Submitted by Sudhir Kade on Mon, 09/26/2005 - 18:46.
The most recent Third Tuesday event at the Great Lakes Brewing Company September 20th featured an excellent keynote speaker, Nadya Zherembayxa of the Organizational Behavior department at Case and Business as an Agent of World Benefit. She provided an enlightening presentation which broke down the business case for sustainability into ten key highlights. These are summarized as follows:
- The movement of the investment community toward socially responsible funds which invest in companies which feature excellent sustainability standards and are screened for socially responsible practices. Such funds have grown in number and capital – totaling over $150 billion today. More impressive have been the significant returns delivered by such funds in recent years – Pax World Fund (15.4%) , for example, outperformed the S&P 500 last year (10.5%), significantly. Other well known funds include Calvert and Winslow.
- Customers demanding sustainable and organic products. Today organic producers only fill 85% of consumer demand. An excellent example of this is the hybrid Toyota Prius, which in such demand production has been unable to keep pace. New emerging markets are an opportunity for firms employing Bottom of Pyramid (BOP) strategies that cater to consumers earning less that $2 a day – Unilever has been extremely successful which such strategy in India – providing soap and iodized salt in sufficient quantity to drive profitability.
- Green Market Coffee Roasters (Case Study). This sustainable company has shown that sustainable strategies like going to source (encouraging employees to visit growers and suppliers overseas) and micro finance in combination with savvy marketing and strategic partnerships can drive business success. The company share value has risen from 9 to 37 dollars a share in the past five years.
- The movement in business from shareholder-based to stakeholder-based strategy which underscores the priority in focus on people rather than share price. A recent Harvard study found that firms employing the stakeholder models featured 4 times the sales growth and 8x the employment growth of shareholder-focused models.
- Case study: Chef’s Garden. As an alternative to reduce-reuse models toward sustainability, the organization began with innovative, no-waste, closed loop models to drive financial success in sustainable agriculture. This was helped by focus on a niche market – high end restaurants and their chefs. The firm also features a Culinary Vegetable Institute which cultivates relationships while allowing chefs to practice and develop new culinary skills.
- Sustainability can save you big:
- Interface has saved over $262 million through sustainable practices
- Great Lakes Brewery has reduced trash removal cost by 40% and saved 15-20 K in energy costs
- Xerox has saved over $2 billion through smart ecodesign and marketing
- Internal efficiencies are maximized through sustainability. Closed loop models energy efficient technology, and ‘Waste to Food’ strategies all save money.
- Case Study: Herman Miller – The furniture company has experienced year-over- year sales growth and production growth and credits much of its successful sustainability strategy to a cross-functional team of over 400 participants that makes key organizational decisions collectively. Sustainable practices have been credited by the firm for higher productivity and higher workforce satisfaction.
- Good companies do better overall: in fact 70 out of 127 studies in sustainability found a link between financial performance and social and environmental performance.
1.Sustainability strategies lead to better reputation management, risk management, employee productivity and loyalty, learning and innovation, operational efficiency, and public acceptance.
Following the rundown other issues were addressed, namely that in recent times a movement toward sustainability has been significant. Two examples just this month include Chevron and GE who have both recently launched major sustainability initiatives.
Overall the session was entertaining and informative. Though speakers indicated there is never an absolute guarantee of business success through sustainable implementation these numerous case studies illustrate that success can be derived with proper strategy and approach. As more businesses answer the sustainability calling, the aggregate benefit for our world continues to increase. It was heartening to see that, contrary to popular belief, doing good and doing well need not be mutually exclusive outcomes. Entrepreneurs like those in attendance at the session must have received some measure of vindication for their sustainability efforts to date, and perhaps some new ideas were sparked for others in learning these best practices.