Amidst the ongoing talk of a ‘green’ dividend for the Scottish economy and the creation of thousands of eco jobs, I am encouraged to hear of that last week British wind farms have provided over 5% of electricity to the UK national grid over the period of a day . Over one hour on Sunday 29th August, wind turbines in the north of Scotland produced more energy, approximately 700MW, than was required by customers. Add this to the recent expansion of Whitelees Wind Farm, already the biggest in Europe, and all seems to be going swimmingly in the clean energy world. Not to mention the onward expansion of offshore wind, wave and tidal energy technologies.
Even the hardest sceptics are perhaps coming to accept that there may be something in all of this green eco stuff. Something that smells of money as opposed to freshly mown grass or wildflower meadows (prescious few of which remain alas). These same sceptics rightly pointed out that wind turbines [on or offshore] require less manpower to maintain, however, they missed the many other jobs in design, engineering, support, consultancy, IT, marketing and finance that have and will be created. While renewable have been grabbing all the glory, the green dividend will also be reaped through a whole host of other companies and organisations that will create a wide variety of jobs and add economic value in previously unseen ways – an ecosystem if you like.
This ecosystem will contain financial services companies such as the Green Insurance Company that recently announced record profits and the creation of 60 new jobs in Scotland. While the ‘green’ element of this company primarily relates to the purchase of carbon offsets of customer vehicle emissions, this business model will no doubt develop. For example, low carbon travel insurance or vehicle or business cover that prices in carbon emission or waste reductions. Other financial service providers will also emerge from existing companies or start ups. Banks’ asset finance operations will grow through funding for clean technologies, possibly building the value of waste, water or carbon savings into the lending formulae. Auditors and accountants will grow their assurance business as more companies choose or are compelled to disclose their environmental and sustainability performance. Fund managers will start to take climate change adaptation seriously and turn to the vast array of data and experience at the Met Office to draw up regional risk and investment profiles.
In addition to the finance jobs, there will be work aplenty for those that actually do the work and get their hands dirty helping to reduce environmental impacts. There will be opportunities for the entrepreneurs and companies that develop and sell technology to decontaminate water, reduce water use, recycle waste, reuse waste, clean contaminated land, monitor and scrub air pollution, monitor and reduce energy. The list goes on. These jobs will be research based, operational, marketing and financial – either in house or supporting outsourced providers.
Within and around this, there will be a growing band of companies that continue to sell food, chemicals, consumer goods and many other products or services, while taking greater control over their impacts on the environment. These companies will be users of the services and products offered from elsewhere within the ecosystem, whether it be to reduce waste or energy, for example. These companies will do so because they see the opportunity to be leaner, more cost efficient and pursue competitive advantage through greater control and disclosure of their environmental performance. While they may be responding to pressure from their own customers, they will pass this pressure up the supply chain and demand greater scrutiny of their own suppliers. Thereby the ecosystem propagates and thrives, with all parts linked to and depending on others.
Accepting the above, the green dividend could be very significant for Scotland as a home for clean technology and service companies and other companies tackling their environmental impacts. The ultimate environmental good is hard to predict, however, the need to adapt to a changing climate will be ever present anyway. Our ecosystems are changing, long live the ecosystem.
Thursday 9 September 2010
Wednesday 8 September 2010
Banging on about sustainability as competitive advantage
My brief talk at the Thrive for Business event on the subject of Corporate Social Responsibility....
Over the next five minutes I will attempt to argue that CSR is ‘common sense really’, nothing more and nothing less than good old fashioned governance and a source of competitive advantage. Since we have to call it something this morning, I will refer to it as ‘sustainability’ – why use three words when one will do.
Before getting into practicalities, its worth mulling over the question of who drives the sustainability agenda. Orthodoxy says that sustainability should be embedded within the values of the business and driven from the top. In reality there will be all manner of prods and pressure from customers, peers, regulators, investors, local communities, as well as the management team and, yes, even the CEO. Then we have the activists, non-governmental organisations and elements of the sustainability industry. Here perhaps, and this is admittedly a cynical view, the agenda is less about accountability but more about an aversion to profit and the abhorrent pursuit thereof. Let’s whip the fat cats in their pinstripes and make them atone for their wicked ways!
