How corporate sustainability can improve a company’s image and its bottom line Featured

2:55pm EDT February 22, 2011
Timothy Iszler, Partner, Crowe Horwath LLP Timothy Iszler, Partner, Crowe Horwath LLP

Many people are talking about corporate sustainability, but many don’t understand exactly what corporate sustainability means.

Corporate sustainability is a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social development.

Still, even if a company is interested in achieving corporate sustainability, the prospect may seem overwhelming. But it’s really not that difficult to get started, according to Timothy Iszler, a partner with Crowe Horwath LLP.

“You can take small steps to get started,” says Iszler. “And the benefits can be significant. Generally when companies go through this process, they end up saving money and improving the bottom line.”

Smart Business spoke with Iszler about corporate sustainability and how it can improve a company’s image and its bottom line.

What key factors does a business need to focus on when approaching sustainability?

The first is a commitment from the CEO and top management. Without that commitment from the top, it will be very difficult to get the buy-in of employees and push the initiative throughout the organization. The leaders also have to develop a business case for sustainability, including a return on investment, as well as the compliance aspect with government regulations, consumer concerns and employee interest.

Consumer consciousness may be driving sustainability initiatives, but on the business end, they can also save costs and improve the bottom line.

Another factor to consider is finding the right person to lead the initiative. Don’t just assign someone to lead; instead, talk to people across different departments to find those who are really passionate about the issue, because without that passion and drive, the effort is likely to fail. You also need to measure the results of your efforts, and not just assume that they are working.

Finally, start small. Looking at too many areas at once can be overwhelming, and taking small steps will reap small successes, which will encourage you to continue your efforts.

What are some ways to start small?

One entry point is to look at your product design. For example, Nike started its sustainability initiative by examining its product design and discovered how much waste it had in the process. By reducing that waste, it was able to realize a cost savings, but it was also an environmentally good thing because a lot less material ended up in the landfill.

Another thing you can do, especially in manufacturing, is to go through your processes and determine where things could be done more efficiently to reduce waste. Even things that seem simple, like changing the light bulbs in a factory to more efficient lighting, can result in additional cost savings and benefit the environment.

Also, more and more companies are using environmentally friendly packaging with a certain percentage made from recycled cardboard and other materials. Doing so can not only save you money but also benefit your brand image, as more and more consumers are becoming more environmentally conscious and view recycled packaging in a positive light.

What are the benefits of sustainability?

The biggest one is an improved brand image for the business. There are also cost savings to be realized from things such as using less electricity, and sustainability can give a company an advantage in a very competitive marketplace. Finally, increased employee satisfaction is also a benefit as workers gain pride from working for a company that is doing the right thing for the environment.

How do you get buy-in for sustainability?

Employee buy-in is critical. When you find the right leader for the sustainability initiative, that person needs to put together a sustainability team. The people on the front line are the ones who are going to be able to identify the opportunities in your organization.

The challenge is to identify those people within your company who are driven and have a passion to pursue the opportunities and then have them spread that passion throughout the organization.

Sustainability should flow throughout the organization, not be separated into a silo or an individual department. The goal is to fully integrate sustainability issues into the core business structures and processes, rather than managing them as separate issues.

Can a company begin the process on its own, or should it consider outside help?

That depends on how sophisticated the company is. It can be difficult to identify issues from inside the company. Before you go down that path, it’s a good idea to have someone from outside the company come in and help you develop a plan. An outside firm can help you assess and respond to the risks and opportunities integral to achieving your strategic business objectives. A sustainable corporate governance program provides a platform to understand, communicate, collaborate and deliver solutions in alignment with your organization’s vision and mission.

A consultant will help you answer questions such as: How do customers measure your performance? What sustainability metrics are included? How do your customers validate what you report? What new sustainability initiatives are your customers putting in place? How are you taking advantage of new tax and economic incentives related to sustainability? How are you going to take advantage of the new business opportunities presented by companies reacting to climate change? How are you preparing for CO2 cap and trade programs?

By consulting with a professional firm, your company can take full advantage of sustainability opportunities to help the environment, improve its image and improve the bottom line.

Timothy Iszler is a partner with Crowe Horwath LLP. Reach him at timothy.iszler@crowehorwath.com.