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Sustainability meets big brands
Dan Crossley, March 18th 2010, Business, Procurement, Retail
Sustainability is no longer the preserve of niche brands. Major manufacturers and retailers are now recognising the value that integrating sustainability into their key product lines can deliver, both in terms of strengthening ties with the consumer and for protecting their market share in an increasingly uncertain future.
At our recent Mainstreaming sustainability into brands event, Ben Eavis from Sainsbury’s explained the principles behind making their bananas exclusively Fairtrade and Alex Cole from Cadbury spoke passionately about the motivation and the journey that the chocolate manufacturer embarked on in their Purple Goes Green transformation.
We captured the essence of the event in a short video:
You can also watch or download it here: http://vimeo.com/10174247
Video round-up:
Dr Sally Uren, Deputy Chief Executive of Forum for the Future, introduced the session by talking about the opportunity for brands to accelerate the transition to a more sustainable world (0:00-03:08 mins)
Ben Eavis, Corporate Responsibility and Ethical Trading Manager, Sainsbury's gave examples of how they are making the more sustainable decision on behalf of the consumer (e.g. by making all their bananas Fairtrade), and talked through some of what is going on 'behind the scenes' to get sustainability at the heart of the Sainsbury's brand (03:09-09:09 mins)
Alex Cole, Global Corporate Affairs Director, Cadbury, set out how they segment consumers and what that means for Cadbury. She then described the story of how Cadbury Dairy Milk has embedded sustainability into the brand. (09:10-18:23 mins)
M&S sets a sustainable benchmark for the retail world
Jonathon Porritt, March 11th 2010, Business, Forum founders, Retail
I spoke at the annual M&S Suppliers’ Conference on Tuesday, which took place in Kensington Town Hall. This venue has a particular resonance for me as it was where the votes for the 1979 and 1984 European elections were counted – and every time I’m back there, I can’t help but recall that sense of consternation that so few people seemed to be prepared, at that time, to put their cross in the Green Party box!
Twenty-six years on and it seemed as if the M&S Suppliers were all voting enthusiastically for the updated version of Plan A! And that was not just because Sir Stuart Rose made a very powerful pitch telling them all that this was their reality whether they liked it or not. By the end of the day, they would certainly have had an unnerving sense of bars being raised all around them, in terms of production standards, transparency, reporting, innovation and so on.
Plan A was launched three years ago, and instantly captured people’s imagination. The combination of carbon neutral and zero waste to landfill pledges, the 100 Action Points, the commitment to invest £200 million, and the sense of all this being at the core of the company rather than being grafted on made an immediate impact. It also gave Plan A the kind of brand profile that took it way beyond the usual corporate responsibility strategies.
Three years on, the £200 million cost has been turned into a £50 million contribution to profit. Forty-five of the Action Points have been delivered, and another 80 have been added on. The ambition level has been ratcheted up several notches, with M&S now committing to becoming the world’s most sustainable (major) retailer by 2015.
Forum for the Future has worked closely with M&S throughout this time, so we are not exactly disinterested parties, but Plan A does provide the benchmark for the whole of the retail world. It’s visionary, it’s applied, it’s comprehensive (as in covering all the sustainability bases), and it’s succeeding in getting whole-company buy-in, through the high level “How We Do Business” Committee, chaired (and driven!) by Sir Stuart Rose.
So it’s well worthwhile checking out the new version of Plan A, available at: http://plana.marksandspencer.com/media/pdf/planA-2010.pdf
Lessons from Kraft’s Cadbury takeover
Jonathon Porritt, February 12th 2010, Business, Finance, Forum founders, General
So the first blow has fallen on Cadbury’s from its new owners, Kraft.
The Keynsham plant near Bristol (pictured) will close, despite the fact that Kraft promised to keep it open (that was actually a bit weird, as Cadbury itself had announced that Keynsham would be closed at some stage in the future).
And the fear, of course, as much in the mind of Peter Mandelson as in the minds of all Cadbury’s workers, is that this is just the first of many cuts that will be brought forward during the next few years.
