Why is SIB a business case?
Sustainable Inclusive Business improves financial performance both in the short and long term. SIB’s impact on improving profits can be direct and indirect. At times, SIB is directly instrumental in reducing costs and increasing revenues, as is the case with energy saving and the saving of resources and materials. However, other advantages that SIB offers are only indirectly manifested. For instance, companies that are actively involved in SIB have much lower rates of employee absenteeism due to illness. In these cases, the companies experience an indirect benefit from their SIB efforts.
SIB’s direct impact on profits.
It is not always easy to directly link financial performance to SIB. After all, the concept of SIB is subject to different interpretations and financial performance is measurable in different ways. That said, the studies below show that SIB’s direct impact can be clearly traced:
- In an 18-year study at Harvard University, researchers followed two groups of American listed companies: “high-sustainability” and “low sustainability” firms. It turned out that an investment in a high sustainability firm yielded more than the same investment in a low sustainability firm.
- In 2012, the Dutch Association of Developers for Sustainable Development (VBDO) conducted a similar study focused on companies listed on the Amsterdam Exchange. This study also showed a positive relationship between SIB and financial performance.
- Companies with mature sustainability programmes have higher profit margins. This finding emerged from a study by Atos Origin and IDC (‘The business case for environmental excellence is real’, 2009). The profit margins that these companies achieve are over 2% higher than the average in their sectors. The study also shows that companies with a proactive sustainability strategy have a stronger base from which to survive uncertain market conditions.
- According to a study by A.T. Kearney, Green Winners (2009), sustainable companies outperformed their industry average by an average of 10% from September to November 2008.
- A study by Atos Consulting Trends Institute, Corporate Responsibility in the Boardroom (2010), found that the yield from sustainable buildings was 16% higher than that from conventional buildings. This was primarily attributable to significant savings in energy and water consumption.
SIB’s indirect impact on profits
SIB’s impact on improving financial performance extends beyond what is directly traceable. There are six different areas wherein SIB leads indirectly to financial benefits:
- SIB helps generate more customers (and boosts customer satisfaction).
- SIB helps to motivate employees.
- SIB enhances the company’s reputation.
- Increasingly, investors and creditors are placing more importance on SIB.
- SIB increases the involvement of stakeholders.
- SIB is often instrumental in generating more innovation.