The Verdant 360 Blog

One of the biggest challenges that business leaders face regarding sustainability is-how to implement a sustainably focused business strategy while at the same time protecting or growing the bottom line. There is a perception, largely based on past history, that the costs associated with developing and implementing a sustainability program out way the benefits. More and more studies are showing just the opposite to be true. I have highlighted some of them in previous posts. Quantifiable bottom line benefits can be demonstrated for high visibility and low visibility programs. Although they sometimes require a longer term view (and in today’s economy when results are measured increasingly on quarterly let alone annual basis that can be challenging) the results can be shown.

The path to developing a case for the ROI of sustainability can be developed on a departmental or on an organizational basis. For this to happen effectively however, it is critically important to get buy and leadership from operational managers. Leadership is the first and most critically important step in the process. Once leadership develops the vision and commitment to create a sustainability plan than the process of weighing the return, developing a business case and creating project budget can begin. Over the next 3 posts I will look at the ROI of some very specific technologies  and show how properly implemented, they can help business leaders reduce costs, minimize risks and deliver direct bottom line benefits. I will look at alternative energy solutions including wind and solar, carbon footprint analysis and recycling and in each case show a strong business case for each.

-FR

Carbon Footprint, Sustainability alternative energy, Carbon Footprint, recycling, ROI, solar wind, Sustainability

The question of the ROI of sustainability is often talked about but not examined nearly as closely as it should be. Yesterday I was at a lunch seminar put on by Corporate Responsibility Officer (CRO) Magazine, Responsible & Sustainable Communications in the Age of Brand Risks. CRO Publisher Jay Whitehead moderated a very informative discussion between Mark Comolli of the Rainforest Alliance and Guy Boucher VP Sustainability at Domtar Paper. The discussion centered around Domtar’s efforts to effectively position their brand as a market leader in the development of sustainable paper sourcing through chain of custody certifications, primarily FSC Certification and Rainforest Alliance certification. In particular it focused on the collaboration between two organization that at first to have divergent interests

A lively discussion took place when the question of ROI was brought up during the question and answer period, and it is clear that ROI is on every-one’s mind. As company’s weigh the costs and associated benefits from the implementation of an effective sustainability strategy, I sense there is still feeling among many that sustainability is high cost low reward scenario. That may be changing, and it should be changing. The challenge is in demonstrating that there are direct ROI benefits from an effectively implemented sustainability strategy.

Interestingly, yesterday morning I received via my RSS feed the following report from the Aberdeen Group, The ROI of Sustainability: Making the Business Case. I highly recommend that you read it. Their research based on interviews with of 200 enterprises came up will the following conclusions.

Using six key performance indicators to distinguish Best-In-Class companies they found that those BIC companies achieved a 6% to 10% reduction in costs while making strides in in retaining customers.

Best-in Class-Performance

• 9% reduction in carbon footprint
• 6% reduction in energy costs
• 7% reduction in facilities costs
• 7% reduction in transportation/logistics costs
• 16% increase in customer retention

The survey showed that the companies identified as Best-In-Class shared the following characteristics:

Competitive Maturity Assessment

• The Best in Class are 52% more likely to incorporate sustainability metrics into value chain performance management
• 74& of the Best-In-Class have an organization wide sustainability policy compared to 58% of all others

The report also highlighted the need d to track, measure and communicate sustainability progress, successes, challenges and areas of opportunity.

-FR

Carbon Footprint, Corporate Social Responsibility, Supply Chain, Sustainability, Uncategorized Carbon Footprint, Chain of Custody, FSC Certification, Sustainability, The Rainforest Alliance

With the release of his new budget, President Obama has reinforced his commitment to reduce Greenhouse Gas Emissions (GHG)’s. Although the mechanisms for quantifying and report  GHG emissions are still being debated, we are clearly moving in the direction of carbon footprint reporting. This is setting the stage for a true cap and trade scenario. According to his budget, Obama is projecting that cap and trade will amount to $300 billion in tax revenue by 2022 and that by 2012 the cap and trade program will begin to have budgetary impact.

What this all means for business leaders is that we will need to be prepared to address this scenario. Although 2012 seems a long way off, particularly given the current economic challenges, the complexity of the issue is such that we need to prepare now. Indeed House Energy and Commerce Committee Chairman Henry Waxman has brought forth legislation which he vows to have approved by Memorial Day that will limit carbon emissions. The Bill entitled The Safe Climate Act of 2007 (H.R.1590) has set very specific targets.

The Safe Climate Act freezes U.S. greenhouse gas emissions in 2010, at the 2009 levels. Beginning in 2011, it cuts emissions by roughly 2% per year, reaching 1990 emissions levels by 2020. After 2020, it cuts emissions by roughly 5% per year. By 2050, emissions will be 80% lower than in 1990. These goals are comparable to emissions reduction goals adopted by many states and called for by leading American companies, small businesses, religious organizations, environmental advocates, and others

The bill is supported by GE’s Jeffrey Immelt and Duke Energy’s Jim Rodgers both of whom endorsed the legislation at a session with the committee in January and lays the groundwork for a cape and trade program.

It is not surprising that many business leaders are not focusing on the issue of trade at the moment. Given that many businesses are simply striving to survive the current economic crisis, it may not seem a priority. However, the fact remains that should the legislation pass as promised by Memorial Day, it leaves businesses 6 months to quantify there 2009 carbon footprint and prepare to meet or lower them for 2010. Building on the assumption that the economy turns around and economic activity increases, businesses will almost certainly have to have a plan to lower emissions just to meet their 2009 emissions.

-FR

Carbon Footprint cap and trade, Carbon Footprint, carbon offsets, GHG's, green