Being a trendy concept, sustainability also comes with its own mountain of written material. However, if you ask me too much of this material can be inappropriate, boring, turgid and seemingly created to satisfy a generic audience that does not actually exist (hence no-one reads, listens or watches). This has a particular relevance in a world where communication channels are globalising and multiplying and ‘audiences’ are disaggregating.
Fundamentally, sustainability is about commercial longevity, which is more likely to be achieved by those companies that innovate, that are sensitive to the needs of their employees, customers and suppliers, that manage and mitigate their impacts on the environment and whose systems are efficient and effective, that are not afraid of making hard decisions based on a long term view, that enjoy what they do and bring stakeholders along with them.
While this is all well and good, how do customers, regulators, investors and others take a view on a company’s sustainability record when there is no official ‘standard’ against which companies can be measured. The corporates have been producing detailed Corporate Responsibility or Sustainability reports for many years and signing up to voluntary sustainability standards such as AA1000, BS8901, GRI, however, questions remain about their effectiveness as genuine tools of transparency. At the same time, the pressure has been growing on smaller companies to disclose more information on their environmental performance or their record in relation to employees and local communities.
At its basic level, this pressure is coming from a growing raft of eco, HR and disclosure regulations which drive up the costs and associated risks of non-compliance. For those companies supplying the supermarkets, take heed. The buyers may not be asking about sustainability now, but they will start doing so over the next few years. This is already happening in relation to certain products, for example, European legislation that targets imports of illegal timber. Suppliers of other products should start preparing for increased scrutiny.
Consequently let us forget sustainability, as the soft and fluffy, nice to have, lets think of it as a necessary pre-requisite for growing a business and being prepared for that moment when the legislators, customers or even financiers come knocking. From its eco-roots, sustainability has emerged blinking into the light as a full-blown source of competitive advantage, particularly in a world chasing a diminishing number of public sector contracts and fighting pressure on margins.
So while its fine for the multinationals, what about small and medium sized business. How should they respond to the pressure – if it exists for them:
Firstly, ensure that it is taken seriously at Board and senior management level. Noting here that the drive to be more sustainable may come from the top.
Secondly, seek advice. There is loads of it out there and much of it is free. Speak to Envirowise, Zero Waste Scotland, CarbonTrust, Environmental Protection Agency, Ethical Trading Initiative, trade associations and any number of other organisations. They can help with advice, audits, standard setting and contacts.
Next. Start to measure performance and put in place a simple roadmap to manage in the long term. A management system may be appropriate, it may not. Also think through the expectations of your employees – how can they help and contribute. Your customers and suppliers may also have questions, particularly where you are bidding for new work or terms of trade are changed, with greater emphasis on sustainability.
At the same time, somehow work out a means of managing and monitoring sustainability in the long term. You may not be able to afford the resources to do this in-house, but perhaps its a part-time role or one that can be economically outsourced, perhaps to one or other of the organisations offering free or low cost services.
Finally, learn how to communicate what you are doing. This will be required in order to speak and listen to your employees, however, it will also be important when customers and others come calling, looking for a concise and credible summary of your actions in relation to sustainability. By this stage you may be able to report on how you have saved on landfill costs, found outlets for waste packaging, reduced your water and wastewater bills, saved on energy costs, reduced the risk from poor suppliers and raw materials, won more work and motivated employees. You might even have developed new products and services.
Along the way, you will find and benefit from companies who have taken a similar view. If you have international ambitions, not only will it free up some cash for export marketing [through greater resource efficiency and employee motivation], it will be a fantastic calling card, since all key international markets are upping their own scrutiny of sustainability performance.
While there will be up-front cost, some of this outlay will be required for compliance purposes anyway. The rest, if spent wisely, will more than pay itself back through greater resource efficiency, lower bills, more business and a better reputation. Double dip or not, I would urge Directors of companies to revisit sustainability, not as eco-irrelevance, but as part and parcel of competitive advantage.
Over the next five minutes I will attempt to argue that CSR is ‘common sense really’, nothing more and nothing less than good old fashioned governance and a source of competitive advantage. Since we have to call it something this morning, I will refer to it as ‘sustainability’ – why use three words when one will do.