I haven’t written about this since the takeover. Apart from the odd sardonic chuckle as the process unfolded (with that arch-globaliser Mandelson shedding a few crocodile tears at another ‘great British company’ being gobbled up by ‘predators’ like Kraft – or Warren Buffet (who owns about 9% of Kraft) complaining that it’s a really bad deal for Kraft shareholders, however good a deal it might be for Cadbury shareholders), it’s been too bloody miserable.
The optimists would have curmudgeons like me cheer up a little. They point to the pledges made by Kraft to stick by Cadbury’s ethical and Fairtrade commitments. Just before the Cadbury’s Board accepted the bid it announced that Green & Black’s would be moving its entire range to Fairtrade by the end of 2011, which elicited the following emollient words from Kraft:
“We strongly support certification as a way to improve sustainability in cocoa farming, so we welcome this step by Green & Black’s. Cadbury and Green & Black’s have proud histories in ethical sourcing, and if our offer is successful, we look forward to maintaining this heritage.”
Just so long as you ignore the unmistakable sound of grinding teeth behind the reassuring words, perhaps that really is something to be optimistic about.
But it is still a wretched outcome. And surely a complete failure on the part of Cadbury’s shareholders to tell the difference between ‘a good price’ and ‘lasting value’.
Roger Carr, who has just stepped down as Chairman from Cadbury, having felt ‘obliged’ to recommend to shareholders the offer of £11.7 billion (up from the opening bid of £9.8 billion in September last year) has now weighed in with some ‘radical ideas’ to ensure that something similar doesn’t happen again. He has suggested raising the ‘victory margin’ from 50% plus one share to 60% plus one share, and that simultaneously there should be a rule that those who bought shares during the course of any takeover battle would not be permitted to vote until the battle was over.
Useful ideas. But the lack of any genuinely radical ideas during the takeover battle was very noticeable. “This is just the way it is with markets”, as one commentator put it. Indeed! Which is why we go through the same nightmarish process with every single takeover proposal.
Why don’t we, for instance, have more John Lewis look-a-likes in the UK? The John Lewis Partnership is hugely admired even by people in the City – even if they don’t really approve of its ‘bizarre’ employee benefit Trust. But this example has been followed by very few companies over the years. As is the case with Scott Bader (a successful chemicals company), and Tullis Russell (a successful paper company in Scotland).
But there is still Royal Mail, which currently has only one shareholder (the Government), which would make it easier to think of some kind of employee ownership basis. Allan Leighton, Royal Mail’s Chairman, has indeed hinted at the possibility of some kind of employee share-ownership.
The interesting thing is that employee-owned companies regularly outperform those in the FTSE All-Share Index. Over the last 17 years, employee-owned companies have outperformed FTSE All-Share companies each year by an average of 10%. In the third quarter of 2009, for instance, employee-owned companies’ share prices were up 27.6% compared to FTSE All-Share companies share prices, which were up 21.3% over the quarter.
But we are still so stuck in our wretchedly unsustainable ways when it comes to ownership structures within the capitalist economy.
Unleashing brands as agents of transformative change
Sally Uren, February 1st 2010, Business, Innovation, Retail
Consumer brands have the power to create huge change, helping millions of customers lead better, more sustainable lives.
A growing number of big businesses are making sustainability a core part of their brand, (we’ve looked at the business reasons behind this in a previous piece) and this is hugely encouraging to anyone concerned with our planet’s future.
Generally speaking, consumers don’t particularly trust governments. You only need to flick through public opinion polls asking who people trust to see that politicians tend to do quite badly, and in the UK, in the wake of the expenses scandal, trust in politicians is probably at an all time low. So, governments exhorting the general public to do their bit to save our ailing planet will only ever have limited success.
But, generally speaking, consumers do trust brands. Whether we like it or not, there is often an emotional attachment to our favourite brands, although often at a sub-conscious level. The power of that consumer/brand love-in is proved by the massive waves of disapproval when a brand gets things wrong, from using child labour in sweat shops (think back to Nike), to charging more for underwear for, ahem, the fuller figure (M&S has almost recovered from this blip in its otherwise savvy reading of its customers).
