March 17, 2016

Increasing Efficiency Means Expanding Profits

March 17, 2016 | by Chris Ihler

It wasn’t long ago that sustainability was considered to be a burden on companies’ time and resources. This time has passed.

Industry leaders now recognize the financial benefits, and competitive advantages that can be gained by improving social and environmental performance.

Focusing on sustainability encourages innovation, strengthens risk management, increases efficiency and facilitates growth. All of these help businesses improve their bottom line.

There are numerous examples that demonstrate the value sustainability brings in these four areas and we have listed a few notable ones below:

 

Opening Doors to Impressive Innovative Potential

Focusing on sustainability prompts companies to think up creative new ways to solve problems.

Here are a few examples:

  • Target recently introduced its sustainable “Made to Matter” line of products and after one year, they reported profits of close to $1 billion
  • GE was reportedly up $200 billion in revenues from its “Ecomagination” program, which is an innovation project with a $15 billion investment in research & design

 

Tackling Risk Head-on

Risk management is a key issue for any large-scale corporation.

Sustainability is a hidden, unaddressed risk for many businesses.

A 2015 EY Global Institutional investor survey found that the failure to adapt to and mitigate climate change is the number one risk investors are concerned about for this year.

Failure to address these risks is already impacting corporations and driving companies to adapt to secure their bottom lines

  • Project ROI identified that 4% of systemic risk can be offset by improving sustainability – a sizeable but achievable goal.
  • One of the world’s largest reinsurance companies, Munich Re, reports that it lost $97 billion in weather-related losses in 2014 alone; about 30% of this one hundred year old company’s assets. Building resilient businesses and supply chains is vital in the face of changing weather patterns and worsening natural disasters.

 

Expanding Profits through Increased Efficiency

When companies measure and manage their sustainability performance, they significantly improve their overall efficiency. This can save them millions of dollars.

  • Unilever reports that it has saved $395 million since 2008 by cutting 1 million tons of carbon dioxide emissions from its manufacturing and logistics operations.
  • One the other hand, efficiency “laggards” in the beverage industry faced 83% additional solid waste costs as a result of failing to implement more efficient waste management policies.

 

Sustainability is Synonymous with Growth

Consumers and industries are driving companies to build responsible products.

Companies that manage their sustainability are capitalizing on these trends and in turn, achieve dramatic results.

  • Project ROI found that sustainability leaders increase their market value by 4-6% as they improve performance
  • The global management consulting firm Boston Consulting Group reports that 15% of consumer money in the food, home goods, and personal care sectors was on responsible consumption (RC) products in the US in 2013. RC products are growing at about 9% a year. This represents 70% of all growth in the grocery sector alone.
Share with your friends










Submit

SIGN UP FOR THE NEWSLETTER

Stay up-to-date with The Pulse and other energy industry insights. Enter your email below to sign up for our newsletter.

energy company newsletter

Download our energy saving ebook