We’ve only got the one planet and it can be truly heart breaking to see it treated with such disdain by many governments and corners of industry. The relentless pursuit of profit above all other considerations has inarguably brought our ecosystem to the brink of collapse, with the evidence for this being writ large in the headlines on an almost daily basis.

The science is conclusive – if humans fail to address the worst excesses of our climate impact, the planet future generations have to grow up on will be a far more inhospitable one than we enjoy right now. This means the onus must fall on governments and industry to clean up their act and take decisive action now.

Here in the B2B business, we share that responsibility and will see ESG considerations becoming ever clearer determinants of success as we move through 2023 and beyond.

A Changing of the Guard

As the generation which switched out glass for plastic begins to retire, younger generations are now taking their places and becoming major decision makers in the B2B buying process. This means that suppliers need to appeal to a new demographic with a different set of values.

Millennials and GenZ are far more attuned to environmental issues than their parents and grandparents and will actively seek out brands which share their own ethos to do business with. And, with the world of B2B selling becoming increasingly similar to B2C, they are bringing these values into their professional lives as well. This means suppliers which fail to take their ESG responsibilities seriously may struggle to attract business from these more environmentally conscious buyers in the future.

Businesses which prioritize ESG considerations will also find it easier to attract fresh talent into the fold as Millennials and GenZers are also seeking employers who share their values on environmental concerns.

"Building a successful (and sustainable) business begins internally,” says HSBC. "Conversations about business values can have significant benefits on employee motivation and engagement. More than ever, Millennial and Gen Z workers are looking to align their personal values with those of their employer. Setting out an intentional approach to ESG issues can improve recruitment processes and boost employee satisfaction.”

By staffing your B2B business with employees which are passionate about sustainability and the environment, these values will permeate your organization and thus make it easier to attract customers which believe in the same principles, creating a mutually beneficial loop where one feeds into the other – the end result being improved business outcomes for your brand and a healthier planet for everyone.

Green Growth

The biggest challenge with making the world more sustainable is making the business case for getting started. Everyone bar a few of the most insincere commentators accept that prioritizing ESG is the morally correct thing to do, but the question is how to justify the expenditure in the short term.

"In a recent report, McKinsey estimated that reaching net-zero emissions by 2050 would require capital spending of $3.5 trillion per year more than is being spent now, for a total of $9.2 trillion per year,” says McKinsey. "That’s the equivalent of about half of global corporate profits in 2020. So, companies are setting science-based targets and spending a lot of capital to decarbonize their operations, and these investments need to be ethically and economically viable. Companies need to reduce their environmental footprint and generate a financial return on investment.”

However, evidence has shown that people are willing to pay more for greener alternatives and this could be used to offset the spending required in this area. The demand for green products is currently outstripping supply, which also creates a higher willingness to pay. Once supply catches up with demand, the market should level out and premiums should ease.

Of course, it’s hard to predict what the market will look like in ten or even 20 years’ time as the willingness of customers to pay is incredibly fluid and varies by sector.

"Companies need to develop a longer-term perspective on achievable prices and margins,” adds McKinsey. "They need to create a detailed understanding of how different demand-supply scenarios might play out, how regulation might play into that, and what will drive consumers’ willingness to pay. They’re the prerequisites for success in the long term.”

Final Thoughts

The climate crisis is everyone’s problem and we as industry players have a responsibility to participate in the conversation and in real action. Transforming industry in this way will be expensive in the short term, but there are still opportunities for growth and profit whilst doing the right thing.

B2B’s role in the climate crisis is sure to be a hot button issue at B2B Connect 2024, being held in June at the Rancho Bernardo Inn, San Diego, CA.

Download the agenda today for more information and insights.