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A Green Business Case will reap many benefits

Posted on: 2011-08-08 20:16:43

Green Business Case

The Responsibility Deals sits within a wider deal between government and businesses through ‘Every Business Commits’ which was launched December 2010. Corporate responsibility is part of the Big Society and many businesses are already working with their local communities. The government wants to see more businesses taking a keen interest in the communities they serve by taking part in Every Business Commits. The idea is to foster agreement, clarity and focus around a small number of thematic issues that are important to society and the economy, which businesses have the ability to support. 

Every Business Commits sets out a simple framework which provides the focus around five key priorities where businesses can make a real difference.

The ‘Responsibility Deal’ is another approach and will formally launch in autumn 2011.   It is part of a broader approach by the government to establish new partnerships with businesses to achieve social objectives.

Working in partnership with businesses

The Every Business Commits framework will work in a way that encourages innovation and is focused on outcomes rather than processes. The framework is a fresh approach to corporate social responsibility and new partnerships with businesses to achieve social objectives will include:-

  • Establishing a Green Responsibility Deal to help reduce businesses’ carbon emission
  • Developing the Every Business Commits framework which helps businesses support the economy and consumers, as part of the Big Society
  • Supporting new industry-led professional standards through the Growth and Innovation Fund
  • Continuing to encourage consumer and competition bodies to work together to empower consumers

The specific actions that businesses will take will vary on circumstances and sector, and not all businesses will want to do something under each priority. Businesses will decide for themselves what best suits their own and communities’ needs. In doing so, consumers will be given the opportunity to make consumer decisions based in part upon the social reputation of a business.  The government will have an important role in convening, supporting and facilitating this idea.

There are a number of major economic business benefits to be gained by ‘going green’ and participating in the Responsibility Deal.   There is a compelling case for embracing change towards a greener way of operating that will certainly lead to increased profitability. 

The precise contribution of each business will be different – but the government has clear strategic priorities: they want businesses to invest in skills and jobs, enterprise, carbon reduction, employee health and well-being and supporting communities.

No two companies are the same but the following key benefits are worth examining:

  1. Direct Cost Savings
  2. Increased Customer Loyalty and Attraction
  3. Increased Employee Attraction and Retention
  4. Ability to Grow
  5. Innovation and Development of New Technologies
  6. Increased Profit

Direct Cost Savings

The most common perception of going green is the potential for cost savings – on everything from reduced raw material costs to reduced operational and administration costs.  For example, if fewer raw materials are used, or re-used, it will deliver a positive environmental impact that will save money. If less energy and water are used, less waste is produced, less distance travelled – there will be substantial savings on the material as well as reduced operational and administration costs.  Many businesses are already seeing these savings which add to the bottom line.

There are savings opportunities as identified in “Best Practice” solutions which can be applied to drive a project through to the end.  Resources  can  be  used  to  support,  expand,  implement,  and  increasingly  sustain  the corporate green transformation.  Although up-front costs are normally required, there are quick win solutions with little cost or effort.  

Increased Customer Loyalty and Attraction

Climate change is a reality and we continue to put a strain on the planet’s resources.  Environmentally conscious consumers are now attracted to companies that share concerns about environmental impacts. Major EU retailers, including Carrefour, C&A, Delhaize, Ikea, Marks and Spencer and Tesco, have signed up to a voluntary code of conduct seeking to reduce their environmental footprint on issues ranging from energy use to sustainable sourcing.

With a 'code for environmentally sustainable business', businesses would be committed to a set of principles and measures aimed at reducing the environmental footprint.  These include more sustainable sourcing of specific products, such as timber, improving resource efficiency in stores and "optimising" transport and distribution. Others focus on better waste management practices and improving communication to consumers. 

Consumers are becoming more aware of the environmental impact of their lifestyles and the most successful businesses will be those who best respond to consumers’ desires to 'buy green'.

With increasing competition, it can be difficult to attract new customers and break into new markets.  It will also be difficult to sustain customers and a market share.