And the need to shift towards more sustainable patterns of consumption is urgent. We are running perilously low on resources. We have to cut carbon out of our daily lives, and soon. In order to meet the scale of the challenge, we need to muster every tactic possible to move from our high-carbon, resource-intensive lifestyles to low-carbon loveliness. Now is not the time to get precious about the morality of deploying business and brands to help provide the solutions to our current crisis.
So, just how can the humble brand communicate the sustainability agenda in such a way that encourages more sustainable behaviours, from how a product is used, to what the consumer does with it at the end of its life?
At this point it’s worth remembering that when it comes to green and sustainability issues, the average consumer is confused and disempowered. He or she is also very clear that business needs to do its bit – there needs to be a clear compact between the brand and the consumer – based on ‘I will if you will’. Finally, most people want simple actions, not a menu of complicated and often contradictory choices.
Which means that when it comes to communicating sustainability, brands must remember that labels have their limits. It is estimated that most of us take an average 45 seconds to make choices when we’re buying our everyday necessities, and a proliferation of sustainability labels, be they fair trade, red tractors or carbon labels, may influence the purchase, but won’t lead to any changes in behaviour.
Simple messages are needed to cut through the clamour of labels. The Ariel ‘Turn to 30oC’ is perhaps one of the most successful pieces of brand communication on this agenda – a very clear message encouraging the customer to do something very simple. It won’t save the planet on its own – but millions of people turning to 30 oC just might help.
Motivating consumers as a group – convincing them that their own simple actions can make a difference - is a key to successful sustainability communications. Unilever’s relatively new ‘Clean Planet Plan’, currently promoted here in the UK through its Persil brand, has the power of collective action at its heart, trumpeting the strapline, ‘lots of small actions = a big difference’.
Two final tips for effective consumer communications. The first is something the green movement has got horribly wrong in the past, and might be one reason public support for green issues has taken so long to muster. Make people feel good. Urging consumers to do their bit by scaring them and painting a more sustainable world as the equivalent of living in a cave with a candle, weirdly enough, doesn’t tend to make people want to change. You stand much more chance of success by showing the links between using less energy and saving money, or recycling products and saving beautiful countryside from being used as a waste dump.
Finally, tell your customers about the success of your efforts. In celebrating the successes of Plan A, M&S is able to share a whole range of facts, from the money it has been able to give to charities to the thousands and thousands of recycled coat hangers. Generally, this all helps to show that the M&S/consumer compact is making a difference.
We live in interesting times, and brands are definitely getting better at helping the consumer do the right thing. But, so far, only a small handful have dared enter the ultimate hard-core sustainability territory, where the penny has dropped that actually, sustainability might just being about selling less stuff. Reducing impacts in the product use phase does make a difference, but not if the absolute numbers of people using those products keeps going up.
For now, innovation still has a big role to play in giving us truly sustainable products and services, but that is only part of the answer. The other part is quite straightforward - we simply need to consume less stuff.
An edited version of this article appeared in the Guardian Sustainable Business section.
Paint your business green with sustainable innovation
Chris Sherwin, January 27th 2010, Built environment, Business, Innovation, Procurement
Innovation is famously described as one per cent inspiration and 99 per cent perspiration – great ideas are rarely enough, the challenge is to execute them.
Sustainable innovation can be a time-consuming and sometimes frustrating process. Our latest report Paint the Town Green has been more than three years in the making but what a story we have to tell.
The report is about a multi-year innovation collaboration which set the goal of creating sustainable paint systems, and about the new products, services and processes which came out of it. It explains how to conduct innovation driven by environmental and social responsibility and why it makes good business sense.
Its not that I’m especially excited by paint – though I must confess to a soft spot after working on it for so long. Essentially the report shows how to use sustainability as a new lens to reinvent and rethink every aspect of our life. If we can do this with paint, imagine what you can do with cars, mobile phones, homes and holidays.
The three-year project set out to study the entire lifecycle of paint – from raw materials through to manufacturing, use and disposal - to find ways to make it more sustainable. It brought together ICI Paints AkzoNobel, a manufacturer and supplier, construction group Carillion, a major user of paint, and Forum for the Future.
