Simple steps to sustainability
While companies in general have been slow to embrace sustainability, some corporates and smaller companies have placed it at the heart of their business and are now using it to develop new markets and secure their long-term future. Others can follow their example by starting with a few simple steps.
One of the most puzzling things about companies’ response to the GFC was that, despite its scale and duration, sustainability programs remained largely intact. Traditionally when companies start cost cutting at the start of a downturn, sustainability, HR, training and other non-core functions are the first targets.
The fact that companies are still pursuing sustainability is one bright spot in an otherwise gloomy picture. The general consensus among scientists and sustainability experts is that the reaction from business has until now been too little, too late.
Professor Andrew Griffiths, Dean of UQ Business School and an expert in climate change adaptation, says that while there may be a number of factors behind this trend, it may signal a hiatus in our attitudes to climate change and sustainability in general.
“The GFC presented companies with an ethical dilemma in terms of their commitment to sustainability. Questions were being asked about the morality of business and the actions of the banks which led to the crisis so companies would have been sensitive to criticism. Where CEOs had already committed themselves to a sustainability agenda, it would have looked hollow to overturn those decisions. In addition, some governments such as the UK have made decisions on tackling climate change.
“In Australia something similar happened. While the economy has been cushioned by the resources boom, mining activity has upset many agricultural and rural communities and resources companies have had to invest in sustainability to deliver on their CSR agendas.”
There is no doubt, however, that some companies have made a wholehearted commitment to sustainability. They view it not just as an ethical commitment but a way to reduce costs and open up new opportunities. It’s a way of doing business.
Unilever has saved over €300 million globally since 2008 by reducing energy, water, materials and waste. However it is also using sustainability to help it increase sales. According to a report it published in 2012, brands that made sustainability central to their brand proposition or product innovation – such as its new laundry product, Persil Small & Mighty – accelerated sales during the year.
Dow, the global chemicals company, has promised to maintain greenhouse gas emissions below the 2006 level by 2015 and is developing a new tracking tool to monitor a product’s energy use and emissions. At the same time the company, which manufactures insulation, recognises the potential for growth. According to its website, ‘Dow is uniquely positioned to continue to provide innovations that lead to energy alternatives, less carbon intensive raw material sources, and other solutions not yet imagined.’
Meanwhile Siemens states that it is committed to ‘acting responsibly on behalf of future generations’ but also recognises that ‘game-changing forces are shaping our business by creating new markets and opening up valuable new opportunities’. The company is a major player in wind, solar and tidal stream power and also promotes the use of its conventional power transmission equipment to reduce CO2 emissions.
Andrew Griffiths says: “Smart companies like Dow and Siemens are building their future on the basis that climate change will happen. They are creating products and services for a world that is affected by sustainability issues.
“While these companies have cottoned on quickly, others haven’t figured out how to change their product and service mix. Part of the problem is that shareholders demand returns within say ten years, but with some of these climate change impacts we are looking 50 to 100 years ahead. For most companies, it’s outside their planning horizon.”
Other companies like Rockcote – which are dwarfed by these giants – have recognized that it makes good business sense to make good products that have minimal impact. Rockcote, with its textures and renders business, is influencing the way that large corporates think of innovation and product development by reviving old traditions.
Andrew Griffiths adds: “We have also found that companies often overlook the impact of small wins. It’s a huge decision to close an aluminium smelting plant. However the key is to start with small wins and build on those. First look at how you can make efficiency gains internally and then how to drive these through the supply chain. Next, think how might you use your efficiencies gains and reinvest them to adapt your product and service mix.
“Scientists argue that there is now a sense of urgency in terms of climate change. Hopefully this will encourage more companies to take action on climate change – and not just benefit from cost efficiencies but to reinvest savings into innovations in their product and service mix which prepares them for the changing world ahead.”