In companies, it is common that a major barrier to internal collaboration is that functional areas do not understand their impact on others. Companies bridging that gap – using an embedded sustainability strategy aligned to the core business strategy, and business processes – will have an edge in creating a competitive value chain capable of fulfilling business strategy requirements.
Additionally, improving service and responding to new customer expectations requires better information. Keeping better track of costs can inform and support interpersonal, cross-functional discussions, helping companies better prepare for uncertainties that lie ahead. And by considering investment in understanding better how assets and resources are used, and applying the metrics forward, companies can position themselves for greater flexibility in the future.
Therefore, with the removal of the silos and an organization viewed horizontally, eco-efficiency has become the economic game-changer for organizations.
However, before rushing forward, it is vital to understand environmental foot-printing, and the importance of data capture is equal to how that data is used, measured and verified. For example: it needs to show the interdependence of areas within an organization, because what optimization may have taken place in one area could well have created a negative impact in another.
What you don’t measure – you can’t manage. Conversely, what you measure badly you will manage badly.
Moreover, getting cost cuts to prevail over the long term has always been a problem. In a great many cases there is a lack of understanding as to the true drivers of costs and how to apply maintenance to any reductions over time. Other times, severe measures are taken to cut costs with no accountancy of which cost cuts add or destroy value. Therefore, a sustainability strategy needs to be developed and aligned to the corporate strategy, making energy and other resource efficiencies accountable: to be treated with the same level of transparency as the financial metrics, making the process of tracking true costs and benefits across the organisation and operational activities easier.
This leads to resource efficiency and strategic planning working together in understanding what the future horizon looks like in terms of accountability life cycle and developing clear key performance indicators and budgets. Additionally, it protects the company from random efficiency projects and creates a sustained process with intended actions and clear outcomes.
The metrics developed in undertaking the sustainability journey reveal risks and opportunities and so begins the process of continual improvement. Furthermore, new skills and competencies develop within the organization in valuing efficiency opportunities from operations to buildings – hence, delivering value.
Likewise, sustainability and eco-efficiency act as a catalyst for change. They also act as a new lens through which to view the business. It shows the interdependencies of all functional areas, and shows how they react with one another in terms of cost. The opportunity is to better understand these interdependencies, driving down costs and making a positive effect on the environment through both asset and operational optimization.
It follows that a holistic approach is called for, to significantly increase the financial returns over isolated technological solutions. This approach must be developed and deployed to encapsulate the whole organization both in terms of operations and value chain. Furthermore, it is vital to actively manage and provide credibility to energy usage and savings in order to incentivise behaviour modifications, driving adoption of efficiency programs to individual employees.
Similarly, by understanding the baseline from backward-looking metrics, when these are turned to be forward facing, resource usage is more predictable and efficiencies visualized to make economic improvements and create competitive advantage. The information gleaned from sustainability footprinting helps create economic models, which assist in understanding the company impact in terms of environmental, social and economic behaviour.
Failing to appreciate the new sustainability business model will lead a business to become a victim of ignorance. Such constituencies of businesses that rely solely on old forms of economic modelling will, over the next five to ten years, suffer continuing disappointments as they hand their customers over to competitors.
There is a great wealth of information in the public domain supporting the fact that companies that have had the intuition and drive to follow the sustainability model have shown that economically, socially and environmentally, it was the right thing to do.
Businesses need to change to a sustainable way of thinking. The opportunity is to understand the business and cost structure better and to meet customer and market expectation.
The economic return – for any company willing to embrace the values of sustainability – in operational efficiencies and the achievement of cost savings will free up capital for re-investment into new technologies. Yet, while investment in low- carbon technologies will help reduce energy consumption and greenhouse gas emissions, to optimise such investments, the procurement of such technologies must be linked to the company wide sustainability strategy, holistically linking organizational processes to these new technologies.
Additionally, with cross-functional teams understanding and working together more efficiently through breaking down the “silo-mentality,” the efforts will translate to the creation of continuous improvement, giving customers a better experience that ultimately fulfils more of their needs.
Such sustainability strategies will – and are – rewarding companies that deliver more efficient products and services, so reducing the exposure of their customers, whilst additionally delivering competitive advantage.
Christopher Gleadle is author of Sustainable Growth Through Sustainable Business and, senior partner at the sustainability performance agency The CMG Consultancy.