Here are a few of the innovations:
- Dulux Ecosense, a new range of eco-paint with half the carbon and water footprint of the standard paint sold two years ago and 40 per cent less waste.
- Improved cans which use less plastic and are easier to clean and recycle.
A recycling scheme in which vehicles delivering paint to Dulux Decorator Centres bring back used cans. - Envirowash - a mobile brush and roller cleaning station for building sites: instead of pouring contaminated water down the drains it is captured for reuse with the paint residue filtered out.
- Manufacturing improvements that save millions of litres of water used in cleaning production equipment by using it to make new paint.
We also developed new tools for the project like our Streamlined Lifecycle Assessment (SLCA) method and Environmental Impact Analyser – a tool to measure the key impacts of a proposed new formulation and compare them against an existing product. This was the key which allowed ICI Paints AkzoNobel to develop both Ecosense and Ecosure trade paint, which won Green Product of the year in the Green Business Awards 2009.
Paint the Town Green marks a unique point in Forum’s innovation work. Some years ago we resolved to only work on practical innovation projects and not write any reports. We caved in on this project, but that’s only because we’re convinced there’s a great story we want to share with others. We hope it provides the one per cent inspiration you’ve been looking for.
Investigating the business case for sustainability: seven steps that could make you millions
David Bent, January 27th 2010, Business
Good environmental management has saved telecoms group BT more than $700 million. It used clear-eyed analysis and fundamental financial tools to identify the business case for sustainability. Here are steps you can apply yourself.
Finding the business case is the ‘holy grail’ of sustainability professionals, a goal which sometimes seems impossibly hard, and yet there are actually many different business cases for sustainability projects, change programmes and initiatives.
In previous posts I gave Six Lessons on Finding the Business Case for Sustainability Initiatives and Four Tips on Getting Buy-In from Finance. This final post goes into the technical part – seven steps to investigate the business case.
I’ll illustrate with the work Forum for the Future did with BT, which helped the telecoms group save $720 million (£442 million) in operating costs over five years.
1. Identify what you’re investigating and why. Obvious, but you’ll be surprised how poorly people define boundaries. Are you looking at the sustainability drivers for the whole organisation or only a particular project or initiative? Are you looking at the worth of an entire change programme, or do you want to add sustainability-related criteria into a decision-making process like capital expenditure budgeting? Make sure you know your scope.
You should also be clear why you are investigating. How will you use the results? What is the change you’re trying to stimulate?
BT was interested in identifying the financial benefits of good environmental practice for reporting and marketing. Crucially, they narrowed that down further to some particulars: transport, energy and teleconference working practices.
2. Prioritise value drivers. Shareholder value – the value of the company to its owners – is driven by certain factors: turnover growth; margin growth; reduced capital expenditure; risk reduction; duration of competitive advantage; reduced tax rate; and reduced cost of capital. Identify which of these is key to your investigation.
For BT the value driver was clear: margin growth.
3. Identify the relevant business cases. Each value driver may have a number of different possible business cases - we’ve compiled a list of 17 pathways from sustainability to shareholder value (see here). Do get in touch if we’ve missed out any.
The crucial thing is to identify the causality: how does A lead to B lead to C, and so on to an ultimate financial impact? It is this assumed pathway that you will be testing.
BT found that each piece of environmental good practice creates a different causal chain creating value. For instance, increasing the number of home-workers has two key effects: firstly, less office use cuts office costs; secondly, home workers use some of the time they’re not travelling to do more work, effectively improving productivity. Both outcomes also reduced net greenhouse gas emissions.
4. Choose the financial technique. Each type of business case will need an appropriate financial technique (more on this at the end). The key is to find a technique that is credible to your internal audience, usually the finance function. Wherever possible, use the same method they do.
In the BT example, measuring cost savings is a management accounting question. The issue is how long can you claim them? We assumed changes five years previously had become normal practice, and so have a five-year rolling gap (i.e. effectively we compared the costs in 2008 with 2003).
5. Do the financial analysis. With luck you’ll get the finance function to do it for you. BT identified total savings of £442m ($720m) from the five years to 2009. You can see more here.
6. Use your findings in the business. You identified why you were investigating in step one. Now you have the results, use them.
