The Age of Sustainability and How C-level Execs Can Lead the Charge

The Age of Sustainability and How C-level Execs Can Lead the Charge

By | July 19, 2017

When I first entered the workforce, most offices didn’t have recycling bins let alone individual recycling containers under people’s desks.

Today, when I walk around Sphera’s offices in Chicago, I see those blue bins everywhere.

And it’s not just us. When I visit companies across the country, I see more and more receptacles popping up. Most people nowadays think twice about whether that piece of trash is really waste or if it could be recycled and used again in some way. Employees now consider whether printing that 100-page RFP is necessary before sending the file to the printer or if the file’s home on the server is sufficient. It’s also not uncommon for offices and conference rooms, ours included, to have motion detectors that ensure the lights go off when no one’s using it.

While Sustainability is an easy concept to digest when you consider recycling and energy efficiency, it’s actually a much more complex topic  that companies sometimes struggle with. As The Chartered Alternative Investment Analyst Association, or CAIA, detailed in a recent article, there are two types of sustainable outlets: material and immaterial.

Just to be clear: When talking about Sustainabilityimmaterial means lacking material components—not that the category is unimportant.

Sustainable material object might seem obvious at first—think natural resources—but it also can venture into counterintuitive territory. As the CAIA explained, food quality and safety can be a material example of Sustainability. On the opposite end of the spectrum, reducing greenhouse gases would fall under an immaterial Sustainability category.

One material area that probably doesn’t get the attention it should is Sustainability in the chemical supply chain arena. After all, chemicals are often created from resources such as water and energy that are finite resources, which is why waste reduction is so important. It’s also why Sphera has spent so much time preparing for the upcoming Registration, Evaluation, Authorisation and Restriction, or REACH, chemical regulations in Europe, which are designed to help protect human health and the environment by tracking more closely the chemicals in products that go in and out of the European Union.

As the American Chemical Society rightly proclaims: The “support for research to promote sustainability, green chemistry, and green engineering, combined with incentives for the adoption of sustainable technologies and new regulatory strategies that promote sustainable products and processes, will be instrumental in meeting the challenges of protecting human health and the environment, meeting our societal and energy needs, enhancing national and homeland security, and strengthening the economy.”

It makes me smile to think about how far we’ve come in terms of Sustainability. In fact, I’d argue we’ve already entered the dawn of the Sustainability Age, but there’s much more to do. 

For organizations, a Sustainability focus starts at the top, and, no, I don’t mean replacing older lightbulbs hanging from the ceiling with energy-efficient ones—although that couldn’t hurt. I mean garnering acceptance from the C-suite and board members that Sustainability is a smart business practice. Organizations can only say they truly are focused on Sustainability when their top leadership embraces it.

Beyond the ‘Right Thing to Do’

Getting buy-in from senior-level executives and board members often takes more than simply saying, “It’s the right thing to do.”

The truth is Sustainability is not only the right strategy for organizations to employ but also it’s the smart thing to do as well.

Three Things Management Can Do to Get the C-suite and Board on Board With Sustainability

  1. 1) Do your homework: Show executives and boards that Sustainability is more than just doing what’s right but that it’s also good for the company’s bottom line.
  2. 2) Know the risks: Explain how Sustainability can help companies stay compliant with environmental regulations.
  3. 3) Buy-in Begets Buy-in: Pitch your idea to a senior-level executive separately to get them on board. That way you have a Sustainability champion on your side.

Source: Adapted from Kagool’s “10 Tips for Getting Board Buy-in”

According to a recent report from the CDP, a not-for-profit organization that helps companies, cities and states measure and manage their environmental effectiveness, 4,300 companies around the world saved a combined $12.4 billion throughout the supply chain in 2016 taking action on climate change and water issues while cutting 434 million tons of carbon dioxide. Incidentally, that hefty amount of gas emission is more than the annual amount found in France, the CDP reports.

And the Harvard Business Review recently cited a 2012 independent report from the Cost of Sustainability Assessment, better known as COSA, on Rainforest Alliance-certified farms. COSA’s research found that the 120,000 cocoa farms that qualified for Rainforest Alliance certification produced 1,270 pounds of cocoa per hectare compared with 736 pounds for noncertified farms. Income was also higher on those certified farms: $403 per hectare vs. $113.

On top of all that, 72 percent of the respondents in the CDP report said climate change risks could significantly affect their business operations, revenue and expenditures.

What this means is Sustainability is not only a good business practice but also one that is not to be ignored, and compliance is a huge component of Sustainability. Regardless of business strategy, companies that don’t comply with environmental regulations put their organizations at risk. One city in Texas, for instance, recently had to pay $563,000 in U.S. Environmental Protection Agency civil penalties and had to upgrade its sewer system under a Clean Water Act settlement. Similarly, a Louisiana company had to pay almost $1.4 million in Resource Conservation and Recovery Act penalties for sending hazardous waste to an unpermitted facility.

As Terry Yosie, president and CEO of the World Environment Center—a not-for-profit that advances Sustainable development through business—explained in a recent post on GreenBiz: There are a handful of major parameters that define Sustainability from a board’s and C-suite’s point of view. They include moving toward a lower carbon economy and adapting to climate change, water scarcity, population growth and urbanization, which would fall under both the material and immaterial categories.

That’s all well and good, but as any savvy business person would ask: What’s the bottom line?

It turns out, according to a separate Harvard Business Review study—which the Sustainability Accounting Standards Board blogged about—plenty. The research shows that investments in material Sustainability create significant value for both companies and shareholders. Keep in mind that doesn’t mean that focusing on immaterial Sustainability efforts is a bad financial strategy per se, but the research found that, with limited resources, companies that focus on material Sustainability investments will find greater returns.

According to the study, the top-performing companies in terms of material sustainability saw a 6 percent annual boost on their stock returns. You can put that on the board when talking to the board about the importance of sustainability. They’ll be glad to hear it.

It’s clear the Sustainability Age is here—so are you ready for it?

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Sphera is the leading provider of Environmental, Social and Governance (ESG) performance and risk management software, data and consulting services with a focus on Environment, Health, Safety & Sustainability (EHS&S), Operational Risk Management and Product Stewardship.
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