Before getting into practicalities, its worth mulling over the question of who drives the sustainability agenda. Orthodoxy says that sustainability should be embedded within the values of the business and driven from the top. In reality there will be all manner of prods and pressure from customers, peers, regulators, investors, local communities, as well as the management team and, yes, even the CEO. Then we have the activists, non-governmental organisations and elements of the sustainability industry. Here perhaps, and this is admittedly a cynical view, the agenda is less about accountability but more about an aversion to profit and the abhorrent pursuit thereof. Let’s whip the fat cats in their pinstripes and make them atone for their wicked ways!
Being a trendy concept, sustainability also comes with its own mountain of written material. However, if you ask me too much of this material can be inappropriate, boring, turgid and seemingly created to satisfy a generic audience that does not actually exist (hence no-one reads, listens or watches). This has a particular relevance in a world where communication channels are globalising and multiplying and ‘audiences’ are disaggregating.
Fundamentally, sustainability is about commercial longevity, which is more likely to be achieved by those companies that innovate, that are sensitive to the needs of their employees, customers and suppliers, that manage and mitigate their impacts on the environment and whose systems are efficient and effective, that are not afraid of making hard decisions based on a long term view, that enjoy what they do and bring stakeholders along with them.
While this is all well and good, how do customers, regulators, investors and others take a view on a company’s sustainability record when there is no official ‘standard’ against which companies can be measured. The corporates have been producing detailed Corporate Responsibility or Sustainability reports for many years and signing up to voluntary sustainability standards such as AA1000, BS8901, GRI, however, questions remain about their effectiveness as genuine tools of transparency. At the same time, the pressure has been growing on smaller companies to disclose more information on their environmental performance or their record in relation to employees and local communities.
At its basic level, this pressure is coming from a growing raft of eco, HR and disclosure regulations which drive up the costs and associated risks of non-compliance. For those companies supplying the supermarkets, take heed. The buyers may not be asking about sustainability now, but they will start doing so over the next few years. This is already happening in relation to certain products, for example, European legislation that targets imports of illegal timber. Suppliers of other products should start preparing for increased scrutiny.
Consequently let us forget sustainability, as the soft and fluffy, nice to have, lets think of it as a necessary pre-requisite for growing a business and being prepared for that moment when the legislators, customers or even financiers come knocking. From its eco-roots, sustainability has emerged blinking into the light as a full-blown source of competitive advantage, particularly in a world chasing a diminishing number of public sector contracts and fighting pressure on margins.
So while its fine for the multinationals, what about small and medium sized business. How should they respond to the pressure – if it exists for them:
Firstly, ensure that it is taken seriously at Board and senior management level. Noting here that the drive to be more sustainable may come from the top.
Secondly, seek advice. There is loads of it out there and much of it is free. Speak to Envirowise, Zero Waste Scotland, CarbonTrust, Environmental Protection Agency, Ethical Trading Initiative, trade associations and any number of other organisations. They can help with advice, audits, standard setting and contacts.
Next. Start to measure performance and put in place a simple roadmap to manage in the long term. A management system may be appropriate, it may not. Also think through the expectations of your employees – how can they help and contribute. Your customers and suppliers may also have questions, particularly where you are bidding for new work or terms of trade are changed, with greater emphasis on sustainability.
At the same time, somehow work out a means of managing and monitoring sustainability in the long term. You may not be able to afford the resources to do this in-house, but perhaps its a part-time role or one that can be economically outsourced, perhaps to one or other of the organisations offering free or low cost services.
Finally, learn how to communicate what you are doing. This will be required in order to speak and listen to your employees, however, it will also be important when customers and others come calling, looking for a concise and credible summary of your actions in relation to sustainability. By this stage you may be able to report on how you have saved on landfill costs, found outlets for waste packaging, reduced your water and wastewater bills, saved on energy costs, reduced the risk from poor suppliers and raw materials, won more work and motivated employees. You might even have developed new products and services.
Along the way, you will find and benefit from companies who have taken a similar view. If you have international ambitions, not only will it free up some cash for export marketing [through greater resource efficiency and employee motivation], it will be a fantastic calling card, since all key international markets are upping their own scrutiny of sustainability performance.
While there will be up-front cost, some of this outlay will be required for compliance purposes anyway. The rest, if spent wisely, will more than pay itself back through greater resource efficiency, lower bills, more business and a better reputation. Double dip or not, I would urge Directors of companies to revisit sustainability, not as eco-irrelevance, but as part and parcel of competitive advantage.
Subscribe to:
Posts (Atom)