- How can investing in sustainability help businesses’ bottom line?
Can we begin by defining sustainability as meaning: meeting the social, ecological and economic needs of our generation, while allowing future generations the ability to meet their own social, ecological and economic needs. As author and Sr. VP Marketing with IBM Canada, Bob Willard points out in his book, The Sustainability Advantage, there are several factors that contribute to a financially stronger bottom line in companies that operate in a sustainable manner.
Some of these factors contributing to a financially stronger bottom line are:
· Competitive advantage in the market served by a company.
· Higher retention of employees.
· Goodwill in the communities served by a company.
· Higher employee morale, which equates to higher productivity.
· Savings gained from conservation of energy and improved systems’ efficiencies.
· Easier to recruit as well as to retain good employees.
2. How can not investing in sustainability hurt a business?
Not investing in sustainability will eventually define a company as being out of touch, not caring about how they are perceived in the marketplace. With the planet’s population at almost 7 billion, and, projected to grow to almost 10 billion in the next 50 years, eventually there will be no choice, except to operate sustainably. Because of ever-declining resources, we will have no choice but to conserve, reduce, re-use and recycle. Failure to take steps toward sustainability hurts everybody and everybody’s descendents. We all need to do our part to make the world a better place for living.
3. How can businesses educate themselves on sustainability?
Subscribe to Sustainable Industries Journal, Green@Work Magazine, GreenBiz.com, read this article, hire MBAs from schools with sustainability degrees (Stanford, The Presidio, Bainbridge Graduate Institute, The Darden Graduate School of Business Administration at the University of Virginia), join local NET Impact chapters and USGBC chapters, read Bob Willard’s The Sustainability Advantage, Ray Anderson’s A Mid-Course Correction: Toward a Sustainable Enterprise, Paul Hawken’s Ecology of Commerce, John Perkins’ Confessions of an Economic Hitman, and countless other books on the issue, many mentioned on the home page of my company, www.dolphinblue.com, where you can download a free copy of The Green Office Guide. A company wanting to educate itself on sustainability can hire Tom Kemper as a sustainability consultant.
Very focused information can be conveniently and automatically delivered to one’s email inbox by using Google Alerts. For example, use search terms like “office supplies sustainable” and “office supplies sustainability” if you are a supplier of office supplies. New info that is published on the Internet that pertains to sustainable office supplies will be delivered either daily or weekly — your choice, on any topic for that matter.
4. What time frame ROI is average for businesses who invest in alternate energy sources?
Sustainability is not only about energy usage and energy-efficiency. Sustainability is also about using less stuff, and using products made of recycled materials. I decided to start a company in 1993 because I saw where we were heading as occupants of a planet with finite resources. At Dolphin Blue, we provide office supplies that contain recycled materials and printed paper products made of 100% post consumer recycled fibers that are also processed chlorine free. For these items used by all companies, our offering lessens the resource burden on our planet, reduces a company’s carbon footprint, reduces the amount of energy needed in manufacturing a product, and eventually decreases toxins and chemicals that are otherwise allowed to continue building in our air, water and soil, affecting human health adversely. This build-up of toxins in the human body wreaks havoc on our endocrine system and interferes with the immune system, causing numerous diseases and ailments that put constant pressure on companies to fund ever-increasing healthcare premiums and claims.
I’ve seen numbers stating ROI in as little as two years, and, as much as 5-6 years. A company would be best served to survey its peers and look at what others are doing, or, have done, to understand what may be a reasonable return for them.
Typically it is claimed that an investor in alternative energy will recover an initial expense within 2 to 8 years. Those figures are highly individual to an investor’s situation and will vary depending on which usual energy source is used for comparison and what assumptions are made about future costs. An investor needs to look at both present costs and costs projected into the future — thus making ROI predictions very hazy. I understand that Congress just passed a generous tax incentive on renewable energy investments that will run for seven years. That can be a very important part of the calculation for ROI.
5. Why do you think more businesses don’t invest in sustainable energy sources?
Lack of time and resources to understand the advantages of investing in alternative forms of energy. The early adapters are finding out that they have the most to gain, both in revenue and competitive advantage. As an example, when Whole Foods Market announced last year that they were buying only energy to power their stores that is sourced 100% from renewable sources, they gained massive amounts of free press. PR experts have valued that free press at approximately $ 1.4 million. How much value is my mention of Whole Foods worth?As to why others haven’t invested in sustainable energy sources, I believe it is mainly because, as humans, we resist change. We know what we’ve been taught, and in that context, we haven’t yet seen the value in making the transition.. I have been a long-time member of an international CEO organization, where I was mentored for five years. I am one of the smallest members (in terms of revenue) in the Dallas Texas TEC Group. It is abundantly clear to me that , among the member companies, where there are several that are Fortune 500-size, they are not operating in an unsustainable manner because they don’t care, but, rather because they are practicing only what they know, and have been taught. If any one of them were to really stop and consider the mess we’re leaving their children and grandchildren, I believe they would abruptly and ardently begin their personal pursuit of sustainability.Change always happens slowly because of psychological inertia that slows the adoption of even obvious benefits. Government is important for facilitating the speed necessary and desirable changes — using its own buying power, setting an example, setting regulations, and providing tax incentives or subsidies. Government can, should, and will be a growing change agent for sustainable practices.
