Why companies should care about the environment

According to Jonathon Porritt, Founder and Director of Forum for the Future, a “governance shift” is occurring in the field of sustainability, with governments stepping back and businesses stepping forward to lead the change.

The whole idea of democratically elected governments caring for the future generations and putting the notion of sustainable development at the heart of their policy making, unfortunately seems to have failed. Look at the utter failure which was the Rio+20 Summit. In June 2012, at Rio+20, leaders of 190 countries grouped together to celebrate “The Future We Want”, a policy document it produced at the end.

Unfortunately, most thought leaders in the field of sustainability were less than enthusiastic about Rio+20 summit’s conclusion, where there was more rhetoric than action.

There is more to the story. In 2010 the UK government axed the Sustainable Development Commission (SDC), the country’s main sustainability watchdog, as part of the coalition governments spending cuts. And in the US, in 2012, neither presidential candidates thought climate change worthy of a mention during their campaigns. In fact, President Obama, upon whom many hang their environmental hopes, hardly uses the term “climate” in public speeches.

On the contrary, some private sector companies are stepping up to the plate to take responsibility for their actions.

Whilst the governments’ inaction and their fundamental lack of leadership is worrying, I am encouraged by the proactive approach of a few leading-edge companies. Going green has become a key economic driver for forward-looking firms such as Toyota, Sainsbury’s, WalMart, DuPont, Tesco, Unilever, Marks & Spencer and General Electric, all of whom have invested heavily in greening their products and processes over the past few years.

When we prevent physical waste, increase energy efficiency or improve resource productivity, we save money, improve profitability and enhance competitiveness. In fact, there are often, huge opportunities which we can call “quick wins”.

Keivan Zokaei

Unilever plans to double its revenue over the next 10 years while halving the environmental impact of its products. GE aims to reduce the energy intensity of its operations by 50 per cent by 2015. They have invested heavily in the Eco-magination project, which is GE’s strategy for driving innovation and the growth of profitable environmental solutions while engaging stakeholders.

Tesco has announced that it will reduce emissions from stores and distribution centres by half by 2020 and that it will become a zero-carbon business by 2050. In 2010, WalMart announced that it will cut total carbon emissions by 20 million metric tons by 2015.  

Toyota, in its Fifth Environmental Action Plan, announced that it will improve the average fuel efficiency of its vehicles by 25 per cent in all regions by 2015 compared to that of 2005. In production, Toyota has already reduced emissions per vehicle by 37 per cent between 2001 and 2012. Similarly, DuPont committed itself to a 65 per cent reduction in greenhouse gas emissions over a ten year period up to 2010. In 2007, DuPont saved $2.2 billion through energy efficiency. In the same year its total declared profits was not much more than $2 billion.

So why do these companies care? Their secret is in a simple yet powerful realisation that their environmental and economic footprints are aligned.

When we prevent physical waste, increase energy efficiency or improve resource productivity, we save money, improve profitability and enhance competitiveness. In fact, there are often, huge opportunities which we can call “quick wins”.

Today, the “greening industry” movement seems to stand where the “quality movement” stood around 30 years ago. During the past 30 years, industries realised better quality can be (and often is) cheaper to make. Similarly, and as many of the greatest thinkers of our century such as Hunter Lovins and Jonathon Porritt have argued for years, going “green” is free – and in fact cheaper.  Lowering our impact on the environment, rather counter-intuitively, means lowering costs.

The reasons are exactly the same ones which underpinned the “quality movement” of 1970’s and 1980’s. When making poor products (or services) we waste time, energy and resources. So not making mistakes in the first place is much cheaper, while also guarantees better customer satisfaction. By the same token, sustainable business means not wasting resources and energy, which in turn means cheaper and better products.

The “quality movement” is variably referred to as TQM, Six Sigma, Lean Six Sigma, or just lean thinking. Similarly, I like to refer to the “greening industry” movement or the sustainability project as ‘lean and green’, because it emphasises the possibilities for better and more profitable business.

That’s why, today, greening your business is not just a “nice to have”— it is now a “must have” just the way lean thinking has been an absolute necessity for most businesses for decades.

Lean means doing more with less. That’s why lean thinking supports green thinking and vice versa. Nonetheless, today economic and environmental continuous improvement are separate organisational silos and sometimes even come into conflict with each other. This is one of the biggest opportunities missed across most industries.  

Here is an example. A few weeks ago we worked with one of the largest sandwich factories in the world. A team of great men and women engaged in a programme to reduce physical waste. They used simple techniques such as value stream mapping, a lean manufacturing technique used to analyze and design the flow of materials and information in a product or solution. The results were staggering. No one, including me, expected to see nearly 1,000 tonnes of waste prevented in just a few weeks, in a very mature industry. Add to that, the fact that they also saved 9 million litres of water from going down the drain every year. The commercial benefits where even more staggering. You will be pleasantly surprised when you put lean and green together.

Our forthcoming book, “Creating a Lean and Green Business System: Techniques for Increasing Profits and Sustainability”, is packed with case studies and examples of leading firms who use lean and green as simultaneous sources of inspiration in various sectors of industry—from automotive and retail to textile and brewing.

Click here for more information about the book.

Keivan is a lean thinker, management consultant and author. He is an honorary Visiting Professor at the University of Buckingham with years of experience at the cutting edge of lean thinking specializing in operations management and supply chain management. Previously Keivan was a director at the Lean Enterprise Research Centre at Cardiff University.

 

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