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The Business Case For Sustainability is Becoming Easier to Make

Leon Kaye | Friday March 15th, 2013 | 0 Comments
business case for sustainability

Unilever makes the business case for sustainability

Good news: the business case for sustainability is becoming an easier sell for companies both large and small. One reason why many of the world’s leading companies have become slow to “embrace” green is because folks from top executives to the most recent hire have not always understood or have been convinced that smarter usage of energy, water, raw materials and yes, human capital were smart business decisions. Here in the U.S., companies are accountable to shareholders first (forget the ethics, that is the fact); add skeptical boards, middle managers who stand their ground and disengaged employees and “going green” is not as easy as snapping the fingers and sending a mass email with a directive “Attn: we are now a sustainable company.”

But there is a shift occurring and it is an exciting one. Growing awareness of human rights violations in the countries home to the factories that make our favorite products; the explosion in social media, which means companies can hide nothing; the surging cost of raw materials and energy; and consumer interest and demand for more sustainable products adds up to financial savings–not to mention goodwill among stakeholders and enhanced brand reputation.

I will share a few examples of how some of the world’s leading companies are doing good while saving or making money and are therefore nudging other businesses to do the same. One caveat: most companies with whom I have spoken are reticent to share an exact return on investment, but in the end scored impressive results.

More renewable energy = operational efficiencies: Jam Stewart of SC Johnson explained to me why the privately held cleaning products company and maker of Windex and other brands has become more aggressive in investing in clean energy projects. Renewable projects are nothing new; in fact for two decades, the company has set new goals every five years. SC Johnson has rolled out concentrates in order to try to reduce shipping costs of hauling what are basically bottles of water across the country, but consumer habits die hard. To that end, in this new economy where energy costs are volatile, SC Johnson’s managers are locking up long term contracts with renewable energy providers to keep fuel prices more stable. For example, two wind turbines at its Waxdale, WI manufacturing plant produce 8 million kilowatt hours of electricity annually. The result has been a 30 percent increase of the company’s overall operating efficiency the past three years. Currently 40 percent of the company’s energy needs come from renewables; this is set to increase to 44 percent by 2016.

Push your employees to behave more sustainably. Recently I spoke with Peter Graf, Chief Sustainability Officer for SAP. The company realized at one point its employees were commuting enough miles to drive from earth to the moon, back to earth . . . and back to the moon again. SAP engineers developed a data tool that tracked the amount of miles commuted, emissions and where employees lived. With a bevy of incentive programs–not to mention the fact the CEO of SAP started to co-ride–the payoff was huge. Within just one year, SAP employees in Germany generated more than 22,500 carpools, avoided more than 311,000 miles (500,000 km) of driving, created an additional 1400 days of networking and saved 47 tons of greenhouse gas emissions. SAP has estimated the value through cost savings, networking and emission reduction generated during its first year at $3 million (€ 2.3 million).

Water efficiency can pay: Campbell Soup Company’s business operations are typical of food processing companies–of all the water the iconic company consumers, only two percent of it ends up in actual products–yes, even for firm that makes heaps of soup. Partnerships with agricultural suppliers to adopt drip irrigation; the retrofit of systems now allowing factories to use heat from hot water for both heating and cooling facilities; and smarter washing of vegetables and other ingredients all added up to savings. Campbell’s Vice President of Corporate Social Responsibility and Sustainability Dave Stangis has estimated water efficiency projects resulted in a 15 to 20 percent internal return on investment for the company.

A holistic approach can revive brands and sales: Unilever launched its Sustainable Living Plan in 2010 after a decade of sluggish performance. The company’s programs are all over the map, from promoting handwashing to a shift towards fair trade tea to selling safer cookstoves in South Africa. Some may object to selling more Lifebuoy soap in the name of promoting sanitation, but families who benefit from saved lives feel otherwise. While the company is not ready to link this shift towards sustainability to performance, the correlation is definitely there: sales went up 6.5 percent between 2010 and 2011; and then jumped 6.9 percent in 2012. Meanwhile the company’s stock has been on an impressive upward trajectory.

Small companies can benefit, too. Setton Farms is a small pistachio grower in California’s San Joaquin Valley. Two years ago the company launched the largest solar power project in the region; the 2.6 million megawatt facility creates enough energy to fuel its processing facility and Setton sells energy back to the local grid. Over 25 years the company expects to save $14 million in energy costs.

If your company has an impressive story on how it made the business case for sustainability work, please share it with us.

Based in Fresno, California, Leon Kaye is the editor of GreenGoPost.com and frequently writes about business sustainability strategy. Leon also contributes to Guardian Sustainable Business; his work has also appeared on Sustainable BrandsInhabitat and Earth911. Most recently he explored children’s health issues in India with the International Reporting Project. You can follow Leon and ask him questions on Twitter or Instagram (greengopost).

[Image credit: Leon Kaye]


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