A
few weeks back, I wrote a post about
establishing a meaningful business case for sustainability, and I said that I
would follow that post up with another, outlining the core benefits of
sustainability programmes, so that they might act as inspiration and compliment
the original post. In the current
economic climate, sustainability agendas may tend to take a back seat. It
may therefore be prudent to outline some tangible business advantages related
to sustainability programmes.
Cutting costs
Perhaps
most obvious is the potential to cut costs associated with utilities and
waste. Monitoring the sources, times and
costs of electricity, water, waste and gas consumption or production allows
organisations to work towards reducing them.
It’s clearly important to develop a good understanding of usage in this
case, but the potential benefits are easy to see. Costs can also be cut in transportation. Conducting conference calls and web meetings,
or sourcing materials locally, is clearly environmentally friendly, and can
bring significant savings too. For
example, Marks & Spencer, the UK retailer, is currently overhauling
its supply chain, taking measures including stopping the purchase of supplies
from one hemisphere to ship to another.
This is expected to save the retailer £175 million annually by fiscal
2016.
Costs
related to employee turnover can also be cut.
As consumers become increasingly aware of the importance of sustainability,
they do not wish to be employed by unsustainable firms. Sustainability can also include a broader
scope, encompassing elements of Health and Safety, and therefore reducing costs
related to sick days. Johnson
& Johnson, the US healthcare and pharmaceuticals company, has implemented a
number of wellness programmes, including smoking-cessation support. The company has saved $250 million on
healthcare costs, a return of $2.71 for every dollar spent on wellness from
2002 to 2008.
Reducing Risk
Along
with cost saving, perhaps equally clear and established is the potential for
sustainability programmes to reduce business risk. This can be done via improved compliance,
mitigation of potential future regulatory change, or by bolstering brand, image
and reputation. Around the world,
governments and international institutions have taken steps towards
stricter environmental policy. James
Murray, editor of BusinessGreen.com, outlines the need to prepare:
“...governments of different stripes have consistently accepted the
recommendations of the Committee on Climate Change, despite fears that carbon intensive businesses could experience considerable short- to
medium-term pain as a result... Any business that does not have a clear
strategy in place to deal with this new reality is guilty of considerable
negligence.”
The
same goes for brand image. In the
opinion of Lee Daley, chairman and chief executive of Saatchi & Saatchi UK:
“Companies which do
not live by a green protocol will be financially damaged because consumers will
punish them. In the longer term, I do not think they will survive.”
Increasing revenue
As
well as risk mitigation, sustainability programmes offer opportunities for
generating increased revenue and market share.
There is a big market out there for green products, despite the world’s
economic woes. Sales of GE’s
Ecomagination products, those tailored to environmental solutions, reached $18
billion in 2009 – the size of a Fortune
150 company all on its own. Revenue
can also be generated through productivity gains. Productivity can relate to
improved health and attendance, or to efficiency gains such as the reduction of
waste and transport costs, both of which I mentioned earlier.
These
are a few examples of the different benefits available to organisations that
choose to adopt sustainable practices, and there are countless other examples
online. All examples are
organisation-specific to some degree, but they can serve as inspiration for
firms to create their own, tailored objectives and to estimate outcomes. Guidance on identifying which impacts to
include in a sustainability strategy was given in my last post, which can be
found here:
Sources
for my examples in this post are listed below.
Thanks
for reading.
Sources:
Porter and Kramer ‘The Big Idea: Creating Shared
Value’ 2011
BusinessGreen.com
www.ft.com ‘Wave of eco-marketing predicted’
12/02/2007
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