Sustainability in Business = 51% to 81% MORE PROFIT
What’s the business case for sustainability? Is there reliable evidence that quantifies the value of a company integrating sustainability into its corporate DNA? Turns out the answer is, “Yes!”
For this video, we’ll draw on the work of business sustainability guru Bob Willard. After working 34 years with IBM, Bob completed first a masters and then a doctorate on the business case for sustainability at the university of Toronto. He’s the author of several books and is considered a global expert on this topic. Let’s see what Bob has to say on the business case for sustainability.
First, the language. Nowadays we hear everything from the word “sustainability” to “Triple Bottom Line”, to “the 3Es (equity, environment, economy)”, “the 3Ps (people, planet, profit)”, “CSR (corporate social responsibility)” and so on. For a recap on triple bottom line, check out this earlier video. What’s important to realize from a business perspective is that, while all these words are relevant – and some will resonate with your company culture better than others (for example words like “profit”, “asset management”, etc.) – what we’re ultimately talking about is being a steward of 5 capitals in a way that helps your business be more successful. These are: financial and manufactured capitals (related to the economy), human and social capitals (related to equity) and natural capital (related to the environment), because everything comes from nature at some point. For more on this last point and the triple bottom line, see earlier videos.
The bottom line here is, all the different terms you hear about all refer to the same thing: managing today while preparing for tomorrow, in ways that set your business up to be resilient in light of changing conditions. The important thing is to choose your language, make sure everyone understands and is using the same definition, and then stick to it.
Second, the numbers. We can’t talk about business without using numbers, right?! Now that we know what we’re talking about, how do we know whether integrating sustainability into our corporate DNA will actually help us steward our 5 capitals in ways that generate revenue and mitigate risk?
Based on years of research and hundreds of case studies, Bob Willard’s research shows that if a typical company were to use best-practice sustainability approaches already being used by real companies, a Small or Medium Enterprise (~6 employees and $1 million dollar revenue) could improve its profit by at least 51% and a large manufacturing/distribution companies (of several thousand employees and a $500 million revenue to 81%) could improve its profit by at least 81% compared with if it did nothing.
There are 7 bottom line benefits that align with current evidence about the most significant sustainability-related contributions to profit.
- Increased revenue: 9%
- Reduced energy: 75%
- Reduced waste: 20%
- Reduced materials: 10%
- Increased productivity: 2%
- Reduced turnover (attrition): 25%
- Avoid a potential 16% to 36% erosion of profits due to reduced risks (é revenue and ê expenses)
The first one is about making more money, 2 to 6 are fewer expenses and 7 is more revenues and fewer expenses due to reduced risks altogether.
It’s true! Just by doing what others are already doing a business can increase its profit by 51 to 81% within 3-5 years. And, keep in mind this is only about best practices; innovation and creating better products and services can take you even further. This is well documented and you can the numbers for your own company on sustainabilityadvantage.com. It’s all free and open-source.
Sustainability is just smart business. The numbers we’ve discussed are just the tip of the iceberg when it comes the business case for sustainability. I’ll offer many more videos about the business case in the days ahead, and also videos on making sustainability relevant for the business community. So, stay tuned! Subscribe to receive the new videos.