Welcome to the Sustainability Mythbusters series presented by Schneider Electric. In this six-part series (see part I and part II), Schneider Electric’s Global Sustainability Services team explores common misconceptions related to the topic of sustainability and presents a business case to “bust” each myth.
In times when the economy is recovering and budgets are tight, corporate focus on sustainability can begin to drift because of the myth that sustainability is an unproven cost. However, an effective program can actually accelerate bottom-line results by contributing to short term operating cost savings. A long term focus on product or service innovation, value chain resiliency and other macro strategies will provide a roadmap for success as well. Organizations must effectively balance short term investment toward proven sustainability measures while driving a vision and strategy of evolving their business for future environmental and social conditions.
Key to making the costs behind sustainability pencil out favorably is taking the right approach. Over the years, I’ve seen it a number of times – leadership never really defines their company’s sustainability goals or the return on investment (ROI) they were hoping to achieve. The program becomes stagnant due to lack of investment and focus. It’s hard for the responsible team to get the necessary time and resources to make a program excel because there is a lack of cohesion amongst decision makers on sustainability measures.
Like any initiative, detailed planning and processes are needed for success. There has got to be a big-picture strategy from the start. You wouldn’t launch a new product without a well thought out sales and marketing strategy would you? Strategies can start as simple as identifying how and where to reduce energy, waste and other resource costs within your footprint to more complex strategies of managing impacts up and down your value chain. In our experience, coalescing the leaders within your organization to rally around a consensus view of the sustainable return on investment or “SROI” criteria by which investments will be evaluated is key to success. As an example, we’ve worked with a 20% reduction goal in resource conservation that equates to upwards of $10 million in savings over the years where the investment is a fraction of the savings.
From a short term perspective, programs often start with investment in operating measures that reduce energy consumption and greenhouse gases plus optimize waste management costs. Sometimes it can be beneficial to focus on water efficiency if the intensity of water use within an organization is relatively high. We generally find that up to 30% of utility costs can be reduced by buying better, controlling use with automation and optimizing consumption through investment in better operating processes or high return capital projects. Also, providing visibility of performance over time to employees in turn drives their contributions to find ways to do more with less. We’ve seen it work everywhere – from manufacturing to retail to your local hospital. Savings generated from these activities can have a significant impact on operating costs and thus short term bottom line results.