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

One of the challenges in creating and implementing an effective sustainability plan, is the question of metrics. Sustainability, indeed the whole concept of corporate social responsibility, is becoming increasingly important to businesses. From the standpoint of shareholder interest, customer perception and even into HR area areas such as employee satisfaction and recruiting, more and more companies are investing in their corporate social responsibility efforts.

There are few ways of measuring, quantifying and reporting, in a meaningful way, sustainability or corporate social responsibility data. This is changing, as we now have effective carbon and environmental footprint calculators that effectively track and measure footprint data inside and organization and along it’s supply chain as well. Measuring, quantifying and reporting more intangible aspects such as employee community participation, employee environmental awareness, and corporate environmental governance can be more challenging.

A good place to start is the GRI (Global Reporting Initiative), which has developed a framework for reporting that can be used by organizations regardless of size, location or sector. The GRI is a multi-stakeholder governed institution collaborating to provide the gobal standards in sustainability reporting. It was conceived by the Boston-based non-profit CERES in 1997, the UNEP (United Nations Environmental Programme joined as a partner in 1999. In 2001 the GRI became a sperate institution. It released it’s first guidelines in 2000, in 2006 it released the 3rd revision of the guidlines. The following is directly from the GRI website:

Sustainability reports based on the GRI framework can be used to benchmark organizational performance with respect to laws, norms, codes, performance standards and voluntary initiatives; demonstrate organizational commitment to sustainable development; and compare organizational performance over time.

By utilizing guidelines such as the GRI, companies and their stakeholders can have a useful comparative tool that can allow them to better monitor, measure and communicate their position. If we are going to effectively transition to a sustainable economy based on accountability, accuracy and transparency ,tools such as these will be a necessary component.

-FR

Corporate Social Responsibility, Sustainability Carbon Footprint, CERES, Corporate Social Responsibility, GRI, Sustainability, UNEP

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

In my last post I discussed an analysis by A.T. Kearney of the benefits of sustainability on the financial performance of publicly traded companies they described as sustainably-focused. Green Winners is a compelling read though it is fairly high level and strategic in its point of view. Today I came across this article today from Industry Week: Sustainable Packaging Initiatives Are a Viable Cost-Reduction Solution in a Downward Economy it is much more operationally focused but no less compelling. According to the article’s author Ryan Humphrey of ModusLink:

A key misconception is the belief that higher costs are intrinsically associated with sustainability efforts. The holistic approach affords visibility into the entire product life-cycle, from manufacturing and packaging, to delivery, recycling or disposition.

When sustainable improvements are considered from this perspective, most organizations will realize a cost savings and positive impact on the bottom line.

A key driver in the movement to sustainable packaging is non other than Wal-Mart who according to the article:

• Is striving to achieve a 5% packaging reduction by 2013
• Promised to become packaging neutral by 2025

Given that they are requiring all suppliers to enter packaging data into their Wal-Mart Retail Link Scorecard it is pretty clear that the packaging supply chain will move with them.

More and more companies are clearly seeing the cost benefits from sustainability efforts through (GHG) Greenhouse Gas Reduction, waste management and recycling. At the end of the day, all these efforts are about business efficiency, reducing waste and effectively managing resources and materials. Those companies that assess and manage their carbon footprint, that implement ISO 14001 based (EMS) Environmental Management Systems and develop a strategy of (CSR) Corporate Social Responsibility  will be better positioned to survive the current economic crisis and grow when it ends.

-FR

Sustainability Carbon Footprint, CSR, GHG, recycling, Sustainability, waste managment

I guess difficult is a bit of an understatement.

The economic numbers are fairly staggering and the length and the breath of the downturn still unclear. The recent job loss data, consumer demand and GDP reports leave no doubt that we are experiencing the most difficult business environment in most of our lifetimes.(Check out this articles from the Wall Street Journal Economy Dives as Goods Pile Up)

As business leaders are fighting to keep their companies afloat it may seem hard to think about sustainability as a business priority. The unfortunate reality is that for many businesses the immediate reaction to falling profit margins is to cut jobs. But I would suggest that now is the time to create a new reality. By embracing sustainability as a core business value, businesses will become more efficient, reducing if not eliminating the need to cut expenses by slashing their workforces.

It may seem counter intuitive, but it is not.  I believe that part of the reason (and why I object to the term green) is that the “green” messaging has been communicated in such a way that  “greening” implies an additional expense without recognizing the inherent financial benefits of reduced energy expenses, more efficient application of technology, waste reduction, and cost benefits from recycling.

Two areas that can help clarify the value of sustainable business development are ISO 14001 and carbon management.

1)    ISO 14001-ISO 14001 grew out of ISO 9600, which helped define lean manufacturing and the Six Sigma approach to manufacturing. At its core ISO 14001 is about utilizing resources efficiently and creating processes and documentation to ensure that businesses operate as effectively and efficiently and consequently as profitably as possible.

