern. We talk about the importance of sustainability as a business practice, and the room goes quiet. CMOs and Sustainability Leads know they need to eventually address their own sustainability and transparency on the topic, but other priorities seem more urgent. They’ll be ready to talk about sustainability next quarter, or maybe next year.

But there are plenty of reasons to be talking about your company’s efforts to be transparent about the sustainability of your business. Every day you wait is another day you’re leaving revenue, customer loyalty, and competitive edge on the table. Will you be prepared to snatch it up? Or will you be satisfied playing catch-up when you’re finally forced to?

Every day you wait is another day you’re leaving revenue, loyalty, and competitive edge on the table.

A new perspective

Let’s start by taking a new view on this frequently discussed topic. It’s of course important to talk about ways to make your business more sustainable. VML is focused on helping you to optimize your business for success.On growing your customer loyalty and streamlining your business practices using technology that turns seemingly challenging tasks into simple mouse clicks. And now, we’re ready to do that for your sustainability and transparency, too.

But why should you care? Let’s set aside (just for a moment) the moral imperative to save our planet. Let’s talk business instead. We’ve got four key reasons why working on sustainability today is simply good business practice. And we’re lining them out for you here.

You’ll increase profitability

Yes, you read that right. We’re starting with the message that might be most surprising. When most executives think about sustainability, they see high price tags and minimal reward. But there is plenty of evidence that your efforts to be more sustainable have a direct impact on profitability. You can read about it in this blog about the ROI of Sustainability. Among the resources in the blog is a report from the World Economic Forum hat shows that ethical supply chain practices can boost revenue by up to 20% and reduce costs by up to 16%. Additionally, McKinsey reports that a solid ESG score can lower capital costs by 10%. Proof positive that putting off sustainability is simply bad for your business.

You’ll meet customer demand

The most overwhelming evidence that sustainability should be a priority comes from consumers themselves. And we’re not talking about a small niche of dedicated climate activists. No, we’re talking about average, daily consumers. Given the choice between two equal products, consumers will overwhelmingly choose the product made by a company that’s making a positive climate effort in their business operations, supply chains and productions. In fact, 66% of consumers wish companies and brands offered better environmental practices. When Amazon started offering their ‘Climate Pledge Friendly’ Badge on products, revenue for those products went up an average of 8.4%. And in some product categories, climate labels increased revenues by as much as 77%. When you make it easy for customers to choose greener products, they respond immediately with their wallets. And that’s no surprise, since 61% of them say they are more likely to buyfrom a retailer that has a purpose that goes beyond selling goods and services. In the B2B space, 69% of B2B buyers say they’re more likely to buy from suppliers with a higher purpose.

At a Glance

Ethical supply chain practices

can boost revenue by up to 20% and reduce costs by up to 16%.

You’ll boost your brand value

You’re likely noticing a link here. It’s not just about running your business more sustainably, but also about effectively and transparently sharing your efforts with your consumers. From your head office to your suppliers, you need to demonstrate the work you’re doing. But in today’s cancel culture, one report indicates that 76% of B2C CMOs don’t communicate about their efforts because they fear the ‘greenwashing’ label. So, the key is to collect the relevant data, make effective changes, and back up yourreporting with hardcore facts. When you do, your reputation will soar.

To avoid the greenwashing label, you must back up your claims with data-driven facts.

Just ask the companies with a targeted strategy for sustainability marketing. All of the companies in a recent reported a positive impact on their brand image (24.13%) and a boost in customer loyalty (20.13%). And 90% of those companies reported that the return on investment was worth the effort to do effective sustainability marketing. But effective sustainability marketing begins with having the data to back it up. Otherwise, you’ll get the greenwashing label, and that’s bad for your reputation.

Focused on employee acquisition and retention? That’s another great reason to have an effective strategy for reporting on your ESG efforts. A KPMG survey revealed that a full one-third of 18- to 24-year-olds have turned down a job offer because of the company’s weak ESG commitments. Having the data to back up your claims isn’t just great for your bottom line, it’s also great for the sustainability of your workforce. The desire to work for climate-aware companies is only going to get stronger.

You’ll be ready for legislation

Starting in the 2025 financial year, companies of a certain size will be required to include ESG factors in their annual financial reporting. And while the Corporate Sustainability Reporting Directive (CSRD) may not be relevant to you this year, it soon will be. And within the next 5 years, specific industry sectors will be required to provide Digital Product Passports in the EU, showing the cradle-to-grave environmental impact of their products and services. Guidelines like the Product Environmental Footprint methodology and the International Sustainability Standards Board (ISSB) are creating a unified set of standards for action, benchmarking, and reporting on sustainability efforts. These and other regulations will hold companies more accountable for their action – or inaction – in this domain. So, you can wait until legislators come knocking on your door, or you can take steps now that will make fulfilling your requirements, writing comprehensive reports, and supporting your claims with data as easy as filling a shopping cart.

At a Glance

One-third

of 18- to 24-year-olds have turned down a job offer because of a company’s weak ESG commitments.

You can wait until legislators come knocking at your door, or you can take steps now.

Where should you start

It seems overwhelming and confusing. And the consequences of inaction may seem far away. But getting a clear grip on your current supply chain sustainability and taking targeted action to both reduce your carbon footprint and effectively report about it to customers, shareholders, and legislators will take some time. VML has designed a methodology to make it all much easier.

We start with a single source of data truth, and as few as two basic product data points. Our complete engine will provide a system that tracks the footprint of your products and services, tracks your supply chain, cleanses your data, and identifies areas for improvement. It will also indicate the steps you need to take in order to create Digital Product Passports and gain certification, badges and labels for your products. This will help you create honest marketing and comprehensive, transparent reporting about your business’ sustainability.

We can show you how to honestly and transparently share your sustainability successes with customers and keep the legislators happy too. All in fewer steps than you might think. It’s called Sustainable ShelfMaster, and it’s our one-stop shop for everything you need to know on this topic. But for now, all you have to do is stay tuned to this space. In the coming weeks, we’ll dive into the core issues and key considerations of the sustainability question for your business, and turn all that complexity into simple, straightforward choices. We’ll show you why the best way to prepare for the future of commerce is to start today. Watch this space.