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
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
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
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