Why Green Business Now Makes Good Commercial Sense

REGARDLESS of the debate about emissions trading or global warming, business will soon have to take significant environmental responsibility for its heavy use of carbon intensive non-renewable electricity and oil.

Ageing infrastructure and an emission trading scheme are set to substantially increase energy costs; some analysts predict prices will double over the next three years. A recent survey by the Australian Industry Group found that only 10 per cent of companies had the knowledge to deal with climate change, yet 80 per cent wanted to do something about it.

Sustainability essentially refers to the balanced integration of social and environmental considerations in business strategy and operations. It is about maintaining economic success and achieving commercial advantage by building reputation and gaining the trust of people that work with or live around the company. In other words, it means satisfying customers’ demands, whilst also managing the expectations of other people, such as employees, suppliers and the surrounding community.

Fortunately, there are a number of points that strongly support the business case for environmental sustainability. The first point to consider is the fact that moving towards environmentally sustainable practices presents few or no risks to business operations. If a business acts now and environmental sustainability continues to become an increasingly important and heavily regulated issue (as it is likely to do), you will have a head start over many of your competitors.

Taking action need not be a threat to our economy or a business bottom line. In fact, a study by the University of Massachusetts-Amherst found that a $US100 billion green investment package would create two million jobs — nearly four times more jobs than spending the same amount of money within the oil industry—and would reduce the US unemployment rate to 4.4 per cent over two years. Besides some initial outlay involved in moving towards environmental sustainability, there are not likely to be any long term negative impacts or expenses incurred.

However, if you fail to act now and environmental sustainability becomes more heavily regulated by governments, there could be significant costs involved. For example, regulators may begin charging businesses based on their negative impact on the environment, leaving you to play catch up and incurring expenses in the process. There may also be incentives schemes introduced that will benefit businesses that operate at better than the minimum standards in relation to environmental sustainability, providing businesses that are sustainable with a clear advantage.

Another key point in the business case for environmental sustainability is the potential to reduce your expenses in the medium to long term. For example, making your business more energy efficient will save you a significant amount on energy costs and help you to improve your bottom line. Performing a cost-benefit analysis will allow you to compare the benefits of environmentally sustainable practices with the total cost of implementation.

Environmentally sustainable businesses may also have a competitive edge when it comes to attracting customers and investors. Modern consumers are aware of social and environmental issues and keep themselves informed about which businesses are acting responsibly in the community. Investors are equally aware of these issues and there is a trend developing towards investing in environmentally sustainable companies.

Most importantly in considering the business case for environmental sustainability is the point that it doesn’t negatively impact on a business’ ability to generate a profit. In fact, in the long term it is considered to actually improve profitability through the reduction of expenses and increased competitiveness.

All of these factors suggest that there is a business case for environmental sustainability. Each point can be capitalised on to generate returns and improve the bottom line in your organisation. As more and more businesses implement environmentally sustainable processes into their operations, you put yourself at risk of being left behind if you don’t actively get involved wherever you can.

As individuals, many of us have implemented energy saving measures at home such as replacing light bulbs and switching off lights, but the business sector is lagging as it waits for clearer government regulation and compelling financial incentives.

The business sector is responsible for more than a third of all emissions yet we are witnessing far more action in the domestic sector with the installation of rainwater tanks, solar panels and roof insulation.

So if your business hasn’t already done something in this space, then where is the best place to start? Should it be with the Board through governance or with management through leadership? It matters not, only that it starts where it has a chance to grow. Business leaders will acknowledge planning and execution is vital to achieving outcomes, yet not everything starts in such an ideal or structured manner. Sustainability is a case in point. Just look around your organisation and you’ll likely notice a number of practices and processes that aren’t documented or officially sanctioned but just exist because it makes sense. That’s the beginnings of sustainability at work.

The development of a sustainability culture evolves from ‘natural instincts’ (those logical undocumented processes that just make sense) to a ‘dependent’ state where rules drive behaviours, through an ‘independent’ state where personal acceptance and commitment occurs, and finally matures to an ‘interdependent’ stable state.

So how does a company lead their team to an ideology of sustainability? The answer is surprisingly simple – through real leadership. Real leadership occurs through behaviour, specifically the behaviour of senior staff in common situations. Take for instance a CEO’s casual walk from the business office to the factory floor. The CEO notices there is a piece of rubbish on the ground just inside the factory entrance. If he picks it up and places it in a bin – the standard has been set for personal responsibility. That action has now become a platform for sustainable leadership simply because it’s the responsible thing to do. (The rubbish could become a safety issue or end up in a storm water drain or water catchment area, or be a poor reflection of general housekeeping standards to staff, contractors and visitors). This is ‘felt’ leadership.

Genuine ‘felt’ leadership has the power to reform organisations by taking a high value, societally important platform (such as sustainability) and allowing it to become the prime driver for improvement and performance. To make the most of any behavioural leadership opportunity – either by your own action, or by the observation of others.

Some simple practices to make a start

There are a lot of things organisations can do to make a start, and many start locally with simple practices or stand-alone initiatives. Organisations can make a strong start in the sustainability space by observing 3 main areas;

  1. Capture all current sustainability initiatives. Formalise a policy. Set performance targets and work out how to measure amp report them. Engage staff by working those targets into their job functions and accountabilities. Integrate sustainability strategies into the business planning processes.
  2. Collaborate like crazy to form alliances that develop sustainable service/product offerings based on measured efficiencies.
  3. Communicate your shared sustainability commitments to all your stakeholders so they can engage with the wider societal purpose of being sustainable amp environmentally responsible.

The single most effective first step for the business sector is to simply switch off. Energy use from lighting, air conditioning and electrical equipment accounts for the major proportion of greenhouse gas emissions and bottom line business expense.

To help get you started on specific tasks, a basic energy saving checklist for businesses large and small includes:

  • Install sensor lighting and turn off all lights and appliances at night, on weekends and over holidays;
  • Reduce heating or cooling by two degrees at the thermostat;
  • Install shades on windows to cut cooling costs;
  • Buy only five-star energy rated appliances;
  • Turn off all non-essential electronic equipment at the power point when not in use as stand-by an use just as much energy as when in use;
  • Stop photocopying and faxing — scan and email instead;
  • Upgrade desktops to laptops (they use half the energy) and dispose of old PCs responsibly;
  • Use low energy flat panel monitors and carefully dispose of old CRTs;
  • Check all appliances with a simple meter to identify power hogging devices;
  • Switch to green power to support the alternative energy sector.

Green business now makes good commercial sense.

Tony Hall was formerly CEO and founder of environmental business certification company, GreenBizCheck, which offers sustainability programs to maximise businesses’ green credentials.  

Go to www.greenbizcheck.com

One thought on “Why Green Business Now Makes Good Commercial Sense

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s