Business Case

Why Do It?

Businesses embarking on new environmental programs and initiatives are typically driven by three main drivers: values, compliance or opportunity. ¹

• Values: “the right thing to do”refers to those businesses that seek to reduce their negative and enhance their positive sustainability impacts as a demonstration of their values.  Businesses that show concern for reducing their environmental footprint and for generating positive community benefits earn a reputation as a good company with employees, customers, suppliers, investors and community members.
• Compliance: “the thing you must do” focuses on reducing time spent to manage current regulation, and the advantages of staying ahead of future regulation. All regulation can affect a business’ ability to operate and its profitability. Reducing regulatory risk of fines, reducing time to understand and comply with regulations, and anticipating new regulation is just good management. For example, many businesses are working to reduce their energy use and carbon emissions, expecting that regulation will soon follow and force businesses to pay for their emissions. Other businesses are focused on improving the health and safety conditions in the workplace to reduce their regulatory burden.
• Competitive Advantage: “the thing you can do to make money” highlights that an environmental focus offers businesses the chance for increased revenues and profits. Some businesses improve cash flow by reducing resource inputs (water, energy, waste services) to lower operating costs, while others diversify existing product lines to meet new customer demand for green products and services. Still others might look at new ways to meet social needs via the marketplace, such as products and services accessible to seniors or people with disabilities.  Once a business has embarked on this path, marketing and advertising their green successes and social responsibility can help build brand and market share.

Benefits You Can Expect

Attract & Retain Good Employees

Environmental and social responsibility programs affect human resources by putting a business’ values into action, and by engaging employees in the change. Such efforts can improve the morale and productivity of existing employees, and attract new talent to the business.

Since many workers feel that they are greener than their employers², environmental initiatives allow them to bring their values and their ideas to work. When employees are proud of the business they work for, they are more productive, more creative, and more committed.³ Employee retention can reduce the costs associated with turnover. When considering recruiting, interviewing, hiring, training, and reduced productivity it costs a business approximately $3,500.00 to replace one $8.00/hour employee.⁴

Sustainability commitments can provide the following benefits to a business’ attraction/retention efforts:

• Increase competitive advantage for recruiting;
• Create a sense of teamwork among employees; and
• Establish an emotional tie between employee and the business.⁵

Reduce Your Operating Costs

Environmental initiatives reduce operating costs by reducing material and resource costs. More efficient use of materials – even if it’s a simple as using less toner and paper - reduces the cost of inputs. Resource efficiency – using less water, energy and sewage – reduces utility costs. It is also possible to reduce maintenance costs.  For example, efficient lighting needs to be changed less often and waterless technologies require less maintenance. Small businesses can save up to 40% of energy costs simply by following recommended maintenance schedules for their equipment – cleaning and sealing ducts, changing filters and cleaning coils.⁶  Studies show small commercial buildings have duct leaks twice that of residential buildings. Identifying and repairing these problems is a cost effective way of reducing your energy costs and your impact on climate change.

Improve Your Brand

Brand is a business’ most important asset. It represents your company’s intangible worth – your reputation in the market. Sustainability initiatives help protect and enhance your brand. By walking your talk, you protect your brand from being tarnished. Further, a visible commitment to reducing your negative environmental and social impacts and enhancing your positive impacts can help foster strong relationships with your customers, your employees and your community.  Many businesses refer to this as “social license to operate.”

The Good news for resource-strapped small businesses is that it doesn’t take fancy marketing campaigns to broadcast your reputation.  When surveyed, customers say that their decision to buy is mainly influenced by a product/company’s reputation (21%), word of mouth (19%) and brand loyalty (15%). Dollars spent on green advertising impacts their decisions only 9%.⁷

Maintain and Improve Your Market Share

As large organizations green their supply chains, the small businesses that supply them are affected by increasingly stringent environmental and social requirements. Innovative small businesses will maintain if not gain market share and stay ahead of competitors. For instance, global giant Walmart is pushing many of its suppliers to green their operations, working to reduce waste from product packaging and reduce carbon emissions from production of products.⁸

Your business’sustainability strategy can help you stay ahead of competitors, create a market differentiator, and gain access to new markets. In the refillable water bottle market in 2008 for instance, consumer concerns about the potential dangers of bisphenol-A (BPA) created a market opportunity for a small upstart called Klean Kanteen, positioning them as the safer alternative to BPA containing Nalgene bottles.⁹

Reduce Your Risk

By reducing your negative environmental and social impacts, your business can reduce the risks associated with volatile energy and commodity prices, and rising insurance premiums. Environmental initiatives help your business hedge against rising natural resource (water, energy, wood, minerals) costs by reducing demand.  In some instances you can switch to alternative and renewable sources. By eliminating hazardous materials, you can reduce the risk and costs associated with spills and injuries.

Businesses who demonstrate they are proactively managing their sustainability impacts are more likely to reduce their insurance bill as they are perceived by insurance companies as having a lower risk profile. Companies that are effective managers of their social and environmental performance are better managed companies overall and likelier to have fewer insurance claims and pay lower insurance premiums.

Improve Your Access to Bank Financing

Businesses that are managing their sustainability impacts are more able to access credit. Perceived as capable managers because of their integrated approach to managing their financial, social and environmental risks and performance, sustainability-oriented companies are increasingly perceived as better investments by financial institutions.  Some Canadian banks, including HSBC and Vancity, have begun scrutinizing the environmental and human rights track records of potential loan recipients as part of the loan assessment process.

Find Further Resources

• The Business Case for Corporate Social Responsibility. Industry Canada.
• The Business Case for Corporate Social Responsibility (2003). Business In The Community (BITC) and Arthur D. Little.
• The Sustainability Advantage. Bob Willard.

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Footnotes

1. Titles adapted from: Willard, Bob. The Sustainability Advantage. Page 11. New Society Publishers. (return to reference 1)

2. Greenbiz.com. 2008. Big Companies Can Make it Harder for Employees to Go Green: Survey. (return to reference 2)

3. Canadian Business. 2007. Canada’s Best Workplaces: Proud Out Loud. (return to reference 3)

4. Blake, R. 2006. WebProNews. Employee Retention: What Employee Turnover Really Costs Your Company. (return to reference 4)

5. Odell, Anne. 2007. Working for the Earth: Green Companies and Green Jobs Attract Employees. (return to reference 5)

6. Centre for Small Business and the Environment. 2009. Profitable Greening: Energy Efficiency. (return to reference 6)

7. Environmental Leader. 2009. 82 Percent of Consumers Buy Green Despite Economy. (return to reference 7)

8. MSN. 2007. Wal-Mart’s Bold Environmental Move – Maybe. (return to reference 8)

9. Harvard Business Review. 2008. The Strategic Obligation of Sustainability. (return to reference 9)