10 Dec Sustainability – Profit Gain v Cost
During the latest in a series of Global Impact presentations given to SME business leaders in Copenhagen, the subsequent hour-long Q&A delivered up a frank exchange of views on all things sustainable, reflecting yet again the glaring absence of help, advice and guidance offered to SMEs who, by their nature, lack the resources to support a CSR professional in their management ranks.
From delegates split roughly 10/20/70, the 20% were, for various reasons, dismissive of the necessity of their business undertaking the sustainability journey while 10% of attendee companies were already travelling down the sustainability path. The larger collective however, while clear they and their businesses carried responsibilities with regard to developing sustainable strategies designed to create positive outcomes, were still to begin their particular sustainability journey. And this despite being brutally aware that society, stakeholders & colleagues and, perhaps most pertinently, new potential recruits, have rising sustainability expectations while making value judgements on the Corporate Social & Sustainability Performance (CSSP) of the business.
In their defence, it remains a fact that in all but a handful of SMEs (employing between 10 & 250 people), satisfying sustainability expectations is frustratingly difficult, particularly in the absence of; a) resources, b) management input & c) a knowledge-set to focus on;
1. Assessing sustainability purpose(s) & potentials within the business
2. Designing sustainability actions & strategies to fit with purpose & potential
3. Implementing the designed sustainability actions & strategies
4. Assessing & monitoring outcomes against sustainability KPIs
In our experience, bridging the gap between; a) the missing ingredients of resources, management input & knowledge & b) the necessity of having sustainability embedded into the business, is not a fix readily available ‘in-house’ in more than a handful of SME businesses therefore for the vast majority, this gap can only be bridged by hiring-in the know-how, and that necessitates investment.
Any investment (“cost” to you and I) no matter it’s size and timescale, is a thorny subject for any SME. The clients we deal with however, who have squared this particular ‘cost v benefit’ circle, did so by having faith in the maxim;
“Sustainability is not only good for people & the planet but – IT MAKES MORE PROFIT”
For them, that faith has been handsomely rewarded, as the following brief examples illustrate;
A. A construction business, focusing on residential projects, added 990.000 kr (£121,000) flowing directly from the implementation of a sustainability programme designed to; a) reduce the company’s CO2 emissions & b) limit the negative health impact of high driver-mileage on the company’s field-based staff.
B. A manufacturer of workshop equipment reduced the cost of individual unit packaging by 3.9% by reducing the volume of packaging by just under 40%. The cost benefit of this action was $1.844,00 per month based on like for like sales.
C. Concerned by; a) the CO2 implications of an increasingly complex manufacturing processes & b) waste increasing as a bi-product of manufacturing, this company, a bespoke engineering operation, undertook stage 1 of a four year sustainability program, which incorporated the digitisation of paper processes guidance & manufacturing instruction processes.
While both CO2 & general production waste generation reduced (in the latter instance by 18% in year 1 alone), the digitisation exercise improved average unit production time, reducing it from 23 to 19 production-line hours and average man-hour input from 22 to 18.45 per unit while also reducing the manufacturing CO2 emissions per produced item by 8%. Of course profit was also impacted on positively:
1. The 14.4% increase in available productive man-hours led to a 9% increase in both production & sales without impacting on improved production times
2. The company also reduced print output by 3,880 images per month generating a cost reduction of £3.176 or 26.100 kr per year (while consuming 93 fewer packets of paper, which equates to a little over 5 trees).
The conclusion to be drawn from literally thousands of similar cases is irrefutable; if a business’s sustainability strategy is created intelligently, and in partnership with an established sustainability professional (be that in-house or external) the interests of People &/or the Planet + Profit will be satisfied because
Sustainability inevitably equals Greater Profitability. And that isn’t green-washing, that is smart, intelligent investment into real, positive triple bottom-line outcomes.
The first step is always the most fraught of course but every journey begins with that first step – it helps that the first step with Global Impact happens to be free.