6. What will it take for businesses to be more sustainable (gov. mandate, more incentives)?
Education. In the 90’s, I was your typical consumer, not caring nor even interested in caring about the state of our planet. I shifted as a result of opening my eyes and looking around me, observing what was happening to my planet. Ray Anderson, Founder and Chairman of Interface Corporation, Atlanta, GA, says it best in his book, A Mid-Course Correction: Toward a Sustainable Enterprise. Ray, after reading Paul Hawken’s The Ecology of Commerce, says, “As an industrial CEO, running a $ 1 billion enterprise, I was a plunderer… it took 39 tons of natural resources for our company to yield 9 tons of sellable goods. That is wasteful, and, costly. We could do better.”
Interface is the model large corporation practicing sustainability in our time.
HP just this week announced a $ 1 billion per year savings in their IT infrastructure by having invested in energy-efficient data center technologies. That’s a huge chunk of change.
In the Healthcare sector, Sequoia Hospital, a 319 bed facility in Redwood City, Calif., has a 44% recycling rate; Affinity Health System in Appleton, Wis., saves approximately $100,000 each year on X-ray film after switching to digital; and Providence Health & Services reduced their energy usage by 7% saving nearly $4 million and received US EPA’s Energy Star Partner of the Year award.
7. Sustainability is a new way of thinking about energy – we typically ‘rent’ our energy as opposed to creating it ourselves. Do you suggest businesses invest in producing their own energy?
Eventually, if feasible. First, though, I suggest a company look at what energy they are using and where and how they are using it. There are many opportunities in almost all companies, that have immediate payback or savings. For instance, how many companies are using simple lighting technology that senses motion, and turns lights on when someone is present, or, turns off automatically when no one is there. How many opportunities are there to look at motors and pumps, which are huge energy “suckers” and replace them with state-of-the-art devices that are highly energy-efficient? Before making the leap to internal energy production, look for the low hanging fruit and reap those benefits first, then move on to more complex and time-consuming endeavors.
The green energy revolution will occur during the next several decades. Nobody has a single good answer, so we need any and all good minds to figure out ways for us to stop using fossil fuels. Good minds for any business can dream up better ways to make energy use more efficient or to implement green energy technologies (e.g., mounting a wind turbine or some solar cells) that are suitable to a particular situation.
8. Do most businesses care where their energy comes from?
Honestly, I don’t think so. What most businesses do care about, or, should care about is the cost, ecologically and socially, of the emissions and footprint of the energy they’re using. If our utility energy is being produced cheaply from coal, and, the result of that manner of production is mercury in our water and climate change, we may not be aware of those costs, until it hits us, or a family member, personally. What we don’t realize is that, as the globe is warming, it is affecting crop production, increases in insect population, species migration, a rise in sea level, destruction by increased ferocity of hurricanes (Katrina, Ike) and resultant increases in insurance premiums and federal debt, as well as flooding from increased intensity of weather patterns. If our transportation energy is being produced solely from oil, and, being done so in an inefficient manner, as it is, we are stealing from future generations by failing to protect a dwindling, and some say, quickly declining, limited resource.
James Howard Kunstler best describes our eventual demise in The End of Suburbia (online video), when he illustrates the massive shift we will all have to make when oil becomes so expensive that we cannot any longer function economically as we do today. Our economy has been designed around and built on cheap oil. We recently got a taste of what is to come when oil hit its recent high, and gasoline cost us $ 4.00+ per gallon.
9. Would businesses be willing to pay for energy from wind/solar energy even if the initial rates were level with current energy fees?
In many instances, businesses are now sourcing 100% wind-powered energy. Whole Foods Market, Mohawk Fine Papers, PepsiCo, The World Bank, 3M, Caterpillar, Inc., and the US EPA have all been recognized for purchasing 100% renewable wind energy. In our small office, we have installed all compact fluorescent lighting, reducing our consumption over the past five years. Our DELL network is a state-of-the-art Energy Star compliant, meaning the network uses as minimal energy as is possible. For more information and a listing of other companies that are leading the way, see http://www.epa.gov/stateply/partners/index.html, which now lists more than 230 partners.
