In the guest post below, Julie Urlaub, Founder and Managing Partner at Taiga Company, discusses how sustainability can mitigate risk to a company’s bottom-line.
by Julie Urlaub
According to the post, Sustainability Practices Are Really Risk Management, “Sustainability today is not about greenwashing for most corporations; instead, it’s about managing risk, according to Peter Graf, Executive Vice President and Chief Sustainability Officer for SAP. But whether the driver is compliance or corporate image, sustainability management is exploding. Not only do companies have to comply with government regulations, such as greenhouse gas emissions reporting mandated by the EPA or disclosing country of origin for wood products under the Lacey Act, but they also have to comply with the best practices established by other companies.”
Within our sustainability consulting, it is not uncommon to interface with business leaders who are unaware of the potential cost and business risk they may be incurring though misunderstanding or inactivity. While many organizations recognize the ‘softer’ value of sustainability generated by some of the more well known leading companies, few fail to acknowledge the risk of their own inactivity.
• Increase cost from uncontrolled emissions.
• Increase cost from measure waste streams.
• Increase cost from rising energy and uncontrolled consumption.
• Increased cost in supply and distribution.
• Increased cost in from the use of unsustainable materials.
• Increase cost from tax or regulatory changes.
• Increase in cost from reactive design, engineering and manufacturing changes.
• Increased cost from obsolete supply or product.
Conversely, businesses positioned to weather the current economic climate are taking the opportunity to manage their strategic relationships. They realize that a strong efficient work dynamic across the entire value chain is essential to long-term business sustainability. Our professional consulting advises clients to:
- Focus on customer service: Engage customers in feedback to improve product reliability, quality, and delivery time. This will strengthen customer relations and improve internal process resulting in lower operating costs.
- Focus on Supply Chain Management: Create strategic alliances with suppliers who share common values and goals to ensure sustainability best practices across your supply base. This will drive efficiency into and cost out of your supply chain.
- Focus on Employee Relations: Take the opportunity to optimize your workforce, create a business sustainability culture, and align employee and company values. This will reduce turnover, which reports indicate significantly improves performance.
The focus on business sustainability risk has provided companies with a new perspective to reassess core functions.