How to build a case for a sustainable business strategy

Although the now-canon episode of Portlandia took the notion of responsible, ethical and sustainable food supply to the level of absurdity, the food and beverage landscape has most certainly evolved. In fact, it continues to move toward a new, sustainable way of doing business. From scrutinizing each rung on the supply chain ladder, to reducing waste and water use, sustainability is a crucial element in your company’s continuing ability to successfully grow and compete in a world of shrinking resources and expanding population.

“It’s fairly easy to make the case [for building a sustainability strategy], because global population is set to double by 2050, and we have to figure out how to feed the world and do it in a sustainable fashion,” says Dexter Manning, Grant Thornton LLP Food and Beverage practice leader. “It’s a real necessity for food companies to adopt sustainable practices and processing.”
In short, sustainability is a natural fit for the industry as a whole, and Grant Thornton’s 2014 State of Sustainability in the Food and Beverage Industry Survey confirms that.

Small steps, big impact It’s wonderful if your business has the immediate resources to make sweeping changes in green credentials, but even small, day-to-day changes can add up to real results. Here are three things you can do, today.
Turn off the lights — Many businesses overlook this simple step. Make sure work stations and even office spaces are dark at night. Computers should be powered down, and personal devices should not be left plugged in. The simple act of switching off can mean dramatic savings, as well as a reduction in your company’s carbon dioxide footprint — every 1,000 kilowatt hours you save stops a corresponding 1,000 pounds of carbon dioxide entering the atmosphere.
Pack light — Consider reducing your products’ packaging materials. Using lighter packaging will not only save you money, but will also make the end product weigh less, which means that it will cost less to ship, take up less space, and require less fuel to get from A to B, which means less pollution.
Carpool — Offering an employee carpool program can not only improve camaraderie, but also have a real impact on fossil fuel emissions and reliance for members who use it.
Finally, one other idea, which is slightly bigger in scope, but definitely worth considering.
Be resourceful — Consider ways you can use existing sources of energy to reduce your own footprint. Corporations are piggybacking on state and local resources to drive their green efforts. SC Johnson, for example, uses waste methane energy created from the Racine, Wis., city landfill to power its manufacturing plant, which means that the plant is able to produce, on average, 100% of its own energy onsite
Creating a sustainable business strategy is not just a good thing to do for the environment, the planet and the residents of it — it also makes good business sense. Building and implementing a strategic sustainability plan can grow your company, increase profitability and create an ROI over the near and long terms. It’s so key, in fact, that 44% of Grant Thornton’s sustainability survey respondents rated sustainability as being extremely important or important in their company’s business strategy. Nearly seven in 10 said sustainability is not only critical to growth but also profitable in the long run (68%).

There is a case to be made for change and we all agree that we want to do the right thing. But what does it really mean for your company? The thought of tackling an evolving concept as big as “sustainability” can seem overwhelming to contemplate and difficult to implement. The measurement tools can seem nebulous. And the initial investment can feel prohibitive. But it doesn’t have to be that way.

Get started Sustainable business practices need to start from the top if they are going to be successful in the long run. Having C-suite and executive buy-in is key, says Manning. “Education of stakeholders is job one, and the first hurdle for companies moving toward sustainable business practices.”

Getting this buy-in can be difficult, as anything involving capital outlay can be hard to sell. But there are real financial upsides to making investments in sustainability, and there is a clear business — as well as social — case to be made for doing so. Companies that embrace sustainability are finding that doing so improves ROI, both externally and internally.  

Externally, consumers are voting with their feet — especially Millennials, for whom the issue of sustainability is very important, particularly when it comes to what they consume. “High-profile, household brand names are on the shelf in front of consumers on a daily basis, and consumers want those products to read ‘sustainable,’” says Tony Perazzo, Grant Thornton Audit partner.

In fact, building sustainable business practices is proving to be so important to industry leaders, who are seeing the financial rewards in consumer sales, that it’s now a primary differentiator. Companies leading the way have begun to partner all the way down the supply chain, from vendors to customers, and businesses not following suit are falling behind.

Internally, sustainability efforts enrich the lives of employees, who like to work for businesses that demonstrate their social responsibility through their willingness to work to solve issues facing consumers. Says Perazzo: “Employees are very proud to work for companies that are focused on sustainability. In return, businesses get an enriched culture, increased productivity and loyalty from their people. Ultimately, this serves to drive brand and market share.”

How to put a plan in place Now that you’ve convinced the C-suite to be on board, and all the players understand the importance and rewards of instituting a sustainability program, you’re ready to take the next steps.

Ways sustainability can anchor your business in the community
Sustainability is not just about the larger, global issues facing our planet. It’s about our own communities coming together to do the best we can for ourselves and one another. Here are four ways to get started:
Go to work — Consider encouraging employees to perform good deeds in their neighborhoods.  Some corporations even offer paid time off to do this. Incentivizing your people and demonstrating your real support for their efforts will in turn show your good faith to the community as a whole. McDonald’s, for example, has an annual McHappy Day, where employees are paid for a workday while they go into the community to volunteer.
Feed people — Support local food banks and pantries even if it’s not Christmas.  Hungry is hungry year round, not just at the holidays, when we’re often feeling our most generous.
Go back to nature — Partner with local nurseries and greenhouses and start a composting program. In your office, simply offering a composting bin, as well as a recycling bin in every work kitchen, encourages people to think about where the waste should go.
Renew — Switch to energy providers that are committed to sourcing their electricity from renewable sources. When companies demonstrate their real commitment to becoming sustainable on every level, providers will fall in line, causing a domino effect of sustainability throughout the corporate world.
Do your due diligence — It may seem counterintuitive, but if your company has not yet adopted a sustainability strategy, or implemented any practices, don’t start yet. Jeff French, Grant Thornton national managing partner, Manufacturing practice, recommends: “Talk to your tax advisers and work with them to find out what tax and governmental incentives and plans might be available to you. It’s important to do this before taking any other action of your own, because, in many cases, federal governmental aid decreases as a company’s demonstrated sustainability practices increase.”

