19. August 2022 | CEO Spotlight

The Sustainability Factor: 3 Advantages of Sustainable Leadership

How would you define sustainability leadership?

Andre Taylor defines it as “a process of influence that delivers direction, alignment, and commitment, and aims to address social, environmental, and economic issues to create a better world.”

At the highest level, the process involves a group of people working together to build a shared vision for change, coordinate their activities, and foster personal commitment for collective success.

In the private sector, sustainable leadership is about demonstrating that ecology and profit are not mutually exclusive. Companies can do the right thing and still succeed financially. In fact, sustainable business models provide a more stable platform for tech companies and ultimately deliver superior results.

Here are three areas where sustainable approaches offer distinct advantages to companies and investors.

Building and Scaling Tech Companies

Vision, innovation, and culture are three of the most important prerequisites for building a successful tech company. Companies that are committed to sustainability from the outset have distinct advantages in all three areas:

  • Vision is vital to identifying the needs and markets the company will address.
  • Innovation is needed to create and monetize the products or services that will address the needs that were identified through vision.
  • Culture is the adhesive that holds the young company’s key contributors together as the company grows and evolves.

Investors and consumers are becoming increasingly interested in environmental, social, and governance (ESG) products and services.

And companies that develop ESG-focused business models are factoring in those potential investors’ and consumers’ needs from the outset, which is a sound growth strategy. They are also setting the stage for developing ESG-focused products and services that may well command a premium from conscientious consumers.

Innovation is at the very heart of sustainability — because it must be.

Der Nachhaltigkeitsfaktor: 3 Vorteile einer nachhaltigen Unternehmensführung

It would be easier to continue using the same old unsustainable approaches to manufacturing cooling equipment, for example, but doing so would continue to harm the environment. Today, cooling accounts for 7% of global warming. And this number will grow exponentially if we don’t rethink how cooling should work in the future.

We must innovate in order to make the products people need without contributing to the deterioration of our planet.

Innovation really isn’t a process, however. It’s a way of thinking and living, and a culture unto itself. So when a company commits to sustainable practices, they are committing to a culture of innovation, which will serve them well.

The term “culture” has long been linked with successful startups and some of the largest tech companies in the world. To survive long-term, it’s essential for companies of all sizes to identify their shared values and hire employees who sincerely hold those values.

ESG and sustainability are topics people generally feel quite passionate about. Therefore, ESG-focused tech companies are likely to attract people who are similarly passionate about the environment. Bringing in people with a strong sense of shared values will promote cohesiveness within the organization and provide a shared lens through which to solve problems and innovate.

Creating Higher Returns for Investors the Right Way

Perhaps the biggest myth about the climate crisis is that profitability and sustainability are mutually exclusive. In reality, ESG companies can grow returns for investors while making a massive impact in the fight against climate change.

While we have the benefit many good examples set by business leaders such as Ray Anderson, Francesco Starace, John Brock, and Paul Polman, large-scale sustainable initiatives are still facing headwinds — and it has everything to do with perspective.

Until recently, the global economy was based almost solely on exploitation of natural resources and people. It was a race to the bottom to produce the cheapest products that yielded the most profit, with little regard for the environment or workforce.

But that idea has changed in recent years, and many investors and consumers are recognizing the importance of environmental and social responsibility. Our goal is to help them realize their sustainability goals by providing carbon-neutral, environmentally friendly cooling equipment that is also cost efficient.

Der Nachhaltigkeitsfaktor: 3 Vorteile einer nachhaltigen Unternehmensführung

Sustainable innovations tend to be market disrupters. While there are upfront equipment costs, these expenses are typically offset by the efficiencies designed into them.

Our organization, Efficient Energy, is disrupting the entire cooling and HVAC equipment market by building sustainable equipment that runs off of a low-cost natural refrigerant — water. Our customers no longer need to pay for environmentally harmful synthetic refrigerants. Now, they can both reduce their maintenance and energy costs and decrease dependence on the harmful chemicals that the industry has relied on for decades.

Because of these cost and environmental advantages designed into our business model, customers understand our value proposition and are willing to invest in our equipment rather than cheaper, less efficient, and environmentally unsustainable cooling systems that are based on decades-old technology.

Attracting High-Potential Talent

According to the World Economic Forum, 75% of Gen Zs and 71% of millennials value sustainability more than brand names when they make a purchase. Perhaps even more compelling, the Deloitte Global 2022 Gen Z & Millennial Survey found that 90% of Gen Zs and millennials are making an effort to reduce their impact on the environment.

These statistics indicate that the vast majority of the people comprising the future workforce are ESG-minded, and that a large number of them factor their preferences for sustainability into their decision-making. That means being ESG-focused is a major recruiting advantage for sustainable tech companies.

Beyond offering high-potential recruits a job, sustainable companies offer them a chance to make an impact through their work while making a good living, which especially resonates with younger generations.

Der Nachhaltigkeitsfaktor: 3 Vorteile einer nachhaltigen Unternehmensführung

Innovation is the Bridge

In Germany, we have a saying that you have to shake the apple tree hard enough for the fruits to fall, but not so hard that you break the tree. At Efficient Energy, we take a similarly measured approach to innovation, balancing advancement with the overall sustainability of our products and operations.

Rather than approaching our work as eco-dreamers or activists, we see ourselves as innovators. True innovation is the key to fostering harmony between ecology and technology, and it’s in this nexus that sustainable companies flourish.

The climate tech companies that innovate the best will emerge as market leaders in the years to come.