As Mohawk’s executives state, “We’re acutely aware that, as a paper manufacturer, we are part of an industry that depends heavily on energy, water, and other natural resources in the production of ephemeral, non-durable goods. Because of this, over two decades ago we embraced the concept of extended stewardship, meaning that we continually examine every aspect of our business with the objective of making our environmental footprint as small as possible. This means doing more with less and taking decisive actions to reduce or eliminate negative impacts. Working to reduce our net greenhouse gas emissions is simply part of our day-to-day business operations and wind power is clean, abundant, and reliable. By investing in wind energy we are aiding the growth of this emission-free energy alternative.”
11. Considering many Americans are concerned about the environment and are drawn to environmentally friendly companies, about what percent of businesses care about their company’s impact on the environment?
I don’t have numbers that indicate an honest answer to your question. My suspicion is that there are many companies, a greater percentage of those that do care about their impact on the environment, than those who don’t care. Again, education is key in this endeavor to become sustainable. It’s really not just about our (United States’) consumption, where we should be concerned. The US has roughly 5% of the planet’s population. We consume roughly 25% of the globe’s energy. China has about 25% of Earth’s population, and India another 25%. China and India are the two fastest-growing, in terms of consumption, major economies. Both India and China are at roughly 15-20% of our (United States) consumption capacity. Only a very small percentage of their population is consuming at anywhere close to our model of consumption, whether individually or industrially. What will our world be like, what will the demand be for oil (and other metals and minerals), when they are consuming at 30-40-50, or even 80-100% of their capacity to consume? To begin to understand this issue, and, all areas of sustainability, will allow us the education and motivation to take steps to make our companies better stewards of our planet and its occupants.
12. What is necessary to convince business owners to start using sustainable energy today – given our poor economy?
A great incentive to begin saving, through energy conservation, is right under our nose. The first step to sustainability is taken by looking at all your energy uses, and where can we easily implement energy-savings. As companies tighten their belts, they will begin looking at every area of their enterprise, finding ways to save. Energy is one of those areas where there are almost always immediate savings available by simply looking at how, where, and why it is used. Little changes in habits will go a long way.
The power of the consumer can be a key factor in fostering a climate that supports businesses that operate sustainably. Responsible businesses should be rewarded for their stewardship with the consumer’s dollar being their vote. We should also inform non-compliant businesses when we do not patronize them with our dollars, as to why we did not support their activity with our dollar.
13. Has the recent decrease in gas ruined businesses’ ambition to use alternative energy sources?
Temporarily, maybe. I think most CEOs and industrial leaders are wise enough, knowledgeable enough, to know that high fuel costs are going to return. Most understand that fossil fuels are on the decline, and that we will see Peak Oil in the time prior to most of our time ending on this planet. For a better understanding of Peak Oil, read the recently-published The Long Emergency: Surviving the Converging Catastrophes of Twenty-First Century by James Howard Kunstler, or, Winning the Oil End Game: Innovation for Profits, Jobs and Security, by Amory B. Lovins and E. Kyle Datta.
We need to work diligently to kick our fossil fuel habit, with the intent of fending off increased global warming. The crisis in climate change will continue to manifest itself, so our motivation will not be sapped regardless of cheap gasoline prices.
Conducting business in a sustainable manner means you can spend less and increase revenue.
While sustainability does help the planet, the incentive of reducing your business costs by half is a strong reason to pay attention. The buzz is that traditional energy and other resources will be in tight supply in the future, resulting in volatile prices. By investing in sustainable efforts now, you can help ensure your business’s long-term success.
“Not investing in sustainability will eventually define a company as being out of touch and not caring how they’re perceived in the marketplace,” says Tom Kemper, founder and CEO, Dolphin Blue. “The planet’s population is projected to grow to 10 billion in the next 50 years. Being sustainable today means competitive advantage, higher employee retention, good will to the communities you serve and savings.”
Americans compose five percent of the world’s population, yet contribute almost 25 percent of the greenhouse gas pollution, which scientists believe causes global warming. If everyone used and wasted energy and other resources this way, we’d need four planet earths to keep up with the demand. Consumers are finally taking notice of this egregious waste and are looking to buy from sustainable businesses, while more and more businesses are looking to obtain products from other businesses using sustainable practices. This is a time when your business can not only streamline production but also increase revenue by drawing in new customers.
“Barack Obama was so specific about forming an energy plan, we’ll be seeing things change soon,” says T. Boone Pickens, founder and chairman of BP Capital Management. “This means businesses have to get going on where they’ll be standing when this comes in to play.”
