Measuring the business value of sustainability

Consumer interest in sustainability is an increasingly important factor for business owners to consider in their strategy and decision-making. More than 45% of consumers say they are buying more sustainable products to reduce their impact on the environment.¹ This recent survey finding from PricewaterhouseCoopers (PwC) reflects the growing business case for operating more sustainably through initiatives that reduce energy, water use, carbon emissions and waste.

Bank of America’s 2024 Business Owner Report discovered interesting trends related to implementing sustainability:

The majority of small businesses said they care about their community and environmental impact. At the same time, 70% reported concern about how pursuing sustainability could impact their bottom line and business success. Initiatives may carry a financial cost to the business or may not resonate with customers. Fortunately, there are several strategies for overcoming these barriers, as well as support within the marketplace, to help businesses make progress.

Covering upfront costs of sustainability-related investments

There is often an upfront investment for sustainability measures in the form of new equipment, building or office space updates, new monitoring and controls and other upgrades. This is a common challenge that governments and non-profit organizations are trying to help businesses tackle by increasing the amount of funding available through direct financing, incentives and tax savings. 

Many of these initial costs will pay for themselves over time and may even result in savings or value creation. Installing automatic lighting and HVAC controls, for example, enables systems to turn off when occupancy is low, reducing energy use and energy bills. Transitioning to QR codes to replace paper invoicing and instructions will require upfront costs to create the code but ultimately reduce paper waste and printing expenses.

How to get started

Read more about some of the federal government assistance programs in the Database of State Incentives for Renewables & Efficiency® and government incentives designed to help business owners implement sustainable practices. Begin with sustainability projects – like energy efficiency improvements – that have a quick return on investment, either through existing incentives or an immediate reduction in costs, to start seeing results without a big impact on your bottom line.

Demonstrating sustainability value to customers

Different messages resonate with different consumer segments. Start by evaluating your unique customer base, dividing it into categories:

• Sustainable consumers who highly value sustainability.
• Agnostic consumers who somewhat value sustainability.
• Indifferent consumers who don’t value sustainability.

Determine what environmental and social issues they care most about, such as climate change, plastic pollution, diversity and inclusion or toxic chemicals. This assessment will help you align with their interests. Use it to inform decisions like:

• What sustainable products to offer.
• What types of sustainability initiatives to pursue.
• What messages to convey in promotional materials and other marketing.

When considering sustainable products, consumers are most concerned about whether they can be reused, their durability and how they will minimize waste.² Promoting these tangible advantages to the customer helps to illustrate the value of sustainability.

• For more agnostic customers, highlight traditional benefits, such as product performance and quality.³
• Link sustainability benefits to the customers’ personal values. As an example, many people buy organic produce because they believe it to be a healthier option.⁴

Successful sustainability marketing should always be authentic and transparent. Harvard Business Review offers a framework for avoiding unfounded or dishonest sustainability claims, which are often referred to as “greenwashing.” First, the intention should be improving the company’s footprint, not a marketing angle. All environmental claims need to be measurable and supported by facts, stories and case studies.

Regarding price, U.S. customers are generally willing to pay a premium of 9-12% for products with minimized environmental impact.⁵ Keep this price threshold in mind to help inform product offerings and pricing strategy.

There is also evidence that consumers are starting to reward brands for sustainability:

• Products marketed as sustainable now hold an 18.5% market share, up more than 4.8 points since 2015.⁶
• A Deloitte study found that consumers are paying attention to business action and using their purchasing power to reflect that. About 25% of Gen Zs and 24% of Millennials have stopped or lessened a relationship with a business due to unsustainable practices.⁷

How to get started

Map your customer base to determine their level of understanding and interest in sustainability and evaluate their priorities. Identify sustainable product features, services and initiatives that align with their priorities. Test what messages work best for your customers and adjust accordingly.

Measuring the impact of sustainability on your business

Sustainability provides direct benefits for businesses to capitalize on – from attracting employees who are looking for an employer that aligns with their values to achieving cost savings from energy efficiency and decreased waste. While each business is unique, there are ways to measure the impact of these efforts on your bottom line.

• Compare your utility bills before and after efficiency upgrades to see cost savings from energy, water and waste reduction.
• Evaluate employee satisfaction and engagement before and after sustainability initiatives. This can be done through distributing engagement surveys, tracking productivity metrics or even informally through conversation and observation.
• Assess whether adding sustainability messaging to advertisements and job posts increases the number of potential customers and employees visiting your website.
• Track sales of sustainable products versus non-sustainable products. Test different marketing messages and evaluate how customers respond in their engagement – like the number of views online – and purchasing decisions to determine what is most successful.

Committing to making your business more sustainable takes work and investment, but resources and strategies are available to help you overcome these barriers and be part of the solution.

¹ PwC, “Consumers willing to pay 9.7% Sustainability Premium, Even as Cost-of-Living and Inflationary Concerns Weight: PwC 2024 Voice of the Consumer Survey,” May 15, 2024.​

² Bain & Company, “Consumers Say Their Environmental Concerns are Increasing Due to Extreme Weather; Study Shows They’re Willing to Change Behavior, Pay 12% More for Sustainable Products,” November 13, 2023.

³ Harvard Business Review, “How to Market Sustainable Products,” March-April 2024.

⁴ UCLA Anderson Review, “How to Make Sustainable Produce More Appealing to Customers,” September 19, 2018.

⁵ PwC, “Consumers willing to pay 9.7% Sustainability Premium, Even as Cost-of-Living and Inflationary Concerns Weight: PwC 2024 Voice of the Consumer Survey,” May 14, 2024; Bain & Company, “Consumers Say Their Environmental Concerns are Increasing Due to Extreme Weather; Study Shows They’re Willing to Change Behavior, Pay 12% More for Sustainable Products,” November 13, 2023; Bain & Company, “Selling Sustainability Means Decoding Consumers,” November 13, 2023.

⁶ NYU Stern, “Sustainable Market Share Index,” April 2024.

⁷ Deloitte, “2024 Gen Z and Millennial Survey: Living and Working with Purpose in a Transforming World,” May 15, 2024.