Corporate Sustainability and Business Strategy: The New Relationship

I’m often asked whether businesses should care about the environment. Although I’d love to give a simple ‘yes’ or ‘no’ to this, the real answer is a little more complex. There are a clearly a lot of business leaders out there who care deeply for the environment. Equally, there are many who don’t. The really smart ones understand the strong link between financial success, environmental considerations and social benefits of a workplace sustainability policy.

Senior management should take an active interest in sustainability – not just because of the obvious environmental benefits, but the financial implications as well. When properly implemented, sustainability programs can help reduce costs, generate new business and boost recruitment efforts.

According to a recent survey conducted by Ernst & Young, 66 percent of business leaders have seen a higher number of incoming inquiries about sustainability-related issues during the past year — primarily from potential investors and shareholders. The survey also revealed that 65 percent of respondents have noticed their CFO’s direct involvement in corporate sustainability decisions, citing cost reduction and risk management as two primary drivers. This is clearly a new relationship between the C-level executive suite and the corporate environmental policy that transcends the usual motivations for “going green.”

When considering a company-wide sustainability initiative, there are four key areas where businesses can make a large impact:

1. Energy consumption. We know that burning fossil fuels for energy production and vehicle use means that a number of gases are released into the atmosphere, notably carbon dioxide. Most scientists now agree that these gases have the potential to cause air pollution as well as changes within our climate. Given that the cost of energy is only going in one direction – and it’s not downward – reducing consumption is a financially sensible thing to do.

2. Company travel. Many of us would also like to spend less time travelling and more with our friends and families. Thankfully, with advances in unified communications and collaboration solutions, companies can reduce the need for employees to travel by overcoming the restrictions of geography. Collaborative tools allow dispersed teams to work together effectively, while visual communications make face-to-face meetings successful without the need for expensive, resource- and time-consuming journeys. Internet protocol (IP) telephony and contact center solutions allow mobile workers and agents to be productive, irrespective of their location. As an example, my company, Dimension Data, was able to utilize our own unified communications solution to reduce travel costs by more than 50 percent this past year.

3. Water consumption. Water is the most essential ingredient for life on our planet and, with 70 percent of the Earth’s surface being covered by water, probably not something that most people think of as a scarce resource. However, around 0.007 percent of all the Earth’s water is accessible for human use, and its heavy usage in industry means that the amount available for human consumption and sanitation is dwindling. Businesses that want to make an impact with water conservation should appoint an internal team to research best practices, such as updating to more water-efficient equipment or encouraging employees to reduce bottled water usage.

4. Waste reduction. Companies can make improvements to the efficiency of the procurement process through using an e-procurement system. Consider the amount of waste generated when a large corporation decides to upgrade its employees’ computer systems. An investment in e-procurement services reduces waste and ensures that projects can be up and running more swiftly and with greater control and visibility. E-waste services can simplify the complexity and cost of disposing of redundant equipment, ensuring that electronic waste is eliminated in a secure, ethical and environmentally friendly manner.

When businesses focus on improving practices around travel, energy, waste and water, it helps not only their financial bottom line, but also with the “triple bottom line” of people, planet and profit. Perhaps most importantly, there is growing evidence to show that a balanced approach to people, planet and profit can also help with top-line revenue growth. Clients and investors alike are often attracted to businesses that demonstrate a credible commitment to the environment and society, and many reports (such as “Linking Climate Engagement to Financial Performance: An Investor’s perspective,” by Sustainable Insight Capital Management and CDP) show that there is a clear link between sustainability leadership and financial performance.

Placing a balanced focus on corporate sustainability creates a subtle shift in thinking and introduces a different perspective on business. Sometimes this perspective will mean that hard choices need to be made to prevent conflict between economic, environmental and social considerations. Those that get the balance right stand to enjoy not only a more profitable business, but also one that actively contributes to making a better world and a better society.