I talk a lot about making sure ESG/sustainability initiatives can be demonstrated in business fundamentals. Not only does this make clear what the business case is for those programs, it also takes the ESG/sustainability discussion out of the theoretical or ethereal. Some things are easier to reflect in hard dollar terms than others. An article from Supply & Demand Chain Executive points out that “[i]ntegrating eco-friendly strategies can both reduce environmental impact and boost economic benefits” and gives practical examples and suggestions.
“For example, sustainable sourcing practices can reduce reliance on volatile commodities and establish a more stable cost structure. As consumers increasingly favor eco-friendly products and services, companies prioritizing sustainability are well-positioned to tap into this growing market segment. Moreover, a sustainable supply chain can help businesses navigate the ever-evolving regulatory landscape more effectively.”
Some of the suggestions include “creat[ing] clear, attainable and quantifiable sustainability goals that align with the company’s long-term vision”, such as
“Optimizing Transportation Routes… Route optimization also brings financial benefits. Fewer miles traveled means fuel and maintenance savings…
Energy-Efficient Warehouses and Distribution Centers. Adopting energy-efficient practices not only lowers carbon emissions but also results in considerable cost savings in warehousing services…
Saving water: Implement water-saving technologies, recycle wastewater and encourage water conservation within your organization.”
Not all of the suggestions are slam-dunks, however. Increasing the use of sustainable packaging is based on the faulty assumption that “consumers are willing to pay a premium for green products.” I caution against relying on product “greeniums” as the basis for a business case unless there is supporting data beyond consumer survey results.
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