2)    Carbon Management-Carbon Management is one of the most talked about yet most widely misunderstood aspects of sustainability and one I will devote an entire upcoming blog post to. The key aspect I want to present here, however, is that every unit of carbon has a corresponding dollar value. If you track and manage your carbon usage you can create carbon reduction programs to reduce the money you spend in this area. Carbon offsets and carbon tax not withstanding, understanding and managing carbon should be a key element of financial modeling for any business.

The economy will recover and business will recover but we will be faced with a different world when we emerge from this recession. China and India will emerge as even stronger competitors, we will still be faced with dramatic environmental challenges and the way we borrow money and fund our businesses will be dramatically different. All the more reason business will need to be more more efficient and more sustainable.

-FR

Sustainability Carbon Footprint, ISO 14001, Sustainability

One of the biggest challenges I face when discussing supply chain sustainability is dealing with what I call “the big misconception.” That is, the perception among many business leaders that sustainability is a high cost low return investment. I believe, however, that the opposite is increasingly the case. By focusing on the positive return on investment and clearly identifying return opportunities, it can be demonstrated that direct ROI benefits can realized through:

• Operational Efficiencies
• Material cost reductions
• Recycling materials
• Carbon Footprint reduction
• Carbon Offsets
• Increased sales
• Increased partnering opportunities

Understandably in the current business environment any additional business expense will and should be scrutinized. But  given the enormous challenges associated with our planet’s growing population and the desire for much of that population to strive towards affluence, we must recognize that business as usual is a recipe for disaster.

The positive for business leaders is that there is tremendous opportunity for those who can innovate, implement and execute sustainable supply chain solutions. Sustainability is at it’s core about the efficient allocation of resources. Reducing carbon footprint across the supply chain potentially has direct bottom line benefits. Inherently, if you use less energy you spend fewer dollars. Not withstanding the current low energy prices, energy costs will rise and as they do the benefits associated energy efficiency will grow. Additionally due to increasing awareness many companies are making demonstrable sustainability plans a requirement for their business partners.

As business leaders it is incumbent on us to do what is right for our companies, our shareholders, our employees and our customers. Increasingly many business leaders are recognizing we need to extend this to our communities, locally and globally. By recognizing that the supply chain benefits realized through a well executed sustainability plan do indeed extend to shareholders, employees, customers and communities, we are demonstrating true business leadership.

In upcoming posts I will present profiles of a number of business leaders who have demonstrated just such leadership and show how they have demonstrated benefits that strike directly to the bottom line and beyond. -FR

Supply Chain Carbon Footprint, carbon offsets, recycling, Supply Chain, Sustainability

Welcome to The Verdant 360 Blog. As we move forward with a new administration, we are presented with the positive potential of a new approach toward environmental leadership. Not withstanding the enormous financial challenges presented by the recent mortgage and wall street debacles, we need to address the dramatic environmental impact we are having on the earth. If the new administration follows through on the promise they have shown through the campaign, we may finally have an administration that supports environmental initiatives and direct investment in sustainability solutions.

For business leaders this means that we potentially have national leadership that recognizes that sustainable business practices are critically important to the future success of our economy and our society. Business leaders are now challenged to implement sustainability solutions in a very difficult economic environment. Across every aspect of their supply chain they are presented with rising costs and stagnant or diminishing revenue streams.

I believe that the best sustainability plans can be effective, because at it’s core, sustainability is about the efficient allocation of resources and technology. By implementing efficient process and  technology while raising employee awareness, we will inherently reduce waste, lower our carbon footprint, maximize energy usage and ideally improve bottom line performance.

I refrain from using the term “green” as much as possible when discussing supply chain sustainability. To me, it has become  such a marketing buzzword that it obscures the business potential of supply chain sustainability. To many of the operational managers that I speak to, “greening” their businesses implies additional cost but very rarely speaks about the supply efficiencies that business can  gain from a well thought out sustainability plan. And yet, there are many examples of businesses have demonstrated that sustainability provides them with a competitive advantage. You will learn about some of those businesses in this blog.

This blog is for businesses and about businesses. It will focus on process, technology, standards and the importance of execution in the development and implementation of sustainability plans. We will  discuss Carbon Footprint, Chain of Custody, ISO 14000/14001, alternative energy solutions and Corporate Social Responsibility. I will highlight business that have successfully implemented sustainability plans and talk to the leaders that have implemented them. I welcome comment and feedback from all areas of business leadership.

In  1993, the poet Maya Angelou closed her inaugural poem, “On the Pulse of Morning” with the following stanzas:

Here on the pulse of this new day
You may have the grace to look up and out
And into your sister’s eyes, into
Your brother’s face, your country
And say simply
Very simply
With hope
Good morning.

To all of you, I say “Good Morning.”

-FR

Sustainability Carbon Footprint, Chain of Custody, Corporate Social Responsibility, ISO 14001