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.

“Companies that aren’t investing in sustainability run the risk of being behind the curve,” says Shelley Keller, vice president of strategic initiatives, Exelon, provider of energy services with the largest nuclear operator in the U.S. “The price of fuel has changed the economics of the situation. Sustainability is more of a good business move based on irrefutable scientific evidence than anything else.”

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.”

There’s a host of reasons businesses don’t operate sustainably.

“One is the complexity of the procedure — they look at the expense and say that’s more than we want to spend — although any cost will eventually be recouped,” Keller says.

All of the readers polled by Smart Business say being green is an important part of their corporate philosophy, yet 72 percent report they’re not willing to invest 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.

“Sustainability is recruitment and retention issue as well as an issue of a company’s relationship with the community,” says Patrick Starr, vice president, Pennsylvania Environmental Council. “Being sustainable means attracting the best employees and customers.”

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.

“A company must assess risk and compliance,” says James Farrar, vice president of corporate citizenship, SAP, a business software company that promotes sustainability in business. “Some business models are less flexible than others, but all will have social and economic benefits from implementing sustainability.”

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.

“Senior leadership is important in implementing a plan,” Keller says. “Encourage employees to help develop your sustainability plan and be part of the process. This will help them understand the science and technical issues of your company while thinking about the different issues that touch your business.”

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.

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.

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.

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