Sustaining momentum Featured

7:00pm EDT January 26, 2009

Sustainability isn’t about saving the planet. It’s about saving your business.

Conducting business in a sustainable manner means you can spend less and increase revenue.

While sustainability does help the planet, the incentive of reducing your business costs by half is a strong reason to pay attention. The buzz is that traditional energy and other resources will be in tight supply in the future, resulting in volatile prices. By investing in sustainable efforts now, you can help ensure your business’s long-term success.

“Revenue and cost are affected by sustainability,” says Steve Glenn, a board member of the Sustainable Business Council, Los Angeles, and CEO, Living Homes LLC, a sustainable home developer. “Customers are making purchasing decisions based on the way products are made and used. Sustainability practices will continue to increase as the demand for it grows.”

Americans compose 5 percent of the world’s population, yet contribute almost 25 percent of the greenhouse gas pollution, which scientists believe causes global warming. If everyone used and wasted energy and other resources this way, we’d need four planet earths to keep up with the demand. Consumers are finally taking notice of this egregious waste and are looking to buy from sustainable businesses, while more and more businesses are looking to obtain products from other businesses using sustainable practices. This is a time when your business can not only streamline production but also increase revenue by drawing in new customers.

“Barack Obama was so specific about forming an energy plan, we’ll be seeing things change soon,” says T. Boone Pickens, founder and chairman of BP Capital Management. “This means businesses have to get going on where they’ll be standing when this comes in to play.”

Eighty-nine percent of readers polled by Smart Business say being green is an important part of their corporate philosophy, yet 70 percent report that they’re willing to invest nothing or less than $5,000 in greener practices. Experts say spending money on green initiatives isn’t paying for an image; it’s a direct investment in a more economic way of running your business.

Why sustainability is important

Think of sustainability like the Internet. Fifteen years ago, when the Internet was emerging, it wasn’t pervasive, but now it’s everywhere. Eventually, sustainable business will just be called business and green building will just be known as building. Experts say that is the way it’s going to be and you have to adapt now.

If you want to know the value in sustainable management, think about the Dow Jones Sustainability Index. For almost a decade, Dow Jones has been providing sustainability indexes of businesses, which shows objective benchmarks for financial products linked to economic, environmental and social criteria. Sustainability indexes offer a performance baseline and an investment value for mutual funds, certificates, separate accounts and other investment vehicles based on the concept of sustainability. To date, the assets managed amount to approximately $6 billion.

“We’re approaching a time when nonsustainable businesses will be penalized in sales,” says Chris Veronda, manager, corporate communications and sustainability spokesperson, Eastman Kodak Co., which incorporates sustainability in its core practices. “The more consumers are aware of sustainability and how pressing it is, the more it will be demanded.”

The need for sustainability has already created thousands of jobs stemming from business consultants to waste managers. Experts say we’ve only scratched the surface of what sustainable practices can do for businesses. While solar and wind power commonly come to mind, sustainability includes using recycled products when building, collecting rain for watering purposes and designing your business’s landscape in a way that minimizes the need for upkeep and conserving resources.

“Businesses are ignoring the sustainability issue at their own peril,” Veronda says. “Employees are eager to participate in sustainability efforts and mandates are increasing. It’s better to lead the way instead of simply being a compliant follower.”

While reducing waste has its obvious benefits, reduced insurance rates are another benefit to sustainable businesses. In fact, sustainability consultants predict business insurance will be more difficult to procure as nonsustainable practices are looked at as a risk.

In a 2008 report by SAB Miller, one of the world’s largest breweries, a survey of 4,000 senior executives showed 70 percent place corporate sustainability at the top of their priority list. That still leaves more than a quarter of businesses delaying action.

What you need to know

When initiating a sustainability plan, think about who your customers are and what they want. Consider how implementing sustainable practices can lead to more business. The challenge is making decisions that are financially, socially and environmentally intelligent. While there isn’t a one-size-fits-all plan, having a sustainability expert evaluate your business is a jumping-off point.

The Global Reporting Initiative is another ally for businesses seeking a sustainable route. It’s an organization that provides a framework companies can follow to measure and report their economic sustainability performance and monitor the performance of other companies. The organization sets the principles and indicators that businesses can use to measure and report their sustainability performance. GRI is growing as an international standard for corporate sustainability reporting.

“Many companies are in different stages of addressing sustainability,” says Aili Jokela, general manager, Fleishman-Hillard and global co-chair of the FH Sustainability Practice Group. “Sustainability will always be good for the bottom line, but the percentage of benefits will vary. Big benefits will come to any sustainable company. If you manage your use and minimize waste, you can improve your outcomes.”

Another source for information comes from the U.S. Business Council for Sustainable Development, which was established in 2002 as a member-led, nonprofit organization that presents projects to demonstrate the business value of sustainable development. Projects featured by the council create value through economic returns and environmental and social benefits.

A sustainability consultant can help you identify what sustainable methods are available. After an assessment, you, along with department managers or those hired for the assignment, can construct an operational analysis that details your plans with set goals and deadlines. This will include your estimated ROI time frame. Make sure your sustainability plan describes how sustainability topics relate to long-term organizational strategy, risks and opportunities, including supply chain topics.

Even if you don’t implement everything in your sustainability plan today, you can reevaluate and implement more sustainability methods in the future.

Make sure you are meeting all local and national protocols while setting some of your own standards. Define sustainability issues for your business based on your industry and the department. For example, if your business uses a lot of water, utilize rainwater recycling to minimize the amount of water you must purchase.

“The ability to bring more renewables into business will alter behaviors and perception of sustainable practices,” Jokela says. “If the process seems challenging, start small, measure everything, and understand why and what you’re paying for. Once you’ve done that, you can move onto bigger and better things.”