June 23, 2017, 10:00 am

Making the Business Case for Sustainability

by: The Financial Blogger    Category: Business
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Even though the concept of sustainability has long since worked its way into modern society’s lexicon, the idea is one fraught with confusion. So, it should be no surprise that not every business has seized on its potential.

Sustainability programs are not to be confused with corporate social responsibility programs, which are more oriented to ethical actions and impacts. Sustainability is really more focused on operating in a way that preserves our resources.

It wasn’t all that long ago that nearly one-third of the members of the World Business Council for Sustainable Development – an organization noted for its support of this drive – said their management had little faith in the sustainability business case and didn’t support the concept internally.

Slowly, though, that’s changing, and Canada is one country that has a notable number of businesses that are seizing on the business case for sustainability. Case in point:

Toronto recruitment firm Arrow Professional Services conducts candidate interviews via Skype to avoid transportation costs and reduce its carbon footprint.

Benefits by design in Kingston, Ontario stocks office bicycles so staff can run errands without the hassle of driving a car.

Cisco Systems Canada in Toronto features recycling and take-back programs so customer can better manage their electronic waste at no cost.

One of Toronto’s most active developers, Mizrahi Developments, emphasizes sustainable design and development, as illustrated by its commitment to EnergyStar technology and GreenHouse Certification.

 

There’s absolutely a strong business case for sustainability, these companies and others would argue. As Sam Mizrahi of Mizrahi Developments points out, initiatives centered around sustainability creates a strong competitive advantage, even as it reduces costs through more energy efficient practices.

Environmental trends and their impact support a strong business rationale for sustainability practices that benefit any number of areas of concern. These include:

Risk management. Any number of circumstances – both natural disasters and civil conflict – can disrupt today’s supply chains and risks are only heightened by climate change and water shortages. In one study, 72 percent of the 8,000 suppliers to 75 multinational companies surveyed said climate change presents risks that might significantly affect their organizations. Managing social and environmental risks – all manifested over the long term – means making investment decisions today for tomorrow’s capacity needs and adaptive strategies. Coca Cola realized this fact after it had to shut down a plant in India in 2004 due to a water shortage. That helped lead to its investment of over $2 billion to reduce water use and improve water quality in areas where it operates.

Innovation. Sustainability can also be a major influence over the innovation pipeline when one considers how products and services can be reimagined to meet environmental standards. Nike is one that brought sustainability into its innovation process. One outcome was the $1 billion Flyknit line, launched in 2012. It’s a specialized yarn system of recycled polyester requiring little labor and dramatically reducing waste – by 80 percent, while also diverting 182 million bottles from landfills.

Financial performance. Despite conventional wisdom, you can have both profits and sustainability. And there are any number of examples to prove it. Dow has invested $2 billion in resource efficiency since 1994, saving $9.8 billion in manufacturing costs due to reduced energy and wastewater consumption. WalMart’s drive for fleet efficiency saw an 87 percent improvement from its 2005 baseline, saving the environment from some 15,000 metric tons of CO2 emissions that were avoided.

Sustainability is good for the environment and the business environment. It’s really no longer an optional strategy to make the preservation of our resources a core component of an overarching business strategy. It’s the only way to invest in our shared future.

 

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