April 16, 2024

ROI Beyond Dollars

It has become increasingly apparent that businesses must prioritize sustainability in all aspects to be successful in the modern world. Prioritizing sustainability would benefit businesses on all fronts, leading to environmentally friendly products and services, better profit generation, and more benefits for their customers and employees. One method to achieve these goals is to change the way businesses model performance, and that can be done by measuring Sustainable Return On Investment (ROI). Sustainable ROI refers to the environmental, societal, and economic benefits obtained from an investment and its profit potential. Sustainable ROI evolved as a response to growing concerns over environmental health and social equity due to business practices. It’s an updated metric from the standard ROI model, which only examines company profit in investment pay-off. The most significant benefit of  Sustainable ROI is its comprehensiveness. The method offers a more extensive assessment of an investment’s impact in ways other than company profit - it looks at the investments’ ability to improve societal well-being for employees or communities and lower impact on the environment.

Among the other benefits that Sustainable ROI brings to society, it is also a major contributor to product creation and innovation. More and more consumers prefer sustainably made and ethically sourced products, with almost 75% of respondents to a McKinsey and Co. survey saying they consider sustainability when shopping. To match increasing consumer demand for products that are sustainable and create more positive impacts that promote consumers’ views, companies are now designing more products with lower environmental impact or social equity in a cost-effective manner. Almost every grocery store now contains paper products made of recycled paper, organic options for meat and produce, and food containers made of recyclable materials like cardboard or boxboard. Clothing and apparel businesses have entire store sections dedicated to garments that are made of recycled fibers or use less natural materials. Cleaner companies are now making cleaners that utilize natural ingredients instead of harmful chemicals. More and more startup shops are appearing whose profit goes directly to local community members in need instead of big businesses. The consumer market is completely changing as a result of Sustainable ROI and the modern consumer’s desire for greener products. 

Sustainable ROI benefits are being seen in so many places other than consumer product businesses, and it has paved the way in helping businesses to succeed. The metric has essentially reached every business sector in the world, and incorporating it into business models has resulted in phenomenal gains in environmental quality and social equity. A prominent example of this can be seen in renewable energy. In the US alone, renewable energy generation from sources like wind and solar energy has doubled from 10% in 2010 to 20% in 2022. There is a good reason for this incredible increase; renewable energy projects emit less carbon and air pollution than typical energy generation methods, combating global climate change and promoting clean air quality. Renewable energy projects also increase energy independence, lowering over-reliance on fossil fuels, and create a plethora of job opportunities for people, driving economic growth. Like other businesses, Sustainable ROI has become instrumental in driving renewable energy’s growth over the past 10 years and allowed humanity to fully realize the benefits associated with it.

Sustainable ROI is an invaluable tool for businesses that strive to understand that sustainability is good for business.  It measures all environmental, social, and economic benefits associated with a product or service to give stakeholders and consumers a more complete picture of business success. The push for Sustainable ROI implementation is real but, for many businesses, the transition from traditional ROI can be a major undertaking that affects product generation and profits. To help businesses make the transition to sustainable practices more smoothly and increase Sustainable ROI, CIRT offers impact assessments on packaging and products, sustainability consulting, and recyclable materials information around the country. Our mission as a company is to combat pollution by increasing circularity and empowering businesses to lead efforts in sustainability and equity.