The latest survey by the European Commission shows that the environment is an important personal concern to more than 90% of respondents in every single Member State.  When asked about solutions, 8 in 10 want businesses to do more to use natural resources more efficiently.  Consumer impact by way of changing buying habits, will affect customer loyalty and attraction.   Because of growing scrutiny from consumers full supply-chain traceability is fast becoming a necessity in today’s marketplace.  This means that if a company is going green, and continues to be committed to green, they will have a much better chance of keeping existing customers and attracting new customers away from its competitors who have yet to embrace this change towards a greener way of operating.

Increased Employee Retention and Attraction

Keeping and attracting good employees is very important both from a development and growth aspect as well as from a cost aspect.   This all relates to hiring, maintaining and retraining etc.  Competition will present a risk to the ability to keep and attract good employees. Focusing on green or Environmental Sustainability issues will help to address this challenge, since employees will stay longer with a business they believe has a good ethical ethos.

The government is also investing in the skills needed so that businesses can get the employees with the right skills.   Being involved with the push for new apprenticeships and with the government’s drive to help the young unemployed is one practical example of a business playing its Big Society role.

It will be necessary to explore employee engagement strategies and techniques that have been proven to overcome the barriers erected by some employees and help businesses genuinely embed green behaviours and business models across their operations.  

If it is a business’s intent to keep good employees and attract the best and brightest employees it will be essential to consider going green – and rapidly – to avoid being bypassed by competitors who have already taken that step.

Ability to Grow

Ability to grow refers to the increasingly challenging ability to lead, develop, and support an increase in the size of a business based on the shrinking talent pool and the increasing demand for natural resources.  

It is imperative that in order for a business to sustain growth it must start the journey toward Environmental Sustainability as soon as possible, and in its planning, all elements of the supply chain must be considered.

The government's new Strategy to promote Microgeneration and decentralised energy has been published and is aimed at making localised energy a real possibility for householders and communities across the UK.

The government is predicting that the supply chain could support 100,000 jobs within five years spread across the UK. The Energy Bill provides for ‘Green Deal’ which is intended to revolutionise the energy efficiency of UK properties. Under ‘Green Deal’, householders will be able to get energy efficiency improvements without having to pay upfront. Businesses will provide the capital, getting their money back via the Energy Bill. At the heart of the offer is a simple rule that estimated savings on bills will always equal or exceed the cost of the work – the ‘golden rule’.

Innovation and Development of New Technologies

Focusing on improving a business’s environmental impact will see energy reduction ideas flow from employees to help ensure the right energy decisions are continually being made.   Innovation will be key as challenge turns to how things can be done differently and better in order to reduce environmental impacts. By constantly striving to do things better, innovation becomes critical to success.  Innovation is a key factor in the success of any organisation because it allows a business to reduce costs and increase capacity.   

The market for new green technologies both on a business-to-business and business-to-consumer level is growing exponentially and will only continue to grow as the world looks for ways to lessen environmental impact. By being focused on green, this drives the development of new and greener technologies, allowing the solutions consumers are looking for ensuring ability to meet consumer demand - now and in the future.

Increased Profit

As the above categories have shown, going green allows a business to identify savings and increase profits beyond original projections.

The amount of success will depend on the extent to which every employee is involved and aligned with the overall vision and business objectives laid out by management.  Another contributor will be the increased revenues from new and existing customers who remain loyal.

Going green makes real business sense and there is growing evidence that being responsible can bring commercial benefits.  For example, consumers increasingly value ethically produced and fairly traded products, job-seekers will challenge their prospective employers on their social and environmental commitments; and investors will increasingly see corporate social responsibility as integral to effective business planning.

Conclusion

The plethora of government legislation and regulation relating to the environment shows that there is a strong business case for including Environmental Sustainability in a business’s vision and for going green.

Embracing the change early will see a business as a profitable leader in the increasingly global movement towards Environmental Sustainability.

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