Balancing profitability and sustainability: Strategies for success

Amid rising concerns about global climate change, income inequality and geopolitical and social unrest, businesses are under increasing pressure from employees, customers, and investors to reduce their carbon footprint and advance environmental and social goals.

With the rise of public and regulatory scrutiny and a heightened focus on responsible environmental, social, and governance (ESG) practices, companies that neglect sustainability risk losing customers, facing public backlash and even losing financial support from investors and lenders.

Achieving a balance between sustainability and profitability requires a clear strategy, a committed leadership, engaged employees, and effective tools to manage ESG efforts.

Developing a clear roadmap

Balancing profitability and sustainability is a complex challenge that requires a clear and actionable roadmap for genuine progress.

Developing a strategy that is grounded in a comprehensive materiality analysis exercise is key; this ensures that the strategy is focused on issues that are material for the sustainability of the business and its operations and these material issues vary from industry to industry.

This provides the business with a comprehensive view of the myriad of issues that must be addressed beyond just environmental impact.

Furthermore, businesses should strive to identify opportunities to ensure that its operations and value chain are sustainable by design. This sometimes means rethinking the business model to create a business that is decoupling its environmental impact from its financial growth. Setting science-based targets and monitoring ESG data plays a crucial role in ensuring progress, accountability and a clear roadmap.

However, whilst the majority of business leaders (89%) expect transparency from suppliers on their carbon impact, over two-thirds (69%) aren’t receiving enough information to track the carbon footprint of products from suppliers or can’t rely on the accuracy of the information.

To support these organisations, Virgin Media O2 Business offer tools like the ‘Carbon Calculator’ to provide clear and trustworthy information on emissions related to their services. In minutes, the calculator generates insights based on the customer’s service information, inputted by an account manager, and forms the basis of a yearly report on their carbon footprint. With the model verified by the Carbon Trust as conforming to the Greenhouse Gas Protocol Product Lifecycle Standard, decision-makers can use the information from the calculator to understand the impact their telecoms services have on their overall carbon footprint.

Integrating sustainability into business practices

To truly embrace sustainability, companies must integrate it into their core operations. This process starts with product and service design, prioritising waste reduction and energy efficiency from the outset.

It also involves choosing suppliers that follow sustainable practices, improving efficiency and demonstrating innovation.

Leveraging technology and innovation is crucial in this endeavour to optimise operational efficiency, reduce energy use, and minimise waste. For instance, predictive analytics can streamline supply chains, while investments in renewable energy sources like Power Purchase Agreements (PPAs) and solar and wind farms can reduce long-term energy costs and lower carbon footprints without impacting business growth.

Furthermore, to strike a balance between sustainability and profitability, adopting circular economy principles, such as recycling and material reuse, can cut costs and reduce environmental impact. This means rethinking product and service design and designing products for longevity and recyclability and repairability to ensure they can be easily disassembled and reused or recycled at the end of their lifecycle, promoting resource efficiency.

Virgin Media O2 Business collaborates with Hubbub and Community Calling on the ‘Tech Donation Programme’, which empowers customers to drive tangible social impact by offering free refurbished smartphones, mobile data, texts and calls to digitally excluded demographics, specifically 11 to 16-year-olds and those aged 65 and over. Customers can choose the location and demographic to receive donated devices, and once the donation has been received by the community group, the customer will get an impact report that can be used in their own ESG reports.

Tracking progress

Defining specific, measurable objectives and communicating them both internally and externally is crucial for ensuring accountability and progress. Effective stakeholder engagement to ensure key groups are updated about the company’s sustainability performance helps the business build trust and manage ESG risks effectively.

Many stakeholder groups have varying vested interests in a company’s sustainability performance. Business customers want to ensure their suppliers are operating at the same or better sustainability standards as their own, investors and lenders want to minimise the ESG risks of their investments, and employees want to work for companies that operate responsibly and sustainably. This is why ESG data disclosures are key and often seen as an extension of a company’s financial performance.

However, a company’s ESG performance can only be as good as its internal adoption of sustainability as key element of its culture and business strategy. Embedding sustainability across the business entails accountability for ESG goals sitting wit the executive board, ensuring these goals are part of the central business strategy, and regular monitoring and reporting through key performance indicators (KPIs) and publishing annual sustainability reports to promote transparency and accountability.

Employees need to be at the centre of this process to ensure it’s adopted across all layers of the organisation. This can be achieved by providing education and training on sustainability practices to empower employees to understand and contribute to ESG goals, utilising digital platforms for employees to track their contributions, share ideas, and receive recognition to encourage active participation and continuous improvement, and appointing sustainability champions within different departments to further enhance engagement by leading initiatives and fostering a culture of sustainability throughout the organisation. Additionally, our carbon target is part of our employees’ annual bonus scheme.  This integrated approach ensures that sustainability goals are not only set but also effectively pursued and achieved.

Further learnings on balancing sustainability and profitability

At Virgin Media O2, we know the power of transparency and accountability. In 2022, we launched the Better Connections Plan, focusing on a zero-carbon future, circular economy, and connecting communities:

  • Zero-carbon future: We are committed to achieving net-zero carbon emissions across our entire value chain by the end of 2040 – ten years ahead of the UK’s national goal. We are empowering customers to prevent 20 million tonnes of CO2 from entering Earth’s atmosphere and supporting large-scale decarbonisation by the end of 2025.
  • Circular economy: We are committed to achieving zero-waste across products and operations by the end of 2025. We will also help consumers to carry out 10 million circular actions to tackle e-waste by the end of 2025.
  • Connecting communities: We are committed to helping eradicate data poverty by connecting one million digitally excluded people across the UK by the end of 2025. We are also working to equip two million people with the skills and tools to help them feel more connected to our digital society by the end of 2025.

As of this year, we have made significant strides. We reduced Scope 1 and 2 carbon emissions by 23% last year – equal to the annual energy use of nearly 15,000 UK homes. We supported 4.7 million consumers with ‘circular actions’ (e.g. recycling old tech or buying refurbished smartphones), saved almost 250,000 devices from landfill in 2023, and helped improve digital skills for two million people in 2023. Through the National Databank, we provided 41,933 O2 SIM cards and 188,149 O2 data (mobile broadband) vouchers. We’ve eliminated 65 tonnes of single-use plastic since 2021, and refurbished 11 million routers and set-top boxes since 2014.

Our employees also contributed to over 100,000 volunteer hours across the UK with their five annual paid volunteering days.

Balancing profitability with sustainability is not just possible, it is essential for long-term success. But in recognising the diverse landscape of businesses, we understand that not all companies have dedicated ESG teams to guide their sustainability efforts.

That’s why we offer tools like the Carbon Calculator and Tech Donation Programme, empowering businesses to navigate their environmental impact and achieve sustainability milestones. By integrating sustainability into core practices and choosing the right partners for support, companies can achieve a balance that benefits both the bottom line and the planet.

Dana Haidan is the chief sustainability officer at Virgin Media O2

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