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Corporate Environmental Sustainability is Not a Cost Center

Corporate Environmental Sustainability is Not a Cost Center

Organizations often view corporate sustainability initiatives as unprofitable, but necessary, signsposts that are not able to drive meaningful change and protect their bottom line. Alison Pepper is executive vice-president for government relations at 4As. She outlines three simple ways that companies can invest in the environment as well as their own business success.

Of all the myths surrounding environmental sustainability, the one that is most damaging is the myth about corporate environmental sustainability efforts being nothing but expensive virtue-signaling activities.

If that is the way you or your procurement staff view environmental sustainability efforts, then take a moment to reflect on why this outdated trope is not accurate and may even be detrimental to real progress.

To be clear, its true that in many cases switching to more environmentally-friendly products and processes could introduce an increase in costs. For example, perhaps your company uses a cheap but harmful chemical in some stage of your manufacturing process, and the more environmentally-friendly alternative comes at a higher price point.

This is a reality that will likely increase costs in the short-term, but could save money in the end. If the chemical is used in class action litigation or to impose fines on regulators, then enough companies will switch to produce more of it.

Companies are discovering that if they look at their supply chains with an open mind to improving their environmental sustainability, they often find surprising opportunities for cost savings. Although it would be nice to believe that environmental sustainability could be improved, the reality is more pragmatic. Companies have to balance their budgets, but they still need to make money.

These efforts are beginning to pay off in the real bottom line as more companies hire environmental sustainability specialists both internally and externally. These opportunities are not restricted to any one sector. Examples include:

  • Packaging:Companies that produce consumer goods require packaging should pay more attention to the growing problem with packaging waste. According to the US Environmental Protection Agency, less than 10% plastic is recycled each year.

While there is no single solution to packaging waste, companies have more options than ever. There are products that rely upon refills after the initial purchase, such as Blueland, Arbor Made, and Kjaer Weis. Or, you can reduce the use of plastic and paper in your current packaging, which Amazon has done through its Frustration-Free Packaging initiative. There are more options available than ever for companies to reduce their packaging waste.

  • Energy:For most companies, energy costs are a significant line item expense. Scope 2 emissions are also a source of Scope 2 emissions. It may seem like companies are at the mercy their local provider. However, this is not always true. Companies can use cooperative purchasing agreements to increase their collective bargaining power and lower their costs.

Energy storage solutions like solar panels and on-site storage can be decentralized to increase expense predictability. Numerous companies have also seen a positive ROI in the long-term by conducting an independent energy audit and implementing any follow-up solutions.

  • Video conferencing: Covid reduced the time it took to adopt large-scale technology in two years, a timeline that would have otherwise taken more than a decade. Business travel has been a significant line item on balance sheets for a long time. While some business travel will always be necessary, companies are beginning to look more closely at what travel is required and what can be done via video conference.

The amount of business travel that a company has done historically can impact the savings. Imagine your company taking 300 domestic flights per year for $300 and 50 international flights for $1,800 each. That’s a potential savings of $180,000. That’s not including hotel, transportation, meals, and other expenses.

These are just some of the areas that companies can save money while improving their environmental sustainability. An audit of a company’s supply chain can often uncover savings that the company didn’t know about.

As the environment outlook for the planet becomes more concerning, brands and agencies must be part of the solution, not the problem.

Alison Pepper is executive vice president of government relations at 4As. The 4As hosts an Earth Week Sustainability SummitApril 20, 2008.

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