Tag Archives: sustainability

Banks Get Involved in Environmental Strategies

Why have some of the largest banks in the world invested large sums of money to environmental and sustainability causes? Why did both Citigroup and Bank of America pledge to invest $50 billion each in alternative energy and conservation projects and – more important – work hard to meet these goals? Why are environmental and sustainability issues important to financial institutions? This does not appear to make sense. Sustainability should be unimportant to banks. They do not operate factories, use much energy or water, require their supply chain to use large quantities of raw materials, or emit much in the way of pollutants into the air or generate much solid waste or wastewater.

In reality, environmental and sustainability issues ranging from climate change to pollution abatement to alternative energy are important to financial institutions. Banks provide capital to all sectors of the economy for positive growth and results. As environmental and sustainability issues directly affect more businesses, they will similarly impact lending decisions, such as return on investment, risk, and facility and supply chain management.

Financial institutions recognize two phases to this issue. Investing in green projects, particularly doing so before the competition, represents a great business opportunity. Cities and now countries (i.e., China, India, Europe) crave greener buildings, smarter energy production and distribution, and cleaner transportation. Even areas in the US, such as PlaNYC 2030, understand this, too. Those with proven technologies and proper financing will have an advantage (and an opportunity to make money).

Environmental and sustainability issues – or more accurately, ignoring these issues – represent a potential financial risk. The UN Environmental Programme estimated that lost value of assets due to the impacts of climate change could total $1 trillion annually by 2040. This has got to be a worrisome figure for financial institutions who finance vulnerable assets, as well as for another industry, insurance.

Therefore these leading institutions are not investing in sustainability for public relations purposes or as charity. It is part of their dynamic corporate strategy. There is growing evidence that sustainability efforts correlate well with improved financial performance. A study by AT Kearney (http://www.atkearney.com/news-media/news-releases/) found that financial services providers focused on environmental and sustainability issues during the recent recession outperformed their competitors by 25% in terms of their market capitalization over a 6 month period.

CCES has the experience to help your firm develop a new or expand your current sustainability program to result in measureable, deliverable successes for you. Contact us at 914-584-6720 or karell@CCESworld.com.

Countering Excuses To Ignore Sustainability–Part 1

Despite the strong business benefits – shown in real life – to become more sustainable, most businesses either do not develop or do not address seriously sustainability goals or treat them as if checking off a box. In some literature, many excuses are given. In this first of many parts, I will examine such a business claim and provide evidence to show that each is not valid for a successful sustainability program developed smartly.

There are no accepted metrics to measure sustainability, so there is no end goal. Also, those that exist are too complex to understand.

Metrics are important in any business program. One cannot manage what does not get measured. Goals without measureable and respected metrics become difficult to achieve or demonstrate that you are achieving. Sustainability initiatives can be difficult to measure because some affect outside society, and may have only minor benefits for the company and employees.

But in response to this, there are a number of metrics and measuring systems that exist to help companies measure their sustainability. Among the more popular ones are the Global Reporting Initiative (GRI) and life-cycle assessments, for which there is an approved ISO procedure (14025) to determine impacts at different levels of a product’s life cycle (from infrastructure and raw materials to consumer use and end-of-life).

In fact, there are so many options that it is important to devote time to determining which ones best suits your business. Which sustainability metric system will provide the most definitive information to your stakeholders and can be integrated with your current business metrics? One must think through which metrics are best suited for a particular industry or size and diversity of entity. Some focus on energy, some on carbon, some on water, and some a combination. Which are most important to your organization?

You need time and thought to invest time to decide which metrics and reporting tools will help you the most benchmark, provide unassailable data and conclusions concerning your operations, allow you to compare reasonably with other similar companies, and identify the areas that need specific improvement.

The bottom line is that there is no simple answer to the right sustainability metrics for you, but that options exist and time and resources should be invested upfront to select the approach best suited for your characteristics and to provide meaningful information.

CCES has the experts to help you research and establish the best sustainability program for your needs that is meaningful and will provide you both useful information and definitive business benefits. Contact Marc Karell today at 914-584-6720 or at karell@CCESworld.com.

Documented Business Benefits of Going Green

Some companies and municipalities think about becoming more sustainable. At some, motivated employees bring this up at meetings. However, only a small percentage of US entities are taking the serious steps to go “green”. Why so few? In most cases, there is fear. What may go wrong and what will it cost? Will this process be difficult to control? Are there financial benefits? If so, are they worth the cost? What about liabilities/risks?

