Corporate environmental sustainability is not a cost center
Far too often, organizations view corporate sustainability initiatives as necessary but unprofitable signposts, rather than real opportunities to drive meaningful change while protecting their bottom lines. Alison Pepper, executive vice-president of government relations at the 4A’s, outlines three straightforward ways that companies of all kinds can invest in both the environment and their own business success.
Being green may not be as expensive as you first think / Adobe Stock
Of all the myths about environmental sustainability – and they are legion – perhaps the most damaging is the myth that corporate environmental sustainability efforts amount to little more than expensive virtue-signaling exercises.
If that’s your – or your procurement department’s – view of any and all environmental sustainability efforts, then let this upcoming Earth Day be a moment to pause and reflect on why this tired trope is no longer accurate and possibly even detrimental to real progress.
To be clear, it’s true that in many cases switching to more environmentally-friendly products and processes could introduce an increase in costs. For example, perhaps your company uses a cheap but harmful chemical in some stage of your manufacturing process, and the more environmentally-friendly alternative comes at a higher price point.
That’s a reality that likely will increase costs in the short term, but the switch could ultimately save money in the long run. Say use of the harmful chemical leads to class action litigation and regulatory fines, and enough companies switch that an influx of producers creates a bigger supply and lowers costs.
But companies are finding that when they really study their supply chains with an eye toward improving their environmental sustainability efforts, they discover a surprise in the opportunities for cost savings. While it would be nice to think that changes could be enacted purely to further the cause of environmental sustainability, the truth is probably a bit more pragmatic. Companies have budgets to balance and they still have to make money.
As more companies have hired internal and external environmental sustainability experts, these efforts are starting to bear fruit on the actual bottom line. And the opportunities are not limited to any one area. Examples include:
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Packaging: For companies that produce consumer goods requiring packaging, more attention is being paid to the growing problem of packaging waste (the US Environmental Protection Agency estimates less than 10% of plastic gets recycled)
While there probably isn’t a one-size-fits-all solution (for instance, sometimes the choice isn’t as clear as it might seem in the paper v plastic debate), companies increasingly have more options than ever to reduce their packaging waste. Options include products that rely on refills after the initial purchase of the container – an approach taken by brands including Kjaer Weis, Arbor Made and Blueland – or cutting down the use of plastic or paper in their current packaging, which Amazon has been doing via its Frustration-Free Packaging initiative. Companies have more options than ever to reduce their packaging waste and costs.
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Energy: Energy costs are a sizable line-item expense for most companies – and for those looking to improve their carbon footprint, the source of Scope 2 emissions. While it may sometimes appear that companies are at the mercy of their local provider, this is not always the case. Cooperative purchasing agreements can help companies pool their collective bargaining power to lower costs
Decentralized energy storage solutions such as solar panels and on-site power storage create greater expense predictability. In addition, many companies have found a positive long-term ROI performing an independent energy audit and implementing follow-up solutions.
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Video conferencing: Covid compressed widescale technology adoption into two years – a timeline that otherwise may have taken a decade to achieve. Business travel has long been a hefty line item on balance sheets. And while some business travel will always be needed, companies are starting to take a much harder look at what travel is necessary and what can be done via video conferencing
Depending on how much business travel a company has traditionally done, the opportunity for savings can be immense. If your company took 300 domestic flights a year at $300 a ticket and 50 international flights at $1,800 a ticket, that’s potentially $180,000 in savings. And that’s not even including hotels, transportation, dining and other expenses.
These are just a few areas where companies can realize major savings on the bottom line while also improving their environmental sustainability efforts. A true auditing of a company’s supply chain can often unearth savings that the company would not have even considered.
As the environmental prognosis for the planet gets increasingly concerning, brands and agencies need to be part of the solution and not the problem.
Alison Pepper is executive vice-president of government relations at the 4A’s. The 4A’s is hosting an ‘Earth Week’ Sustainability Summit on April 20.