Ninety percent of readers polled by Smart Business say being green is an important part of their corporate philosophy, yet 69 percent report that they’re willing to invest nothing or less than $5,000 in greener practices. Experts say spending money on green initiatives isn’t paying for an image it’s a direct investment in a more economic way of running your business.
Why sustainability is important
Think of sustainability like the Internet. Fifteen years ago, when the Internet was emerging, it wasn’t pervasive, but now it’s everywhere. Eventually, sustainable business will just be called business and green building will just be known as building. Experts say that is the way it’s going to be and you have to adapt now.
If you want to know the value in sustainable management, think about the Dow Jones Sustainability Index. For almost a decade, Dow Jones has been providing sustainability indexes of businesses, which shows objective benchmarks for financial products linked to economic, environmental and social criteria. Sustainability indexes offer a performance baseline and an investment value for mutual funds, certificates, separate accounts and other investment vehicles based on the concept of sustainability. To date, the assets managed amount to approximately $6 billion.
“Lack of time and resources keeps more businesses from investing in sustainability,” Kemper says. “They don’t know the advantages of sustainability, but early adapters are seeing that they have the most to gain with both revenue and competitive advantages.”
The need for sustainability has already created thousands of jobs stemming from business consultants to waste managers. Experts say we’ve only scratched the surface of what sustainable practices can do for businesses. While solar and wind power commonly come to mind, sustainability includes using recycled products when building, collecting rain for watering purposes and designing your business’s landscape in a way that minimizes the need for upkeep and conserving resources.
“Sustainability should be part of your corporate philosophy,” says Jack Hill, stadium general manager for the Dallas Cowboys, who are building their new stadium using sustainable methods. “Being sustainable can make you feel good about what you’re doing for the environment while enhancing your product and saving money.”
While reducing waste has its obvious benefits, reduced insurance rates are another benefit to sustainable businesses. In fact, sustainability consultants predict business insurance will be more difficult to procure as non-sustainable practices are looked at as a risk.
In a 2008 report by SAB Miller, one of the world’s largest breweries, a survey of 4,000 senior executives showed 70 percent place corporate sustainability at the top of their priority list. That still leaves more than a quarter of businesses delaying action.
What you need to know
When initiating a sustainability plan, think about who your customers are and what they want. Consider how implementing sustainable practices can lead to more business. The challenge is making decisions that are financially, socially and environmentally intelligent. While there isn’t a one-size-fits-all plan, having a sustainability expert evaluate your business is a jumping-off point.
The Global Reporting Initiative is another ally for businesses seeking a sustainable route. It’s an organization that provides a framework companies can follow to measure and report their economic sustainability performance and monitor the performance of other companies. The organization sets the principles and indicators that businesses can use to measure and report their sustainability performance. GRI is growing as an international standard for corporate sustainability reporting.
“If the Pickens Plan or another similar plan is adopted by the government, the price of oil will drop, but if a new alternative energy source isn’t incorporated, the prices will continue to spike,” Pickens says. “Supporting this sustainability plan means helping yourself, your customers and the country.”
Another source for information comes from the U.S. Business Council for Sustainable Development, which was established in 2002 as a member-led, nonprofit organization that presents projects to demonstrate the business value of sustainable development. Projects featured by the council create value through economic returns and environmental and social benefits.
A sustainability consultant can help you identify what sustainable methods are available. After an assessment, you, along with department managers or those hired for the assignment, can construct an operational analysis that details your plans with set goals and deadlines. This will include your estimated ROI time frame. Make sure your sustainability plan describes how sustainability topics relate to long-term organizational strategy, risks and opportunities, including supply chain topics.
Even if you don’t implement everything in your sustainability plan today, you can reevaluate and implement more sustainability methods in the future.
Make sure you are meeting all local and national protocols while setting some of your own standards. Define sustainability issues for your business based on your industry and the department. For example, if your business uses a lot of water, utilize rainwater recycling to minimize the amount of water you must purchase.
“Responsible businesses will be rewarded with consumer dollars going their way,” Kemper says. “Many customers are boycotting businesses that aren’t compatible with their initiatives. There’s a lot of power in that, and it’s not a point a company wants to get to.”
The swelter of summer is officially here — in Dallas, we’ve been experiencing triple-digit temperatures more days than not lately. There’s no better way to cool off — or, at least, brave the heat — than with a summer soiree for your friends, family, or the neighbors. The great outdoors is the best background for such a shindig, and you can easily incorporate earth-friendly principles into your party.
Don’t miss our Industry News, where you can learn about one airline’s step toward reduced carbon emissions, find out about an innovative program in Japan, and see the latest in green motorcycle manufacturing.
Enjoy the opportunity to throw a backyard bash while it lasts — sometimes, there’s nothing like those lazy, hazy days of summer.
President & Founder