· 6 min read
Sustainability, or the field of sustainable development, has been around for several decades. The mantra: Reduce, Reuse, Recycle has been around since the official Earth Day calendar appeared on April 22, 1970. Twenty years later, with a few notable exceptions, there has been talking about sustainability in business.
It was believed that the new trend in itself is a good thing, and it benefits companies by creating a positive image for them in the eyes of consumers.
Why today, environmental responsibility and sustainable development are so often considered by businesses as an asset that helps to earn money and open new opportunities?
Since the adoption of the Kyoto Protocol in 1997, when global warming was recognized as a real problem along with overpopulation, the environmental consequences of the impact of the economy on the environment have become an increasing threat.
For Generation Z and millennials who grew up with inconvenient truths, sustainability and the environment have become near-top priorities.
As technology advances to enable digitization and cloud storage, coupled with the growing use of lean manufacturing practices, companies are finally looking at how sustainability can move from a cost, first to savings, and then to a source of income.
Why following the principles of sustainability is beneficial for business?
The first reason is that it’s an effortless way for a non-sustainable company to look at what it’s already doing and try to find new benefits it can gain with just a few slight changes.
As a simple example, let’s take the operational process of creating the final product along the entire chain. This process produces waste.
In the past, companies would have paid for the removal of this waste. What is being discussed now is how to reduce or eliminate this waste first. Then, how the waste itself or the process of its production can be turned into a source of income.
Simply performing these two steps within the supply chain (or service delivery chain) can reduce costs and/or significantly improve production efficiency.
When a company integrates sustainability issues into its daily business processes, that is when sustainability becomes a source of additional income.
Bank of America Merrill Lynch has provided data supporting the economic power of sustainability.
Their 2018 study proves that companies with better ESG (environmental, social and governance) scores outperformed their lower-rated competitors, and their stocks had less volatility and delivered higher returns over a three-year horizon.
Whether these numbers are the result of causation, and the real correlation is still questionable, but companies implementing the sustainability process do show more positive economics relative to their competitors.
Investors also see the long-term positive side of implementing sustainable development principles.
So, as of 2019, the campaign to move away from fossil fuels, coal, Fossil Fuel (FF), which was funded by some university funds, has expanded to all types of fossil fuels.
Today, FF’s assets exceed $11 trillion, which includes investments from the Norwegian sovereign wealth fund (the world’s largest), French insurance giant AXA, and SDIC, one of China’s largest state investors.
Where cash flows go is where companies will focus in the coming years.
Today, many global companies are making the right steps in the area of sustainability and are likely to make great progress in this in the near future.
Which companies successfully implement sustainability in business
Interface
This flooring company is better known for its sustainability efforts than for the products it sells.
The Interface Zero program started in the 90s, aims to eliminate any negative environmental impact a company may have in its production cycles.
According to the latest data, Interface has reduced its carbon footprint per square meter of carpet it produces by 69% and its water consumption by 89%.
The company’s factories currently use 89% renewable energy, and their European operations do not send waste to landfill. They use carbon to produce better products.
The company recently began selling carpet tiles that use recycled materials and biomaterials that store carbon and prevent it from being released into the atmosphere. Now, these are the first carbon-negative floor coverings.
The company achieved this result by radically changing its end product structure and business practices with sustainability in mind at every stage.
Some simple examples of this are the replacement of latex in the precoat with recycled PVB and the use of recycled fishing nets as raw material, as well as energy savings that allow for more efficient operation.
The company’s latest initiative is the Interface — Climate Take Back program, aimed at reversing global warming.
Honda
Honda is promoting its Triple Zero program with three specific goals:
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Zero CO2 emissions through the use of renewable energy sources
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Zero risks of disposal
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Zero energy risks
They are doing this with partners to integrate renewable energy companies’ technology into vehicles, ensure the safe transportation of waste, and encourage their consumers to adopt sustainable lifestyles.
To this end, the company has reduced total vehicle CO2 emissions by 30% from 2000 levels.
Honda is the first automotive company to disclose greenhouse gas emissions across the entire value chain.
Nestle
The Nestlé Water Stewardship program aims to ensure the availability and sustainable use of water.
The company achieves this by reducing consumption, protecting, and conserving water resources and through research conducted by the World Wildlife Fund, Zero Water technology, and other NGOs.
Nestlé was an early adopter of sustainability principles, initially reducing the weight of its various packaging in 1991.
To date, this reduction has amounted to more than 500 million kg. In addition, Nestlé has a team of more than 1,000 agronomists who train farmers to minimize their environmental impact.
Under the motto “Do not be evil”, the company pays special attention to sustainable development. Through its program, Google is trying to protect marine habitats and provide new opportunities for long-term fishery management.
Their Global Fishing Watch provides near real-time transparent tracking of fishing activity through a public map. It enables scientific research and improved fisheries management processes.
Since its first steps towards sustainability, Google has achieved impressive results.
Google data centers consume 50% less energy than competitors, while 91% of waste is recycled. Google is also working with its suppliers to expand the use of renewable resources.
IKEA
The Scandinavian manufacturer of affordable furniture is also seeking sustainability recognition.
IKEA’s 2020 sustainability strategy called for recycling or incineration of 91% of the waste from their stores for energy recovery, increasing the use of sustainable manufacturing materials, and increasing sales of water jets, air-purifying fabrics, and efficient LED lamps.
Since the end of sales of incandescent lamps in 2011, IKEA has sold more than 85 million LED lamps.
IKEA is working with its suppliers to procure sustainable materials and identify excess energy and material consumption in the manufacturing process.
The company requires its partners to use the most environmentally friendly materials. For example, 100% cotton and 77% wood in products sold by IKEA come from sustainable sources.
IKEA is confident that over time this approach will pay off handsomely.
Sustainability is a straightforward way for a company to evaluate its performance and strive to maximize performance.
This approach allows the process to start by improving obvious gaps in the value creation process and gradually extend to all aspects of doing business.
Such efforts allow companies not only to make their own contribution to responsible production and consumption but also to improve their own financial results in the process.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.