However, many entities have successfully gone “green”. Yes, there were upfront costs, education of managers and staff, and some workplace changes. But in so many cases the programs have worked successfully and have brought great financial benefits: not just direct dollars and cents, but also other indirect benefits that save hard cash.

It has been well documented that a robust, well-organized “green” program will save energy costs. The centerpiece of the program is a professional energy audit resulting in energy efficiency and conservation. Energy costs are saved and risk reduced. It is easy to identify and implement low hanging fruits with fast paybacks and use these initial savings to fund just-as-important, but perhaps more long-term, future energy savings.

But robust benefits do not end there. In a good sustainability program, use of other resources, such as water and necessary chemicals are often reduced, as well, saving more costs. And when water and other chemical usages are reduced you have, by definition, saved time and expenses for cleanup, waste management, and, indirectly, agency spotlight and liability. This further decreases energy costs and makes managing your manufacturing or other processes simpler. You make a higher-quality, more reliable product or successful operation, all contributing to a better bottom line.

And then there are the social benefits. It has been well documented that an entity with a meaningful “green” program has a more motivated labor force. Employees are more loyal, productivity increases, and are less likely to leave. The latter represents a major cost savings, as finding and training the right replacements is very cumbersome and expensive. A good example of increased productivity is a client of mine that switched fuels from No. 6 fuel oil to cleaner natural gas. Every time an oil truck came on site, a couple of employees had to stop their work to help load the oil into the storage tanks. With several hundred annual truck deliveries eliminated by using gas, these employees were freed up for their regular duties. Plus, they had much fewer areas to clean up. And then there are the neighbors. “Green” facilities emit fewer odors and air pollutants than others. While the public sometimes comes around slowly, they eventually do, and friendly neighbors also add to the bottom line and to future growth potential.

CCES has the experience and the experts to help you get similar results. We can help you implement a successful sustainability program to give you maximum business benefits. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Recent Surveys: Greater Sustainability Acceptance

The MIT Sloan Management Review Report was recently released (http://sloanreview.mit.edu/feature/sustainability-strategy/). According to their survey, corporate sustainability programs grew markedly in 2011. About 70% of nearly 3,000 executives surveyed said that sustainability was on the management agenda in 2011 and will probably remain so permanently. Two-thirds of those managers surveyed said that sustainability-related strategies are not just “nice” or even adding on to profit, but are necessary to stay competitive. 24% of those surveyed meet their criteria of “Embracers”, companies that have incorporated sustainability in the management agenda, have a business case for sustainability within their company, and feel that sustainability is necessary to stay competitive. About 31% of those surveyed meet their criteria of “Harvesters”, companies that have begun a sustainability program and realize the business case, but have not made it a far-reaching or permanent part of the culture.

What is especially telling are the corporate motivators to become more sustainable. The factor that was said to be the greatest motivator is the belief of customer preference for sustainable products and services (41% of those surveyed). Political pressure (35%) was next, followed by resource scarcity/price volatility (30%), competitors’ sustainability programs (28%), and stricter requirements from customers along value chain (26%).

A study by McKinsey & Company shows that energy efficiency is particularly profitable. Their study shows that proper energy efficiency programs that will generate an internal rate of return of about 17% and would result in meeting a significant percentage of the greenhouse gas emission reductions needed to meet Kyoto Protocol targets. If just the profits were reinvested into other greater cost strategies, then total Kyoto goals can be met at no net cost. These days a 17% return on investment is too good to ignore. This is not an environmental group talking, but a leading global business management firm. This and additional studies prove that being more sustainable is not a cost sink, but improves the bottom line of business and society as a whole, driving further growth.

Walmart recently issued its 2011 Global Responsibility Report (http://walmartstores.com/sustainability/7951.aspx) and stated that its sustainability and energy efficiency efforts begun in 2005 now saves them more than $500 million a year. Given a net 3% profit margin on their items, to match their annual $500 million of savings they would have to sell an additional $16.7 billion in goods, a real challenge.

CCES technical advisors can help you start a sustainability program from scratch or to move it along more smoothly to implement feasible projects to generate direct business benefits for your company and for your stakeholders. Others are doing it. Contact us now.