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Six Bottom Line Benefits of Sustainability

To make the business case for sustainability, it all boils down to two simple concepts: managing risk and maximizing opportunity.  Managing sustainability risks and opportunities will either deliver cost savings or drive income growth.  And, you don’t need an accounting degree to know that more revenue and less expense improves the financial bottom line.  You can gain both from efforts to manage social and environmental impacts.

Check out these six ways that sustainability can contribute directly to your bottom line.

Regulatory Change Management – The world is a changing place.  Climate change, resource scarcity, population growth, complex organizational networks, Internet access to information, and greater interconnectedness all lead to rapid regulatory developments. Businesses benefit when they have a better handle on these trends and the potential future implications for their business. They have a reduced the cost of compliance when officials implement new regs at a federal, state, local or industry level. Check out the case study in Chapter 1 of Carol Sanford’s The Responsible Business for a case study on how Proctor & Gamble benefited from this back in the SIXTIES!

Resource Scarcity and Waste Management – Population is growing, as is the global middle class.  We are already using 50% more of Earth’s resources than our planet is able to regenerate.  That number is expected to increase to 300% by the end of the century. As supply decreases, costs for inputs such as raw materials, energy, and water will soar. That, in turn, will increase the cost of all goods, especially food. We can expect supply chain disruptions as production becomes less reliable. Reducing resource use, reducing waste, and substituting non-renewable inputs with more sustainable materials will reduce long term operating costs for all businesses, regardless of sector.

Brand, Reputation, and Competitive Edge – Like it or not, sustainability is here to stay.  Sustainability reporting and the use of company websites to promote organizational initiatives is proliferating. Information is abundant. The bar for leadership is rising. Stay current with what your competitors, partners, and customers are doing, and your will be more apt to grow and evolve your sustainability programs. A strong program delivers a stronger public image and often a competitive advantage.  Sustainability programs can improve and/or protect reputation and help to maintain or grows market share.

Employee Attraction and Engagement – With the growth in information available online, employees can learn a lot about what a business is doing… and what it is not. Institutions of higher education are integrating sustainability concepts into curriculum in droves. The result is a much more educated incoming workforce and a universe of employees who care a lot about their future. Research shows that employees who take part in sustainability work are less likely to leave. That’s because employees who view their work as purposeful or contributing to society are more engaged. All these factors result in higher caliber employees, lower turnover, and greater productivity. These factors reduce costs related to human capital and can boost sales and customer retention.

Innovation – “Dear Product Design Team: Please make this product with the same level of quality and effectiveness, but use 50% fewer raw materials, energy, or water.” How’s that for a statement that will drive creativity and innovation? And, companies are doing it. All the time.  Evolving the composition and design of current products to meet the needs of a changing world is a good first step. Using strategies such as biomimicry to use nature to inspire more sustainable design is an exciting trend. Keeping abreast of sustainability trends will open your eyes to opportunities. A resource-constrained society will drive new markets, products, and services.  These efforts will lead to new and expanded revenue streams.

Access to New Markets & Capital – Other benefits of sustainability are beginning to emerge. One example is a link to lower cost of capital. When companies show strong levels of corporate governance and sustainability, securing investment or financing can be easier and less expensive. There is growing evidence of an impact on human capital costs as well. Employees prefer to work for companies that with responsible practices. In some cases, they may be willing to work for a lower salary. And, for companies that sell in, or are expanding to, foreign markets, a lack of a sustainability strategy can be a barrier to entry for business. Knowing this beforehand can eliminate an expensive (and potentially impossible) game of catch up.

So, take your pick! Consider creating mini business cases around each of these areas to deliver in 15 minute increments to your management team.  You just might be surprised what will come out of it!