Cayenne Consulting

Environmental Factors in Your PESTEL Analysis

Part 6 of 7

Introduction

It wasn’t that long ago that if you asked a business leader how she intended to mitigate the issues related to climate change, corporate social responsibility (CSR), or sustainability, she might have wondered what you were talking about. Not today.

In 2023 and beyond, companies pursuing a strategic opportunity such as the launch of a new product or service, or a move to a new market, will almost certainly be compelled to consider the issues above which, collectively, fall into the Environmental Factors category of the PESTEL analysis. Indeed, environmental factors have become critical macro-economic influences that every business must consider as they complete their PESTEL Analysis.

Examples of Environmental Factors

A perfect example of how environmental factors impact companies is the restaurant industry. Each year, we write a large number of business plans for restaurant entrepreneurs; because of this, we know that if you are thinking of opening a new restaurant, you might want to think in terms of sustainability. In restaurant terms, this means that you will use natural ingredients that, if possible, will be locally sourced from farmers that raise crops and livestock in a way that does not damage the land or other natural resources, preserving it for future generations. In addition to sustainably sourced food, you will want to purchase highly rated equipment and fixtures (including kitchen, A/C, etc.) for maximum energy efficiency.

The table below lists just some of the topics that might be evaluated when considering environmental factors:

  • Energy sourced from wind and solar systems
  • Cultural attitudes toward being “green”
  • Recycling
  • Influences of weather
  • Influences of climate change
  • Frequency of natural disasters
  • Pollution of air and water
  • Environmental laws
  • Availability of health care
  • Sustainability

Environmental Factors Case Studies

Here are several recent examples of assignments we have completed for clients where environmental factors influenced significant decisions during the launch of their business:

Conclusion

Environmental factors affect every company in every country. Some businesses are motivated simply to save money by increasing energy efficiency, while others are motivated by being better members of their communities. No matter the motivation, all successful leaders today must evaluate environmental factors when considering strategic changes to their business. Moreover, for companies considering moving to or expanding in a new country, they are well advised to complete a PESTEL analysis and give careful attention to the new country’s environmental issues, which are almost certainly going to be different from similar matters in their home country.

This is Part 6 of our series on PESTEL analyses. Go to Part 5 here. Our next and final post in this series will be on the Legal factors to be considered in a PESTEL analysis.

Other Articles in the PESTEL Analysis Series

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