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Sustainability can help UK businesses cut costs
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With the prospect of a double-dip recession looming large on the horizon, businesses across the UK are once more beginning to tighten their belts. As austerity measures begin to kick in, any ‘quick wins’ or cheaper alternatives are likely to hold a lot of sway with FDs tasked with identifying areas where they can limit their business’ overall total expenditure. From a sustainability perspective this is likely to create fresh challenges but also potential opportunities.
Traditionally, a common consensus has existed that adopting a sustainable approach costs more than the status quo. Whilst this may have been the case during the advent of the discipline, it’s no longer so clear-cut. However, in cash constrained times the industry needs to address this misconception more aggressively than before for unless they can change this mindset there is a real danger that some worthy initiatives could be overlooked, regardless of the environmental and economic benefits they could help to deliver.
To overcome this challenge the sustainability sector needs to address three main issues.
The business case
When developing proposals there is a pressing need to focus on the business case that underpins the move towards a more sustainable approach. Whilst environmental benefits are welcome, they alone may not be enough when available capital is in such short supply. In order to secure buy-in at board level financial metrics need to be aligned to carbon reduction savings so that the full return on investment from sustainable solutions are recognised. In the property sector for example, building owners and operators are prepared to spend more to ensure their assets are BREEAM certified, as this can help to increase the value of the asset when it ultimately goes on the market
Measuring success
A greater emphasis also needs to be placed on the broader ‘value’ of sustainability as opposed to just the associated cost of adopting a greener approach. The reality is that the benefits of acting in a more sustainable manner extend well beyond the bottom line and so by measuring success in purely monetary terms there is a danger of selling short the impact that greener initiatives can have. As an example, recent research from the Westminster Sustainable Business Forum revealed that adopting a sustainable approach led to increased staff retention and higher productivity levels. The study then estimated that these factors had the potential to deliver up to £8bn In added business return
The cost-return ratio
Even if the capital set aside for sustainability schemes is reduced, it is still possible to deliver significant value from that funding. In 2010 the Better Buildings Partnerhsip (BBP) found that by adopting relatively cheap retrofit measures across their entire asset portfolio, they were able to cut overall energy use by 10% ultimately saving over 32,000 tonnes of CO2 in the process.
The lesson for the industry is that it should not be shy about promoting the role it can play in helping the UK if it does enter into another economic downturn. Sustainability has now evolved into a discipline that delivers ROI in hours, not days or weeks and which successfully meets both the ‘green’ agendas – environmental and economic.
Nick Hayes is head of sustainability at EC Harris
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