Customers, employees and (most) executives agree that companies should be concerned about their environmental impacts and that sustainability is sexy – whether they like it or not.
Return on Investment (ROI) is the term that is thrown around to identify if and when companies expenditure will return a profit, either monetarily or non-monetarily. This is based on spending, speculation, expectation and forecasting.
So where is the green in being green?
To answer this question, we are going to take a look at what Sustainable ROI (S-ROI) means, how to track it and some great examples of sustainable companies in action.
S-ROI is a measure of performance that provides a gauge on a companies gain from investing in sustainability initiatives. These gains can be measured in a number of areas such as:
A Nielsen report demonstrated that sustainable product sales in North America have grown by a staggering 20% since 2014, showing the support from consumers for companies who are environmentally minded.
This consumer demand provides a consistent growth opportunity for businesses, developers and manufacturers who are looking to ‘go green’.
This industry stimulation is seeing sustainable companies attract a lot of investor interest. Large advisors and investors are progressively looking for Environmental, Social & Governance (ESG) funds. According to Forbes, ESG is now “big business”.
The ESG’s are looked to as a guide for companies who are trying to be ethical or at least appear so.
Employees have embraced the swing to sustainability. 38% of millennials have chosen a job because of company sustainability. 75% of millennials said they would be willing to take a pay cut if it meant working for a company that is environmentally and socially friendly. While less than a quarter of gen X and 17% of baby boomer respondents said the same. In fact nearly 70% of respondents from the same North American study said that if a company had a strong environmental impact and sustainability plan, it would affect their decision to stay with that organisation long term.
Sustainability equals Satisfaction!
Green environments are now proven to boost employee’s productivity, over all health and satisfaction levels.
Another separate study revealed that $40 USD spent per person, per annum to increase office air quality resulted in mean gains of $6,500 USD per annum in employee productivity!
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7 Steps for measuring your sustainable action
1. Energy Usage
Your energy consumption is the largest component of your sustainability. Use less, save more! Simple right?! This improves operations while saving costs, bringing down that bottom line, improving your financial performance and directly reducing the amount of greenhouse emissions and other compounds, which your business is responsible for. IoT sensors can be used to continuously measure and monitor your energy consumption in a dynamic live time process, rather than an overall measurement at a single point of time (when the bills need to be paid). This gives you quantifiable data, which you can use to make changes and show actual reductions! These reductions can then be translated into environmental impact such as carbon offset and reduced air pollution. These IoT sensors provide a analytical framework, cataloging data for monitoring and measurement from a suite of sensors.
The major contributor to climate change is the emission of CO2 and other compounds as a byproduct of fossil fuel burning. Efforts to improve energy efficiency and migrate towards renewable energy sources provide us with an effective way to reduce our harmful emissions. The below chart is based on EPA data and shows the average emissions per megawatt-hour of electricity reduction.
Remember the source of your energy matters too. Utilities are moving from coal natural gas because methane (the primary component of natural gas) is 85% more efficient in producing electricity than coal. Greater efficiency is achieved while lowering GHG emissions.
In theory, a complete migration to hydrogen fuel would eliminate CO2 emissions while offering the highest level of fuel efficiency. The below chart shows the energy of fuel sources as measured by kilo-joules of power per gram of fuel.
3. Water Usage
Water is a primary component in everyday usage within most companies and facilities. Similarly to energy consumption, water usage can be monitored in a dynamic way with the use of IoT sensors, giving your business a live view of consumption. Data from the U.S. Energy Information Administration (EIA) suggests that on average 75 litres of water is used per square foot each year in building spaces. This may seem insignificant, but when you apply this over a 100,000 square foot building, you are looking at over 7.5 million litres of water consumed per year, which equates to 3 olympics swimming pools. It is important to make sure pipes and water distribution lines are monitored for leaks and faults. Leakage off course can have a huge impact on water consumption in businesses and facilities.
4 . Water/Pollution
We should always be striving to reduce the waste and pollution we produce where feasible. Ask the questions:
Am I using recycled materials?
Am I incorporating sustainable energy sources?
Am I recycling a large portion of my own waste?
Am I using less packaging, using recycled packaging or redesigning the way my packaging is made?
Reducing waste and pollution are crucial practices for any sustainable business and your customers and employees will see it first hand.
5. Employee Health and Safety
Sustainability and corporate responsibility go hand in hand. Creating a safe and healthy working environment includes looking after the quality of air within your buildings, promoting safe work practices, inspecting practices to minimize risk, encouraging employee health programs, providing training to help employees safety on tasks and helping employees reduce or manage stress. Employees are known to perform tasks better with greater air quality when inside working, have greater productivity, less time off for health issues and sick days. This is better for the employee and employer.
6. Supply Chain
Your organisation is (probably) a part of a larger system or network, which allows finished products to be used and consumed. As a sustainable business it is your responsibility to take steps to improve the sustainability and minimize the environmental impact at all levels of your supply chain. This may include auditing suppliers, changing where necessary, minimizing inefficient freight and logistics and working closely with suppliers to help improve potential issues. As a sustainable company you need to know where your materials are being sourced from, if your supplier is adhering to the legal methods of extraction, how so and how the waste products are being treated and disposed of. Transparency in your supply chain allows you to communicate with your customers on the origins of your products or services, adding to your companies image and legitimacy.
7. Management Behaviour
These changes all start with management. Ask yourself the questions: Does your culture support sustainability? Have you implemented policies and procedures that support this? Are you ethically responsive to your people, the planet and your products? Do you compromise your beliefs and company position on sustainable business in any part of your business? If the culture is supported from the top down your employees will ‘buy in’ internally and it will attract external parties. Develop a coherent policy to ensure that your entire organisation is on the same page.
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