Sustainable entrepreneurship: safeguarding future generations

September 2023  |  FEATURE | BOARDROOM INTELLIGENCE

Financier Worldwide Magazine

September 2023 Issue

Due to the alarming environmental and societal problems the world has experienced in recent years, the issue of sustainability has grown in prominence. A growing belief that green capitalism is not enough is leading more companies to shift their focus to sustainability. Entrepreneurs are challenging themselves to develop innovative solutions and integrate a responsible way of thinking about the world into their business models.

As companies have faced increasing economic and geopolitical challenges, concepts such as sustainable entrepreneurship have emerged. Sustainable entrepreneurship can help create a new approach to developing the global economy. At its core, it combines many aspects of politics, business and civil society to facilitate the development of socially and environmentally sound economic activities via innovative business models, the development of new markets and the generation of new sources of income, particularly for socially disadvantaged population groups.

Sustainable entrepreneurship is opportunity-oriented, aimed at generating new products, services, production processes and techniques. Many sustainable businesses are providing products and services that address sustainability concerns by reducing energy and natural resource use, for example. It is a business strategy that can help solve social and environmental problems, especially in emerging and developing countries.

Indeed, the end goal of sustainable entrepreneurs is not only to achieve profitability by meeting specific needs, but also to have a positive impact on society and the environment. Ultimately, sustainable entrepreneurship offers an important opportunity for the evolution of business development practices at the nexus of environmental and social aspects.

Indeed, the overall value of assets under management (AUM) at funds leveraging environmental, social and governance (ESG) data totalled $40 trillion in 2020, up from $22.9 trillion in 2016, according to Opimas.

Shift in entrepreneurial thinking

More entrepreneurs are considering the future ramifications of social innovation and business strategy. They are putting into practice business ethics that prioritise the long-term health of society at large. Increasingly, companies can consolidate their position within the market through innovative actions in the field of sustainability.

Today, many companies are working toward the goal of creating a more just and sustainable world. By focusing on social innovation and business strategy, entrepreneurs can help achieve this lofty goal.

According to edie’s 2023 Sustainable Business Leadership Survey of sustainability and corporate social responsibility (CSR) professionals, business leaders, environmental consultants and energy managers, 82 percent of respondents said their organisation will be more committed to sustainability in 2023 than in 2022. Further, 91 percent of respondents believe that their chief executive is either ‘somewhat’ or ‘very’ engaged with sustainability.

In recent years, companies have begun to link their executive compensation packages to ESG factors, established net zero and nature positive goals, and pursued business models which reduce waste and prioritise inclusion and equity efforts, while boosting business resiliency.

Another key area in sustainability is energy efficiency, which is seeing growing investment. By optimising energy efficiency, it is possible to reduce greenhouse gas emissions, reduce demand for energy imports and lower costs for households, offices and other properties. Industry will continue to invest in this area, particularly over the next five years as the crucial race toward net zero intensifies.

According to the Energy Efficiency Investment Survey 2022, significant population and economic growth in the coming years will accelerate climate change to a critical point. Growing urbanisation and rising geopolitical tension will also make energy security and sustainability more pressing. Improved energy efficiency can address these issues. According to the survey, 97 percent of respondents are already investing or planning to spend on energy efficiency, 40 percent plan to make energy efficiency improvements in 2023 and 89 percent expect to increase investment in energy efficiency over the next five years.

While industry can make improvements to energy efficiency, it is also the responsibility of government and non-governmental organisations (NGOs) to work together to find solutions to meet energy and climate goals.

Another strategy entrepreneurs can use to increase sustainability is garnering the support of their stakeholders. Sustainability initiatives can, for example, empower a customer base to take action, strengthening the bond between a company, its employees and its customers. Stakeholders of all stripes want to forge relationships with sustainable organisations. By fuelling stakeholder momentum, entrepreneurs can help make waves across industries.

Consumer trust

In many respects, it is consumers who are now driving these changes. According to First Insight, sustainable products are becoming more popular with consumers across all generations, from Baby Boomers to Gen Z, who now willing to spend more for them.

Deprioritising short-term profits over long-term sociocultural and environmental issues can create trust among employees, customers and other stakeholders. Through trust and openness, entrepreneurs can differentiate their business from the competition.

By creating products and services that address ecological and social concerns in new and responsible ways, companies can help build a better and more profitable future in the long run.

© Financier Worldwide

BY

Richard Summerfield