This article looks into margins and sustainability. Margins matter. They are the lifeblood of all businesses and everybody within an organisation should be made aware of how important they are.
A lot of people who are passionate about sustainability make the connection that because it involves a focus on energy efficiency and the resources that are entering and exiting a business that this would be good for the economic health of the company.
There are a number of high-profile studies that verify that this is the case. I came across a paper by Boston Consulting Group recently that I found particularly interesting. Their 2017 paper Total Societal Impact: A New Lens for Strategy serves as the point of departure for this article.
I think that instances of support for sustainability and corporate responsibility are particularly important when they come from mainstream and established sources such as Boston Consulting Group. It works to highlight that we are operating in a new paradigm.
Their study found a link between Environmental Social & Governance performance and margins. This held across a number of industries.
In consumer-packaged goods gross margins were 4.8% higher for the top sustainability performers when compared to the median performers.
In biopharmaceuticals margins were 8.2% higher for the top performers on expanding access to drugs when compared to the median performers.
I thought this was a strange one, but their findings even showed that in oil and gas top performers on health and safety had margins 3.4% higher than the median performers.
In financial services, margins were 3.4% higher for top performers on environmentally responsible sourcing when compared to the median performers.
What you need to know
This article looked into margins and sustainability through the lens of the 2017 Boston Consulting Group paper.
What this shows is, is that for business leaders concerned about margins, that an organisational focus on sustainability is a good way to ensure success in this area.
Margins matter and sustainability matters. So, it is fruitful that a link was found between these two important areas.
Thank you for reading,
By Barnaby Nash
Please share your thoughts in the comments section below or reach out to me on social media. What do you think about the link between margins and sustainability?