The business case for sustainability is extensive. Often focusing on brand value, innovation, and culture, the benefits to being sustainable can be intangible while having a huge impact on company success. These benefits, however, can take time to see returns and can be difficult to measure. Many companies are instead drawn to the cost savings of sustainability as a first step into improving their operational impact.
Sustainable operations have a somewhat contradictory reputation. Everyone is happy to put in efficient lightbulbs, while remaining skeptical that environmentally and socially ethical practices will be far too expensive. There is no doubt that sustainable business decisions can cost more at first blush. It is the responsibility of the company and their sustainability professional to balance people, planet, and profit in times they contradict and in times they complement each other. How does one reduce costs while improving operational impact? To begin, there are three main places to save money in a business. 1) increase efficiency 2) reduce consumption 3) improve pricing. The first two are linked to sustainability because they require smart and intentional use of resources.
Here is your starter plan:
- Make your team: A sustainability champion/team lead, representatives from relevant departments, executive sponsor, and, if needed, an outside consultant.
- Conduct a system evaluation to understand environmental, social, and financial impact of the current processes.
- This can include a review of manufacturing processes, product distribution, purchasing decisions, waste management, compliance costs, and employee turnover.
- If you use business methodologies like EOS or lean manufacturing, see if you can combine them with sustainability for maximum benefit.
- Here are helpful questions to ask:
- Where is waste produced? What categories of waste exist? Where does waste create cost? Where does the waste end up? Can waste be a source of value?
- Are there places where processes can be made more efficient to save money and reduce impact?
- Are there purchasing swaps that will cost less money and have a smaller impact?
- What are the current costs and impact of utilities (electricity, water, heat, etc.)?
- What percentage of products have to be disposed of or remade? Can this be reduced?
- Has your company been fined recently? Can improvements in compliance produce improvements in sustainability as well?
- Go through your discoveries from the system evaluation and rank them according to difficulty of change, environmental impact, social impact, and financial impact. Create a map of these actions so you can easily demonstrate the options to people in the company.
- Make a plan to act on your identified actions. Have progress indicators to track so you can see improvements and use that information to later justify more sustainability work.
- Begin actions! This can include:
- Create a closed cycle in production. This can reduce the costs of extraction and waste disposal, and it can provide a source of value by selling what otherwise would have been thrown away.
- Add sensors and tracking devices to electricity usage, avoiding wasteful lighting.
- Add sustainability to your evaluation for purchasing and see if there are cost savings available. There may be opportunity to partner with others in your industry to make purchases.
- Ensure that products are shipped correctly and with minimal waste. Avoid air shipping. Consolidate shipping so that containers are full.
- Make your production methods more efficient through machinery changes or retraining.
Remember to track all the work done. When you are later making the case for sustainability as a larger business strategy, you can use this as supporting evidence. You should make sure the value gained is made known to relevant departments, so they can feel invested in the changes. If possible, you can also bring some or all of those cost savings to the department employees themselves, such as in the form of bonuses.
Adopting sustainability as a business strategy will bring you benefits in employee morale, innovation, brand reputation, and more. However, starting with the low hanging fruit of operational impact and cost savings can give you momentum to build a sustainability strategy.
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Some other helpful links:
https://www2.deloitte.com/ca/en/pages/finance/articles/how-reducing-costs-through-a-sustainable-cost-transformation-can-set-you-up-for-long-term-business-success.html
https://nbs.net/improve-revenue-and-reduce-costs-through-csr/
https://www.bomler.com/blog/how-sustainable-sourcing-can-reduce-cost
https://www.linkedin.com/pulse/5-companies-show-how-reduce-cost-through-michael-d-heur/