BT has used its results in different ways. It has disclosed them, as part of communicating to stakeholders and shareholders the value of sustainability. It has used them to build awareness of the business case for sustainability across the business. Most importantly, they have been a powerful tool in marketing BT services such as teleworking. The results say: we do this ourselves, and this is how much we’ve saved.
7. Learn and embed. Finally, what have you learnt about investigating this business case? How will you do it differently next time? Do you need to set up an information management system to collect the data automatically? How can you embed the results in regular decision-making? What do the results mean for sustainability in the company more generally?
This is the last of three blogs which relate to the Forum’s work on Better Decisions, Real Value . We’ve nearly finished piloting various techniques with our partners. By the end of April we hope to have a tool which takes people through the steps above, including directing them to the appropriate financial technique. If you are interested in seeing a draft, or have suggestions please do get in touch with me on d.bent@forumforthefuture.org.
This article was originally published on GreenBiz.com.
This is the third of three blogs looking at the business case for sustainability. The other blogs are: How to Build a Business Case for Sustainability: Four Tips on Getting Buy-In from Finance and Six Key Lessons on Mapping Out a Business Case for Sustainability Initiatives
How to build sustainability into a brand
Sally Uren, January 21st 2010, Business, Leadership
Mainstream brands are currently busy showing off their sustainability credentials. From Cadbury’s Dairy Milk - now 100% Fairtrade - to Persil’s Small and Mighty, using less packaging, less water, less energy - mainstream brands are having sustainability makeovers.
Is this just marketing gone mad? A fad? A cynical attempt to grab a new bit of market share? No, no, and sort of – in that order. The market share bit is partly true, but in most cases, from Cadbury to Unilever to M&S, there’s little cynicism involved – this is simply an evolution of their sustainability strategies. It’s not enough to have shiny policies; leadership today is pushing the sustainability promise into the brand.
And there are at least three reasons why using brands to visibly demonstrate sustainability commitments makes good business sense.
Firstly, as public awareness and interest in the sustainability agenda grows, there is the potential to cement existing consumer relationships, and build new ones, using social and environmental issues as communication channels (that’s the market share bit).
Secondly, by doing the work to understand the sustainability impacts of a product, ways of reducing those impacts - and often saving money - become apparent.
Then, thirdly, there’s the bit about securing future supplies of raw materials: doing the right thing in terms of sourcing isn’t simply about a fair wage, it’s also about ensuring long-term continuity of supply.
So what does an authentic voice on social and environmental issues look like? How can you tell if a brand is serious about sustainability?
Of critical importance is the need to demonstrate, visibly, that taking sustainability seriously doesn’t mean business as usual. There needs to be evidence that as a result of confronting sustainability head-on, some things have changed, such as taking some products - the sustainability villains - off the shelves. Both B&Q and John Lewis in the UK have stopped selling patio heaters – which lets face it, aren’t part of a sustainable future (a jumper will always be the low-carbon option).
Honesty is also important. Communicating the challenges and dilemmas associated with a journey to greater sustainability helps build credibility. Never believe the brand or business that claims overnight sustainability, it just isn’t possible. Businesses such as Exxon, which have had a more recent conversion to sustainability, need to be very honest about the huge challenges they face in switching from an inherently unsustainable business model (oil is running out, right?) to one with renewable technologies at its heart.
Finally, there need to be absolute targets for reductions in key impact areas, from water, to carbon, to waste. Normalised targets - units of carbon emitted per area occupied, for example - as the sole measure of a brand’s performance have had their day. These clever numbers all too easily communicate efficiency improvements, but can disguise an increase in the brand’s overall footprint. And the argument that ‘we’re a growing business’ doesn’t wash. That’s the whole point – we absolutely have to decouple economic growth from environmental impact if we are going to get close to the 80-90% reduction in carbon emissions the developed world needs to achieve by 2050.
We are currently in the middle of a market transformation, from niche and green to mainstream. That’s not to say the niche and the green are not important, they are, and their very existence has paved the way for the big players to engage with the sustainability agenda. But niche and green won’t deliver the scale of the change we need to see. Giving mainstream brands serious sustainability makeovers just might.
