Thursday, April 21, 2011

But after all, what's the ROI of sustainability initiatives? ...

...or how to measure the business value of sustainability?

Working as a consultant in sustainability, I often take for granted that the business value of sustainability is clear. However, when my clients ask:
- "Is there business value in sustainability?"
- "yes, of course!"
- "Oh, do you have examples, do you have numbers?"

...well it is not that easy to find an immediate response for the following reasons:

1. Some studies have shown the correlation of a company's involvement in sustainability and its stock value. But is that causation? If a company is doing well, is it because of sustainability? Or because it is doing well, the company has enough budget to allocate some to sustainability?

A study by AT Kearney: “Green winners", showing this correlation, can be found at this [link]

2. Sustainability initiatives are often part of a larger change happening within the company, so how do you allocate the benefit of sustainability only?

Here are a few examples that I found useful to use:

1. See the AT Kearney study (mentioned previously)

2. "UPS CFO Discusses ROI and Sustainability" [VIDEO]

3. Example by Steve Yucknut (Kraft Foods, VP Sustainability) of Philadelphia Cream Cheese
Summary: Kraft implemented an “anaerobic waste digestion” (burning waste to produce energy) for the production of the Philadelphia Cream Cheese , and they added a “Made with Renewable Energy” label

- Increased bottom line profits by reducing cost of fuel
- Partnered with Walmart and gained visibility
- Sold 75% more products that the previous year

Drivers for sustainability, Yucknut says, were:
- Walmart increasing involvement in sustainability
- At that time, customers awareness to sustainability issues thanks to the IPCC report and Al Gore’s “Inconvenient Truth”

Watch the [VIDEO]

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