https://arab.news/ca8q4
The world today is witnessing a crippling catastrophe.
As corporations prioritize economic success and ignore the deeper repercussions of their strategic decisions, the world grapples with unrestrained wildfires, rising sea levels, global warming, loss of biodiversity and stifling air pollution.
Unfortunately, the list is alarmingly long.
If this was not enough, the unanticipated onslaught of COVID-19 brought various staggering issues. We witnessed a shift in what consumers expect from their lives and the world around them — a world that undoubtedly is incomplete without giant retail players.
A simple Google search to understand when sustainability became a buzzword would surprise anyone with the exponential increase in page results.
While it is not a foreign term in our community, it is only now that corporations are coming to realize the bright prospects of sustainability in the competitive retail space.
We are finally moving beyond judging green slogans as a “damage control” or “corporate social responsibility” agenda. So what is the untapped potential of sustainability?
Environmental sustainability
In a corporate context, environmental sustainability involves taking measures to conserve natural resources and protect the ecosystem by revolutionizing business operations.
While most see it as an expense accounting for the larger financial outlay of resources, its rising importance makes it a valuable investment.
Although the UAE is ranked among the top 40 sustainable nations in the world, the region requires high energy for cooling and air conditioning, consuming roughly 70 percent of the nation’s electricity.
Knowing how proactive the UAE government is in taking corrective action, corporations can enter the conversation with carefully chosen store fit-outs employing energy-efficient infrastructure.
Not only does this help businesses partake as responsible volunteers, but it also allows them to align with the nation’s initiative to reduce carbon footprint and employ only clean energy by 2050.
Similarly, corporations could keep an eye out on addressing the next big sustainability challenge that the region wrestles with.
It could be the rising fuel demand as most people in the UAE choose to drive even for short distances or depend heavily on food imports.
Here is the gap that grocery retailers can fill by simply streamlining operational logistics, choosing innovative ways to reduce fuel consumption and sourcing locally grown products.
With so many concerns emerging around us, corporations can choose which environmental issue is the closest to their value proposition, the field of work and, more importantly, region.
It makes them relatable not just in the context of marketing principles but also in conscious engagement with the region’s pressing issues demonstrating long-sightedness, all while painting a “greener” future in terms of sustainability and money.
Social Sustainability
The social pillar of sustainability drives a corporation’s impact on people. This support extends to employees, customers and the local community.
Recent research suggested that nearly three-quarters of adults in the UAE expect businesses to be environmentally conscious. Yet, over a quarter were also willing to switch or boycott brands with no promise to adopt sustainable behavior. These are astonishing numbers. But will consumers be ready to pay a premium for sustainability if it comes down to it?
While consumers previously also intended to pay more for sustainable products and services, it has seldom converted to action.
However, with digitization, it is projected that this gap will close — 31 percent each of both Gen Z and millennials expressed willingness to pay more to support environmentally sustainable companies.
Although price continues to be an essential purchase criterion, sustainability has ascended the ranking, attracting significance by 60 percent of consumers.
In the digital era, information is accessible. Expectations are rising. People are demanding answers. Keeping them informed and engaged is imperative to brush off the climbing pressure and leverage sustainability as the next game-changing differentiator.
Economical sustainability
A business is only a business if it can continue to achieve economic growth. The good news is that economic growth and sustainability are not two mutually exclusive events.
According to McKinsey, having a sustainability strategy allows a company to make long-term investments. Considering the adverse impact of unsustainable behavior on enterprises, they are moving toward a circular economy. This shift also shows a growing potential, with the renewable energy market expected to increase to $2.15 trillion by 2025.
The increasing importance has resulted in heightened attention from investors and executives who have realized the role of sustainability in safeguarding a company’s long-term success.
Besides revenues, going green can boost bottom lines, driving down business costs with innovative strategies and developing goodwill through an improved reputation as a byproduct.
Numerous examples show how sustainability reduces downside risk and lowers loan and credit default swap spreads, contributing to higher credit ratings.
A parting note would include that a journey on the path of sustainability does not promise success overnight. That said, while a handful of companies continue to shatter preconceived notions of what is possible with sustainability, the clock is ticking on retailers to plan many such initiatives for the future.
Even though certain case examples have outlined the steps to achieving economic success, non-financial key performance indicators cannot be overshadowed.
So considering that it is possible to achieve economic growth through ecological measures, why not choose to grow sustainably?
• James Scott, CEO of Grandiose Supermarkets