CSR? Profit is just as good a reason to embrace sustainability

ciaran's avatar
CSR investment

For many, the days of shareholders only worrying about their dividends are over – they now want to know that the companies they invest in are doing more than making a profit.

It’s also assumed that people who care about the environment will not invest in the companies that have had the biggest negative impact on our planet – regardless of any corporate social responsibility (CSR) policies these companies put into action.

But Michael O’Leary, managing director at investment firm Engine No. 1, thinks the reality isn’t so clear.

Is sustainability an investment?

“I think there’s a misrepresentation of shareholders. Most shareholders are worried about their retirement; buying a home; putting their kids through a good education,” said Michael.

“So they’re thinking decades down the track,” he continued. “And that means they’re invested in having a healthy planet, a functioning political system, and a prosperous society at large.”

If “shareholders are already starting to exercise their voice on social and environmental issues,” as Michael said, could ‘profit’ no longer be a dirty word associated with socially irresponsible, ultra-capitalist businesses? Could ‘profit’ become something good for the planet?

In 2021, 34 percent of UK consumers chose to support brands that have environmentally sustainable values.

– Deloitte

The trend towards more eco-conscious shareholders and investors has been termed ‘impact investing’. These investors support businesses or ventures – across dozens of industries connected to the fight against climate change and other environmental issues – in a number of ways.

The aim for the entrepreneurs behind these businesses is still to make a profit. But now they’re doing it in a positive way.

“Impact investing means realigning capitalism away from selling people crap they don’t need, and towards addressing the important problems in the world – a world where a US$1 profit equals one ‘unit’ of good done,” said Seth Bannon, founding partner at investment firm Fifty Years.

This revision of how important profit is to investors could be just the tonic many businesses needed to shift operations towards more sustainable processes that reduce our impact on the planet.

CSR investment chartsImage: Song_about_summer/Shutterstock

The changing face of investing

Eka VC partner Camilla Dolan thinks the whole world is going to experience this change in the coming decade: “Every sector, from food to healthcare, is going to go on this journey of disruption.”

Camilla had three simple elements that founders should include in their fledgling business model. “To really take off,” she said, “you need a great product, price parity, and a sustainability angle to it.”

Making operations more sustainable is really the only logical solution for most businesses. A healthy planet means a more secure consumer base, which will sustain growth in the long term. But if businesses adapt operations around more sustainable principles, will consumers – clearly pushing for change – come along for the ride?

Seth thinks companies won’t need to convince consumers that a potentially more-costly product or service is superior to an older iteration just because it’s sustainable. Instead, he sees the challenge in making this transition between old and new seamless.

“It’s not so much about changing minds or behaviours,” Seth said. “It’s about how we let people do exactly what they want, without it being problematic, because our products and services are better.”

In 2021, 28 percent of UK consumers stopped purchasing from certain brands because they had sustainability-related concerns about them.

– Deloitte

With businesses conscious of how to be more environmentally friendly, and the money and customers following that trend, organisations may not need the PR boost of a publicised CSR strategy anymore.

Profit may be the only reason companies need to choose sustainable practices.

Want to learn more about the latest developments in the worlds of tech and business? Join the Web Summit newsletter today.

Main image of wind turbines: GH Studio/Shutterstock

A partial image of a hand holding a smartphone. The NYTimes game Wordle is displayed on screen.

NYT Games: Time well spent?

In recent years, the New York Times has made a strategic bet on games, shifting focus from the newspaper...

September 27
Image of two people (Kelly Burton, CEO, Black Innovation Alliance; Janaye Ingram, Director of Community Partner Programs & Engagement, Airbnb) sitting on stage on perspex and plastic chairs. The person on the left appears to be talking while the person on the right looks on.

How can you build tech equity?

Tech is increasingly integral to our every day lives, but is it ...

September 19