An edited version of this article appeared in the Guardian’s Sustainable Business section.
Corporate sustainability holds its value in the recession
David Bent, January 7th 2010, Business, Leadership
Despite what the Financial Times has called "the Great Recession" corporate sustainability is holding its own. The downturn has hit the UK harder than any since 1930s but companies are still finding sustainability is a source of cost savings, innovation, motivation and long-term advantage.
This time last year people were predicting the decline of corporate sustainability, saying the recession would force everyone to show their true colours: consumers would stop buying 'ethical' and companies would get rid of the PR fluff, including all this sustainability nonsense.
At Forum for the Future we were also concerned, so we created some scenarios that outlined lots of possibilities, from 'Chinese-American globalisation', through 'A quick return' to 'Into depression'. We focused our April Business Network event on the recession, with a set of scenarios and some techniques to keep sustainability relevant and fight off budget cuts.
Eight months on we know it has been a difficult time for pretty much all the organisations we work with in business and the public sector - "the worst year in my professional career" as one CEO put it to us.
But the vast majority of our partners have kept going on sustainability. There have been budget cuts, but mostly only in proportion to cuts around the rest of the business. The evidence so far is that corporate sustainability is holding its own in the recession. Why?
Back in April we proposed four ways a sustainable approach can help your business in a recession: it identifies direct cost savings; it helps innovate products and services which defend your revenue; it motivates your people; and it captures long-term advantage.
Other people have come up with very similar lists (see Andrew Winston's short book Green Recovery, The Economist's rather churlish article, and the excellent Sloan Review special report on The Business of Sustainability).
We don't know of any good quantitative research, but the anecdotal evidence is that sustainability does help companies in a recession. Some of our partners have pushed ahead with projects aimed at reducing energy use (which also helps prepare for the Carbon Reduction Commitment). One partner told us they'd seen five years' worth of innovation this year, especially in helping customers reduce their spending. We can see IBM trying to capture long-term advantage through all that “Smarter Planet” advertising.
On top of this, it's likely that companies would have retreated much more on sustainability three years ago. The resilience of corporate sustainability in the recession is evidence that increasingly they understand what it can do for them, and they are embedding and integrating it into their organisations.
But we're not out of the woods yet. Here at the Forum, we've been using our recession scenarios to track developments each month. The summary is that parts of the world have growth, but there is great uncertainty, with most predictions pointing to a long, slow climb at best. Commodity prices, like oil, are high for a struggling global economy, and this shows that the underlying infrastructure bottlenecks are still there (see our report on Acting Now for more). Households and banks are going to take a while to rebuild their balance sheets. Governments are walking a delicate tightrope; keeping spending going long-enough to maintain growth but proving they are serious about tackling deficits. There is a real risk of a ‘double-dip recession’.
The year ahead will still be difficult for companies, and we will all have to adjust to a world that is different from 2007. But the fundamental reasons why sustainability has risen up the corporate agenda remain: the real impacts of an unsustainable world are being felt, with the prospect of more to come. The challenges and opportunities of sustainability will still be important for companies in the years to come.
Copenhagen flop means business must take a stand
Ben Tuxworth, December 22nd 2009, Business, Climate change, General, International
As Copenhagen diminishes in the rear-view mirror, we must still do whatever we can to stop it also sinking beneath the waves.
What should organisations make of the Copenhagen Accord (or if you find accord just too challenging, ‘letter of intent’)? With its questionable traction, action-free plan to keep temperature rises under two degrees, vague suggestions about using the markets, technology and forests er…somehow, and unappealing invitation to all nations to record whatever voluntary commitments they’d like to make in a special register, it doesn’t exactly help you believe in Santa again. As China distances itself even from this weedy document, leaving no clear path to something more binding next year, it would be perfectly reasonable to find the whole thing pretty depressing.
Whether you blame Denmark, China, or the UN itself, organisations – particularly businesses - hoping that Copenhagen would bring some clarity on the carbon regime they should be planning for, will have to wait. With no clear shared targets, timetable, or approach to markets, the temptation to wait and see before making investments – and then pile into countries with weaker carbon regimes – will be hard to resist. Some companies are already making it clear that if governments were expecting them to make the big investments in the low-carbon transition, they have utterly failed to create the environment required.
