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Ecotech Institute's Anthony Valdez Explains the Business Case for Sustainability

Ecotech Institute's Anthony Valdez Explains the Business Case for Sustainability

More companies around the globe are incorporating sustainability practices into their operations and management for various reasons. A survey by McKinsey and Company showed results from companies integrating sustainability principles into their businesses by pursuing goals that go beyond maintaining a profile for Corporate Social Responsibility. McKinsey and Company is a global firm, comprising more than 9,000 consultants and nearly 2,000 research and information professionals assisting businesses around the world in their management and operational functions.

The survey, aimed at executives, explored why and how companies are addressing sustainability and to what effect they believe these practices affect their bottom line now and over the next five years. Business practices in sustainability include saving energy, developing green products, and retaining and motivating employees toward a sustainable company culture. The executives surveyed expect operational and growth-oriented benefits in the areas of cutting costs and pursuing opportunities in new markets and products.

The survey also examined the top reasons for addressing sustainability including improving operational efficiency and lowering costs. When examining the reasons why these businesses implemented sustainability practices, the most frequently reported motivation was the concern for costs (33%); followed by corporate reputation (32%); alignment with the company's business goals, mission, or values (31 %); and new growth opportunities (27 %).

Other reasons measured were companies leveraging the sustainability of existing products to find new growth or committing research and development (R&D) resources to bring sustainable products to market. Executives believe sustainability can drive growth; organizations that act on sustainability processes report higher efficiency than their competitors at managing several sustainability initiatives. In the companies surveyed, the area with the greatest emphasis on sustainability is mission and values, followed by external communications; while the areas with opportunities for improvement include supply chain management and budgeting.

Two of the companies highlighted in the study's results of sustainable processes include Dow Chemical, which reported that it invested less than $2 billion since 1994 to improve its resource efficiency. To date the company has saved more than $9.8 billion from their initial investment through reduced energy consumption and water waste in its manufacturing processes. Wal-Mart, another company highlighted, expects to generate more than $12 billion beyond 2013 in global supply chain savings through implementing a packaging "scorecard" that could reduce packaging across the company's global supply chain by 5 percent from 2006 levels.

Sustainability has gone beyond protecting the environment to incorporating nonlinear strategies in all business processes in boardrooms around the globe. By adhering to the tenets of Sustainability, (i.e. Planet, People, Profit), companies are realizing they can have an impact on stakeholders as well as shareholders. Creating wealth does not have to be in opposition to protecting the planet, communities and employees. Companies are creating Chief Sustainability Officer positions to implement programs relating to climate change, carbon emissions, recycling, pollution, natural resource conservation, employee retention, and energy use. This new trend creates an exciting opportunity for students to specialize in their education to meet employer demand.

Anthony Valdez is the Business Administration - Sustainability program director at Ecotech Institute.

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