7 Ways in Which Sustainability Unlocks Value in Your Business
We all agree that the practice of sustainability is the right thing to do, yet when it comes to actually investing in sustainability, many owners question the inherent benefits of pursuing sustainability within their businesses. We still see it as a luxury investment or a public relations exercise driven by moral duty. Consequently, “Sustainability” is often incorporated into some or other Social Responsibility initiative, resorting under an HR or PR department commandeered for this purpose. But unless underscored by a much broader commitment, such initiatives often fail to reach critical mass beyond the limelight of the launch.
A past president of GSN Planet, Bonnie Baker, emphasized the importance of sustainability as one of a spa’s business primary objectives, stating that going green is very much about staying competitive and that by not adopting sustainable practices, spas overlook a key strategy for growth. Alannah Weston, who is Group Chair of Selfridges, a well-known high-end fashion and cosmetics store in the UK, was asked in a recent interview whether a company can be sustainable and profitable at the same time. Her answer was that:
“companies will not be profitable unless they are sustainable”.
Consumers and investors have homed in considerably on sustainable products and services over the last 20 years and this has manifested positively in buying patterns and habits. More and more consumers now believe that they have a responsibility, through their purchasing power, to make a positive impact on the environment and society.
And this responsibility is increasingly being discharged in the spa environment.
Sustainable spas have become the destinations of choice for a discerning clientele where prospective spa guests now weigh a spa’s environmental conservation efforts and community upliftment practices before rewarding them with their custom. And passing muster, those spas who have shown to have incorporated authentic, natural and indigenous treatments, hired local staff and contributed to their local communities attract the most discerning guests. Loyal repeat visits and valuable word-of-mouth endorsements are a natural consequence of this positive feedback loop.
Also, thanks to their commitment to local communities and their subsequent contribution to the micro-economies of the area by, for example purchasing locally produced goods, sustainable spas are often as a result themselves benefiting from the economic stimulus. The ability of smaller businesses to expand their operations, better infrastructure and a greater diversity of commercial trade, often follow community success.
But let’s consider in more detail, 7 points that demonstrate why investment in sustainability will generate benefit to spa businesses.
1. The financial performance of sustainable companies world- wide provides a good starting point. Already in 2012, an analyses by Deutsche Bank evaluated 56 different studies all of which concluded that companies with high ratings for environmental-, social-, and corporate governance generally had lower costs. The Deutsche Bank study found that almost 90% of those studies showed that such companies
outperform the market in the medium and long term.
Additionally, a research brief of IBM Institute for Business Value in October 2022 concludes that sustainable companies attract higher financial valuations.
2. As already indicated, consumers and investors alike have shifted their focus significantly in recent years and when it comes to their acquisition decision making, sustainable products and services enjoy strong preference. In late 2019, a survey conducted by Accenture, a Fortune Global 500 professional consultancy, found that more than half of consumers said they would pay more for sustainable products. The survey of 6 000 consumers in 11 countries across North America, Europe and Asia, confirmed that more than 80% of consumers consider it important for companies to design products that are meant to be reused or recycled. Nearly 75% of the respondents indicated that they are currently buying more environmentally friendly products than they were five years ago, and over 80% of them expected to buy more over the next five years.
3. Sustainable businesses foster innovation, the backbone of success, by identifying new opportunities or creating new products and services to conform to environmental standards or social needs. By way of example, the Puma company developed a tool to measure the cost to nature of their manufacturing process, calculating the volume of potable water consumed, pollution caused and topsoil lost when a new product is created.
A large cosmetic manufacturer in South America, Natura, started developing products specifically aimed at protecting the biodiversity and traditional knowledge in Amazonia, over and above already making products that are natural or organic. Closer to home, Esse Skincare, which has its head office in Kwa Zulu Natal, has its whole range of products certified organic and carbon neutral, and in addition, has received several awards for its cutting-edge and advanced innovations in the area of formulation, including for an intensely hydrating serum containing hyaluronic acid and its probiotic serum.
4. Adding up savings that arise from the reduction in energy and water use, improved staff retention, lower waste generation and better collaboration across different markets, sustainable spas generally enjoy lower overall operational costs.
5. Sustainable businesses are also employers of choice, by offering healthier working environments to their staff, engaging their staff in decision making processes and collaborating with their immediate communities. Employee morale and motivation are much higher in green companies and this translates into reduced absenteeism, improved productivity and a marked reduction in staff turnover.
6. It is no surprise then to note that sustainable companies are getting access to special funds at preferential rates. Green Bonds and similar financial instruments are increasingly becoming available in the market. For example, Nasdaq offers Green Bonds, Sustainability Bonds and Social Bonds to stimulate investment in sustainable infrastructure, technologies and services. These funds are exclusively used for the financing or re-financing of new or existing eligible green projects that have a positive environmental or social benefit. Many banks are also gearing their funding in this direction, with Switzerland-headquartered investment bank UBS decreasing fossil fuel financing by 73% between 2016 and 2020, followed closely by Credit Suisse and Deutsche Bank.
7. Lastly, we are seeing an increase in global regulation around business activities that have environmental and social impacts. Legislation around air quality, carbon taxes and employment equity are some examples. Sustainable businesses face fewer operational risks in complying with these regulations because they have already adapted their businesses to meet environmental and social challenges.
Taking all of this into consideration, it is clear that what now needs to happen is for spa businesses to start thinking about sustainability as a critical corporate survival tool.