It would be easy to throw our hands up in despair. But as with all such crises, of course, this is exactly when leadership has to stand up. As Ronan Dunne, CEO of Telefonica O2 pointed out at a recent Forum for the Future event, decisions where you can analyse the numbers for an answer don’t need leaders. Ditto moments when everyone knows what to do. It’s time to decide what you really think about it all, and take a stand.
But in the face of uncertainty about carbon, what’s the right leadership stance to adopt? Before COP 15 we had five arguments for action. One was that a future regulatory environment on carbon constituted a risk too potentially expensive to ignore. That one may be on hold. But the others – the arrival of peak oil; the fact that most of what you would do to decarbonise makes social and economic sense anyway; the lesson of history that responding to a constraint can drive game-changing innovation; and the awful truth that there are plenty of other, much less debatable environmental challenges already at the gate – all still stand. Now’s the time to make the most of them.
So the post-Copenhagen world means pushing on with pretty much all those things that made business sense at the end of November. And ultimately it means remembering that, somewhere out there in the darkness, climate change itself grinds on, indifferent to our hopes, fears and failed conferences, and still the greatest challenge facing humanity.
Merry Christmas!
How to Build a Business Case for Sustainability: Four Tips on Getting Buy-In from Finance
David Bent, November 30th 2009, Business
How can you persuade your finance department to invest in finding your company's business case for sustainability? It's not easy, but it can be done.
Sustainability professionals often find themselves caught in a vicious circle: They need resources to investigate the business case and the accountants won't release resources without a business case.
In a previous post I gave Six Lessons on Finding the Business Case for Sustainability Initiatives. This blog sets out how to take your finance managers step-by-step to the point where they understand the financial rewards in sustainability and are willing to support big projects, based on our experience at Forum for the Future helping companies escape from this trap.
1. View the business case as part of a wider change program. That means knowing who are the internal stakeholders you need to influence, especially in the finance function. Is there someone who could be a champion, or at least a curious friend, among the accountants?
Also, it is a good idea to have a core message that frames the search for your business case, for instance: "Sustainability is an opportunity as well as a risk to be managed."
2. Go to the finance department with a safe pilot. Unless someone in your C-suite has an epiphany, you will need to start with a small and safe pilot. Identify something -- an initiative, project, decision or process -- where the business case can be investigated without requiring too much resource. Whatever you investigate must also be relatively unimportant, so you don't trigger defense routines. I'll return to the technical part of the pilot in my next blog.
3. Use the pilot to build credibility and awareness. Wherever possible get the finance department themselves to investigate the business case. They will find their own results the most credible. You can use the pilot to learn how to speak their accounting language better, and to help them them understand sustainability too.
In our experience, rather paradoxically, it is not vital that there is a great business case for whatever you investigate. More important is demonstrating, first, that you are searching for how sustainability can create profits, and, second, that there probably is a business case for the company, even if not with what was piloted.
4. Keep creating a "permission and results" cycle. Hopefully, by this stage you have some credibility and interest from the finance function. You can use that to address larger and more important areas. How can you bring sustainability into capital expenditure decisions? Do sustainability-related risks get valued correctly in the risk register? Do people in strategy planning understand the size of sustainability-related opportunities?
Throughout the process, continue to build permission to investigate more of the business case, and use the results to get the next round of permission. Along the way you will want to build the capacity of individuals to understand and act on sustainability.
Of course, in an ideal world you would start with the big and important items listed at stage four, not least because they often have a more compelling business case. But in practice, you need support from the finance department, and you can only get that permission by starting small.
There is one final piece in the puzzle: How do you actually investigate the business case for a sustainability-related initiative, project, decision or process? That will be the subject of my next post.
This blog was first published on GreenBiz.com.
This is the second of three blogs looking at the business case for sustainability. The other blogs are: Six Key Lessons on Mapping Out a Business Case for Sustainability Initiatives and Investigating the business case for sustainability: seven steps that could make you millions
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