Also, see if there are opportunities to partner with a nongovernmental organization (NGO) to certify your products or get access to knowledge that you don’t have. For example, you can certify certain raw materials by Fairtrade International to bolster the company’s credibility and get a step closer to a more sustainable supply chain. Or consider connecting with an NGO like Oxfam that can offer information about the farmers who may supply goods throughout your sourcing chain, and how your company can help them. All this will not only make your company more credible and socially responsible, but will give you a unique competitive advantage.

Tim Schram, Grant Thornton managing director and national practice leader for Credits and Incentive Services, agrees. He adds: “It’s very important to work with someone who can navigate the landscape. It can be difficult to identify all the different opportunities that are out there, so it’s important to work with someone who specializes in tax credits and incentives. Companies can, in some cases, also layer economic development incentives into their funding, which can really add extra value.”

Go to the source — Just as you scrutinize your incentive and investment potentials, you must also do a deep dive into your company’s relationships with key partners and stakeholders. In particular, it’s very important to examine the practices and products throughout your supply chain. “No one can be sustainable on an island,” says Manning.

While scouring your supply chain from beginning to end, look for any deviation from your sustainability standards. More and more companies are doing this. Wal-Mart and Home Depot, for example, now send out sustainability questionnaires to vendors throughout their supply chains.

“When you do this, and you can promote sustainability throughout the entire chain,” says Manning, “You’ve really hit a home run.”

Create a baseline — As you study the links in your supply chain, take a baseline reading of your own company. You need to set an example in in terms of sustainability. Real metrics exist to measure your business’s improvement in sustainability, so it’s important to know where “zero” is for your company. Being able to cite these metrics in an annual report will demonstrate your company’s commitment to consumers and shareholders alike.

Pick the low-hanging fruit — It’s not necessary — and often not financially viable — to make major systemic changes, such as converting to geothermal or installing solar panels on an employee-garage roof, to make a real change in your business’s footprint. Even a relatively minor outlay into new equipment can lead to huge utility savings due to the increased energy efficiency of the product, and will also sharply cut your use of fossil fuels. In some cases, for example HVAC, federal incentives drive the actual investment cash cost down significantly. Further, these products can have increased sustainability value — for example, high-speed low-volume fans, which are often used in dairies, warehouses and food-processing facilities. “They are energy-efficient and provide many benefits from a sustainability standpoint, but have also been found to help with improved drying effect, which increases efficiency of production processes,” Perazzo says.

Take ownership — More and more companies, from small startups to global organizations, are appointing sustainability officers. This is important because measuring compensation against sustainability performance keeps it at the forefront of the company’s mind. Further, it drives home the message to employees and stakeholders that your company takes its social responsibility seriously, and is treating it as a long-term strategic business element, rather than a short-term tactical response to current industry “buzzwords.”

Be realistic — Building a sustainability business plan, implementing it, and seeing real, measurable results takes time. Says Manning: “We’ve been going down the wrong path for a long time. It’s going to take some time to turn it around.” But the good news is, now you’ve got the tools to do it.

6 questions to find out if your company is ready to embrace sustainability As your company prepares to start formulating and implementing a sustainable-in-all-ways business plan, here are six questions to help you assess your readiness.
  1. Does your senior leadership understand and openly support the benefits of building a sustainable business?
  2. Do the people at your company understand the benefits that increasing sustainability will bring, both economically and from a social perspective?
  3. Is everyone from the top down in full understanding and agreement about what steps they plan to take, and understand their role in driving sustainability success?
  4. Is management prepared either to appoint a sustainability officer, or to reduce and/or reassign tasks to team members as needed, to support the process?
  5. Do you have alignment across the business, including alignment about resource allocation and investment?
  6. Do you know what credits and incentives are available to help fund your sustainability plan?

Ideally, you should be able to answer “yes” to all of these questions. If not, you may want to consider reviewing the foundation of your plan.

It is always possible to hit a roadblock when attempting such a large undertaking. Most often these hurdles are caused by the following:  a) no top-level buy-in, which can cause problems when it comes to securing investment seed money, or b) even with C-suite buy-in, having trouble finding and securing investment capital. One way to potentially solve both of these problems at once is to follow the steps outlined previously and to secure federal or other aid and incentives (we will discuss these in more detail in a subsequent article).

Working with a financial expert can often lead to unexpected and substantial funding sources. Once the money is secured, demonstrating an expected ROI and allaying C-suite fears about the initial expenditure should help to drive alignment. Empowering employees to become shareholders in the plan will further raise enthusiasm throughout your organization.

Moving forwardThe topic of sustainability is as comprehensive as it is fascinating. Rarely has such a movement taken hold so quickly, from small start-ups to the largest multinational corporations. And, as more innovations are developed, and sustainability becomes increasingly important to companies’ revenue, it will become ever-more important for businesses to adopt sustainable practices on every level. Forthcoming articles will include information on sustainable sourcing, sustainability goals and reporting, performance improvement, and talent recruiting. And for now, to get you started, you might want to consider this exhortation, and prepare yourself to “follow the frog.”

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