Sustainability Initiatives Cut Costs by 6-10%

June 9, 2009

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Sustainability initiatives have become a “must have” business imperative for companies, despite budget and return on investment (ROI) challenges, according to a new study from Aberdeen Research.

Aberdeen Group has benchmarked over 200 enterprises involved in sustainability initiatives for its ROI of Sustainability survey. The research company says that top performers excel at matching potentially hard-to-grasp concepts like environmental and social stewardship to actionable and measurable improvements to their bottom lines.

However, 46 percent of companies surveyed report that budget challenges remain an impediment to sustainability initiatives and 42 percent still find it difficult to demonstrate quantified business value and return on investment (ROI) in order to make a business case for sustainability.

Similarly, nearly 55 percent of respondents to a recent Panel Intelligence Quarter Sustainability Tracking study observe no financial criteria (i.e. ROI, payback period) when evaluating sustainability projects for their respective organizations.

Aberdeen used six key performance criteria to distinguish best-in-class companies, with top performers achieving between 6 percent to 10 percent reduction in a variety of costs while also making strides in retaining customers.

A key finding reveals that best-in-class companies reduced their energy costs by 6 percent, compared to an industry average of a 4 percent increase. These companies also reduced their carbon footprint by 9 percent and paper costs by 10 percent. They also cut both facility and transportation/logistics costs by 7 percent.

Other key findings show that top performers experienced a 16 percent increase in customer retention rates while driving sustainability-related costs down by an average of almost 8 percent across the board. Best-in-class companies are also 52 percent more likely to incorporate sustainability metrics into value chain performance management KPIs, and to use sustainability to guide major portions of their corporate strategy. In addition, 74 percent of these companies have an organization-wide sustainability policy compared to 58 percent for all others.

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