Return on Sustainability: Your Tool for Saving Money
Due to the economic situation we’re in, the days of companies pursuing sustainability initiatives “because it’s the right thing to do,” are probably over.
Companies are now more than ever driven by their bottom line and are starting to abandon or postpone sustainability efforts for 2009. In fact, a recent survey by Booz and Co. found that “40 percent of respondents expect green and other corporate social responsibility (CSR) initiatives to significantly slow due to the downturn.”
That’s why I developed the Return on Sustainability (ROS) framework. The ROS calculates the financial, brand, ease, and sustainability impacts of each potential action a company may take in response to climate change and gives decision makers the prioritized, actionable and quantified information they need to get sustainability initiatives off the ground.
This framework is based upon some of the work of John Elkington’s Triple Bottom Line (TBL) theory, which measures social, economic and environmental parameters. However, as I’ve consulted with companies about climate change, I’ve found that businesses want help taking action on climate but are more focused on actions that contribute to their bottom line, add brand value, and are easy, but are not nearly as interested in the social aspect of the TBL.
I believe ROS is the most effective measure for doing just that. It removes some of the guesswork from the process and places less emphasis on anecdotal thinking about what the benefits of individual actions will be. The ROS is weighted based on a company’s own goals and objectives and takes into account the ROI, brand value, ease and sustainability aspects of a decision and gives it a quantitative score.
From those calculations, it delivers a strategic road map with a prioritized implementation plan tailored to the company’s specific goals.
Companies need to be able to sort through the myriad of potential strategies and opportunities for GHG reduction and quickly understand which actions give them the most ‘bang for the buck,’ because business leaders (employees, managers, executives, and boards) are all saying the following:
• “I have to worry about the bottom line first.”
• “We can’t afford to address climate right now!”
• “Sustainable business will cost more.”
• “I’m expected to produce each quarter, and climate really isn’t a priority right now.”
How the ROS Framework Works
The ROS framework, which is broken down into four categories—Financial, Brand, Sustainability and Ease of Implementation—is designed to:
• Allow a company to weigh each category depending on its level of importance to the company,
• Quantify and put real numbers behind each potential action the company could take,
• Score each action across all four aspects and by category, and
• Discover low-hanging fruit for immediate action to increase buy-in throughout the firm.
Of course, for each company, the weight or the importance they want to assign to each of the categories will differ. This is what makes the ROS tool so powerful— it can be completely tailored to each individual company’s values and goals.
Going through this process with a multi-billion dollar financial institution, we identified over 160 actions that would improve their sustainability performance in just two hours. They discovered that 60% of these led to cost savings, 20% of these were ideas previously discussed but lacked inertia to get off the ground, and 10% of the actions required zero upfront costs.
Doing a similar exercise for a northwest non-profit, which like most NGOs, had been struggling due to a lack of donations since October, they too identified thousands of dollars in savings by being more environmentally responsible. The results were similar when we did this again recently with a northwest public agency, and they stated that they felt better positioned financially and environmentally both in the short and long-term.
Of course the solutions range from the obvious and mundane, such as putting motion detectors on lights to changing printing and copying defaults to the more cutting edge ideas of switching to four day work weeks to save on office leasing and energy costs or to using industrial ecology to reduce both raw material and waste costs.
All that being said, this proves that now is exactly the time to deploy Return on Sustainability thinking because companies need actions that can save money, but that also prepare for future regulation and meets the demands of the market and their customers.
Kevin Wilhelm is the CEO of Sustainable Business Consulting, and author of “Return on Sustainability: How Companies Can Increase Profitability and Address Climate Change in an Uncertain Economy.”
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