Question

What are at least three of the current market conditions that are driving businesses to act more responsibly? In other words, what is causing companies to take sustainability more seriously, and what are some of the reasons or evidence for this shift in the market? What are some of the consequences for companies that ignore sustainability as a driver?

Answer 1

The market conditions that are driving businesses to act more responsibly are:

1. Environmental degradation and the impacts of climate change are material business risks

(i)The top global business risks include sustainability issues of water, climate change, and extreme weather identified by business leaders throughout the work according to a survey of WEF (world economic forum). These factors create unexpected risk in the corporate value chains, not just environment risks but business risks.

(ii)The most vulnerable sector is the companies which are in the food sector. For example, Walmart says that 95% of its fresh production lines are threatened by climate change.

(iii) According to a world's largest beer brewer, when the amount of water for irrigations dipped, the prices of barley skyrocketed in a severe drought affected areas in the US. Interconnected production of cans and unavailability of the low cost of power from hydroelectric dams affected the overall output.

(iv) Another affected region is the energy sector because of its location in the water-stressed areas. Energy companies depend on these areas for their extraction of production, electricity generation and cooling. If energy outages happen, it creates a ripple effect across the economy.

2. Sustainability is a major driver of business strategy and competitiveness

Sustainability could prove to be a source of competitive advantage.

The Harvard business school has categorized sustainability as a meta-trend, along with information technology, globalization, and mass production. Among many major corporations, comprehensive sustainability commitments are now becoming commonplace.

3.Consumer demand

Going green not only saves money but it also generates new revenue by attracting customers who care about the company's environmental footprint.

Other more reasons are:

Risk mitigation

Leadership

Tax incentives.

Brand reputation and publicity.

• Consequences of companies that ignore sustainability as a driver:

According to Godman Sachs, if you ignore sustainability, you are going to be worthless.