Many commentators believe that sustainability harms profitability; we have found the opposite to be true – good sustainability programs add significantly to profits.
This is because many of today’s business challenges relate to society and the environment. These include resource scarcity/security and resulting commodity price escalation, game-changing new cleaner technologies, disruptive resource-efficient business models and increasing corporate responsibility expectations.
A well-designed sustainability program addresses these challenges and unlocks value through cost reduction, new product innovation, enhanced customer value propositions, brand enhancement, improving licence to operate, risk reduction, lifting employee engagement and raising barriers for competitors.
Marks and Spencer’s Plan A sustainability program contributed £135M p.a. to its bottom line in 2012.
Interface has lifted its profit margins and retained its leading market share of the global carpet tile market while moving to 100% renewable energy and reducing its greenhouse gas emissions by 90% in Europe.
Toyota’s European operations have reduced their energy, waste and water use by over 70% per vehicle with minimal capital expense.
Similar profitable sustainability examples include Unilever, Du Pont, GE, Body Shop, Ecover, Patagonia, Henkel and P&G. Would these global market leaders have continued to drive sustainability if it was not adding value for them?
In over 50 projects completed by our team members we have helped companies to increase profits while improving environmental and social impact. For proof see Our Experience page.
Key areas in which we find substantial value include:
- New business models (servitisation; circular resource use; shared use)
- Rapid product/service innovation
- Enhanced customer propositions (provenance; impact reduction; engagement)
- Radical resource efficiency
- Supply chain collaboration (suppliers; peers; customers)
- Cleantech (renewable energy; smart systems)
Further detail on the value available from sustainability and how to access it can be found in our viewpoint Unlocking New Value in a Changing World.
How to Unlock Value through Sustainability
The key to profitable sustainability is the design of a coherent, comprehensive sustainability program – addressing key issues, putting necessary enablers in place and engaging the right stakeholders. Conversely, poorly designed programs which reach beyond a company’s core business can drain profitability.
So how can a company begin/continue to drive profits through a sustainability program? Here are the most common types of projects that we undertake for companies, which may trigger ideas for how you could accelerate profitable sustainability within your organisation:
Build your Profitable Sustainability Strategy: Please refer to our paper Sustainability: the HOW for more detail on how to create one.
Articulate the Business Case for Action: This involves demonstrating the untapped sustainability value and what it would take to unlock it, using a rigorous fact-based business case to show the economic attractiveness of acting.
Capture Quick Sustainable Wins: For companies under economic pressure and uncertain about committing to long term sustainability programs with stretch targets, this captures low-risk, profitable opportunities that pay back within one or two years. Such initiatives also can act as a pilot to prove the business case for and determine the internal appetite for a larger profitable sustainability strategy.
Integrate Sustainability into Core Business: Integrating a company’s sustainability strategy into its core business strategy and culture changes sustainability from a side activity to everyone’s day-to-day responsibility.
Capture Specific Opportunities: Often companies recognise that they have profit and sustainability improvement potential in one particular area – such as remanufacturing, energy efficiency, waste reduction, light-weighting/packaging reduction, transport efficiency or new sustainable product development. Focussing on capturing this one opportunity is therefore key. This involves quantifying the size of the opportunity, building the business case and designing and implementing programs to capture the additional profits.
Feel free to contact us; we welcome the opportunity to discuss how sustainability can increase your profits.