Implementing sustainable practices can streamline your business processes, save money.
Sustainable practices for every business are in the midst of a major shift from “nice to have” to “need to have.” Government regulations and consumer demand are partly responsible, but the main driver turns out to be something few businesses predicted as recently as a decade ago: sustainability is good for the bottom line.
Awareness of this reality has been creeping up on the American business community in a stealthy way, because the benefits of so-called “green” business often come from channels other than customer sales. So why is it working? Here’s a quick rundown on where the money’s coming from.
Reduced Energy Costs
There are up-front costs involved in building new energy-efficient facilities or retrofitting existing sites, but either strategy can repay your investment in a short amount of time—often in 3–5 years or less. And some savvy alternative energy companies are starting to offer payment plans that deliver savings right away.
More Efficient Supply Chains
How much are you paying to get what you need to run your business and then get your products to market? Finding comparable sources closer to where you need them can pay off quickly in reduced fuel costs and faster time-to-market.
Reduced Waste Throughout Product Life Cycle (And Big Retailer Preference)
Cutting down on the materials needed for packaging and other components is enough to justify this form of savings. It may also create opportunities for those supplying large retailers, as many now require or give preferential treatment to products with eco-friendly packaging.
Improved Employee Health, Productivity and Motivation
Social considerations are a growing priority, not only with independent organizations that certify sustainability, but also among forward-thinking companies themselves. Healthier and happier employees take fewer sick days (real or fictional), do better work, and stay with their current employers longer. Your bottom-line benefits include higher productivity and employee buy-in, stronger customer interactions, and reduced costs for finding and training new hires—just to name a few.
Greater Opportunities with Governments and Organizations That Value Sustainability
Want to build a government building or be a government supplier? You may discover that green practices are now a requirement, and many corporations are moving in a similar direction. This is just one example of how sustainable know-how can open doors, even if it’s not the primary focus of your business.
Sustainable practices can make your business eligible for tax credits at the federal, state, and local level. For example, commercial buildings that saved 50% of heating and cooling energy by installing new systems between 2006–2013 could qualify for a federal tax deduction of up to $1.80 per square foot, and lesser incentive was available to those who made partial upgrades. Green practices can also earn you perks like multi-year tax abatements. The landscape of these inducements is ever changing but it’s worth watching, especially if you’re trying to decide which option to pursue next.
Better-Educated Customers (With More Money to Spend)
Some companies are contributing to the social side of sustainability by funding schools or training programs. This long-view strategy has the potential to raise the education level and prosperity of the people you sell to. For example, a 2012 Census Bureau report suggests that college graduates will make more than $1 million more during their working lifetime compared to those who only finish high school. Create more college grads among your customer base and it will ultimately be good for everyone.
Consumer Goodwill and Preference
While not every consumer is willing to pay more for responsible products, the number who claim they do just hit the 50% mark worldwide according to a recent Nielson study. That’s up from 45% the previous year. Even if your offering isn’t more expensive than non-sustainable competitors, consumers’ desire for “green” products and services is a growing trend no business can afford to ignore.
Certain niche funds invest exclusively in responsible companies, but this is just the tip of the iceberg. There’s an up-and-coming movement that believes sustainability reporting should be included in corporate annual reports because of its growing influence on investor decisions. Watch for more discussion of “Integrated Reporting” in the months and years to come.
For a strategic and tactical process you can implement today to start getting the most out of your own sustainability story, download our NEW parathink briefing Beyond Green: The Expanding Role of Sustainability. Click here to get your free copy.
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