Published on February 10th, 2014 | by Jonathan Churchman-Davies0
Sustainability For Business Growth – The Size of the Prize
In this third part of our sustainability series, our special guest blogger Jonathan Churchman-Davies, an Independent Specialist Adviser for Innovation and Sustainability, shares his insights on how businesses can deploy sustainability efficient measures as a tool to save on cash for more investment. Please also read his advice in the first part of our series here on how sustainability can become a value to your business and in the second part of the series here on how sustainability can be positioned as a driver in overall corporate strategy.
I recently saw a statement claiming that UK consumers are crying out for more sustainable products and services, and that this represents a huge opportunity for UK companies. While I agree that there is an opportunity, I think that we need to be careful with expectations that consumers have a massive pent-up demand for sustainable products.
In these tough times, the brutal fact is that consumers do want sustainable products, but only so long as they work as well as the old and don’t cost any more. In 2007, their views might have been different, but that was another world.
Opportunity Knocks With Sustainability
However, that isn’t to say that opportunities don’t exist – you just have to look for them in the right places. Innovative companies have been using sustainability-related issues to explore how they can unpick and reassemble their business models. Some are reinventing their supply chains. Interface is closing the loop on flooring products, using lifecycle analysis to reduce waste, energy and cost in its products. Others are starting to sell value-added services that improve the efficiency of use of their core product – reducing core product sales but locking in customers. British Gas are a high profile example of this.
Others are using sustainability to reinvent their images. Remember when Toyota were a global giant, with a reputation for producing bulletproof but rather unfashionable vehicles? Then they hitched their brand to the concept of helping consumers deal with fuel prices, launching the hybrid Prius. The leap in technology that the Prius bought to the market proved that not only did Toyota excel in technology, but also in value engineering, helping them to reposition themselves as a premium brand.
Other firms have used sustainability to deliver benefits in internal efficiency and team working. In their 2013 reports, Marks and Spencer stated that over its 5 year run, the Plan A sustainability programme has given a net benefit of £185m, comparing well with 2013’s profits before tax of £564m. Perhaps most importantly for M&S, they have used Plan A to help pull their teams together in realigning themselves within a fiercely competitive marketplace.
Profit Producing With Sustainability
While Prius and Plan A are highly visible initiatives, more prosaic examples also have real value. Many companies are replacing less crucial face to face meetings with electronic communications. On the face of it, not meeting directly does have its drawbacks, but these can be overcome through the deployment of appropriate technology and training. Any residual inefficiency is dwarfed by the savings in travel time overheads. Would it surprise you to know that the travel time to meetings can easily be half of, and sometimes climb as high as a factor of 2.5 times, the face-to-face time? One services company recently calculated that it could easily reduce its business travel by 20%, adding 2% to its short term EBITA, and about 4% over a 2 year timescale.
All of these initiatives are publicly associated with large savings in CO2, waste, pollution and all the other good stuff for the sustainability report. However they are backed up with something more solid than reputation and credentials: savings in hard cash to put in the bank.
With pressure on UK business to grow, using sustainable efficiency measures like these to free up cash for investment is a very good deal.
Has your company recently taken on sustainability plans to help save money and grow business? What do you think of sustainability measures as an efficient tool to free up cash? Please comment below.
Jonathan Churchman-Davies is an independent Adviser for Business Development, Innovation, Energy, Carbon and Sustainable Operations. A former graduate of the Imperial College of London, he is now based in Wantage, Oxford, UK. Jonathan can be reached here:
photo credit: kav777