The Business Case for Sustainability

What is Sustainable Business?

Businesses are increasingly being asked by regulators, customers and investors to measure social and environmental impact, in addition to profits, to combat threats to the environment. Coined in 1994 by John Elkington, an author and sustainability expert, this is known as the triple bottom line, or People, Planet, Profit. The triple bottom line illustrates that a sustainable business not only looks to ensure financial health but also positive social and environmental impacts, as well.

What are the main drivers of Sustainability?

Companies in every industry are increasingly feeling pressure to demonstrate their commitment to sustainability. Studies have shown that people want to work for companies and support brands that align with their values.

According to the Harvard Business Review, embracing and building a culture around sustainability can prove beneficial in the following categories:

Risk Mitigation

By implementing sustainable business practices, the sportfishing industry can reduce collective greenhouse gas emissions, strengthen the resilience of fisheries to climate-related disasters, and improve credibility as the leader in habitat conservation and resource protection.

Employees

In a recent survey by Qualtrics, more than half of U.S. employees – 54% – said they would be willing to take a pay cut to work at a company that shares their values. 56% said they would not even consider a job at a company that has values they disagree with.

Customers

According to a 2021 World Economic Forum report, more than half of U.S. consumers support brands that align with their values and make purchasing choices based on the brand’s environmental impact.

Retailers

Walmart, Target, REI, and other major retailers are now requiring their suppliers to calculate and report their carbon footprint, set Science-Based Targets, and disclose other sustainability-related practices.

Regulators

Companies face increased regulatory pressure to disclose climate-related information. The SEC recently passed a regulation that will begin requiring publicly traded companies to disclose climate-related risks and provide accounting for their greenhouse gas emissions (carbon footprint).*

Access to Capital

Investors are increasingly considering environmental, social, and governance (ESG) factors when making investment decisions. Companies with strong sustainability performance may have better access to capital, as investors seek to align their portfolios with their values and long-term sustainability goals.

* In the United States, California’s Climate Corporate Data Accountability Act (SB 253) mandates that U.S. and multinational corporations operating in California, with revenues exceeding $1 billion, must annually report their comprehensive greenhouse gas (GHG) emissions to a third-party emissions reporting organization contracted by the California Air Resources Board (CARB). Additionally, under the Climate-Related Risk Disclosure Act (SB 261), U.S. and multinational companies conducting business in California, with revenues of at least $500 million, are obligated to biennially formulate and publish a climate-related financial risk report by January 1, 2026. The SEC

Case Studies

For AFTCO and Z-Man, sustainability is a winning strategy, and their success can be translated across the industry.

  • AFTCO

    Through its quality-driven product philosophy and conservation ethic, AFTCO has demonstrated its business case for sustainability by attracting and retaining talent and mitigating legal risks.

  • Z-Man Fishing Products

    Z-Man has a thirty-year history of manufacturing non-toxic fishing lures, so sustainability was already a part of their DNA. However, the company decided to further pursue improvements to its sustainability efforts.

Tax Incentives for Sustainability

The federal government and many states offer tax incentives and credits to lower upfront costs and lessen barriers to entry for sustainability initiatives. Here are a few examples:

Database of State Incentives for Renewables & Efficiency (DSIRE)

DSIRE is the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States.

Inflation Reduction Act for Small Businesses

With the IRA, businesses can benefit from savings on installing solar panels and other energy efficient projects. Overall, there is a potential for ~70% tax savings in various amounts and ways by utilizing clean energy.

Commercial clean vehicle credit

A tax credit of up to $7,500 per electric motor vehicle with a maximum total tax credit of $40,000. This tax credit can be used to offset the cost of purchasing or leasing an electric vehicle.

Energy-efficient commercial buildings tax deduction

Businesses and building owners may be eligible to receive a tax deduction of up to $1.88 per square foot towards the cost of making energy-efficient improvements to their buildings. This includes energy-efficient upgrades to HVAC systems, lighting fixtures, water systems, walls, windows, and roofing.

Energy Star

Building owners who install new equipment aimed at improving the energy efficiency of their properties may be able to claim a tax deduction to offset some of the costs of the equipment.