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Green is green: How green initiatives can save your company money

By Sovereign Insurance
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More than a decade ago, many business leaders viewed sustainability and green initiatives as an expense they had to incur to protect the reputation of their business. They believed revenue would suffer if they weren’t seen to be making some effort to “go green.” Echoes of that remain today, but there’s been a significant attitude change.

Today, we’re more aware than ever before of the impact of our practices on the environment. Sustainability is an important moral and ethical responsibility for every business. But that doesn’t mean green initiatives aren’t also benefiting businesses. Increasingly, sustainable, green business practices help companies save money through operational efficiencies and lower costs. In fact, this trend could be detected as far back as a 2011 McKinsey study.[1]

Short-term pain for long-term gain

Going green doesn’t come cheap. Depending on your business, there’ll likely be an initial outlay for new equipment and upgrades, more efficient manufacturing processes, better recycling strategies, and the costs of employee training and education. These expenditures can be daunting and cause many to shy away from exploring these initiatives or take a reduced-cost approach that can be inefficient over the medium and long term.

There’s evidence to show these improvements will pay off. Upgrading equipment, lighting, manufacturing processes, and conducting regular equipment inspections lowers your costs over time. Consider that by simply replacing old computers and monitors with ENERGY STAR® certified models, your company could save up to 75% in electricity costs.[2] Plus, improving recycling strategies reduces the amount of waste your company produces at a time when the cost of shipping to landfills is increasing. These are just two examples of ways that your company can help make the Earth a greener place, as well as benefit your business in the long run.

An opportunity to spark innovation

Businesses that regard sustainability as an opportunity rather than an obligation not only see new opportunities first but also understand that they can increase revenues by identifying and addressing social problems that intersect with their business.[3] 

For example, your company may make gains by redesigning some of its products to make them more environmentally friendly. Meeting that challenge leads to innovation and the creation of better products, which can give your company increased market share and a foothold in new markets. In addition, there are cost savings experienced from the development of operational efficiencies through a systematic approach to management that includes continuous improvement.[4] As your company develops money-saving efficiencies and expertise, you’re able to achieve an edge over your competitors.

Get ahead of government regulations and your competition

Being on the forefront of change allows your business to prepare for new regulatory requirements rather than simply reacting to them. It buys you added time to experiment with solutions to operational or procedural problems, leading to more efficient processes and a positive impact on the bottom line.[5]

When your company is in the vanguard of change, government will often look to you for input when developing industry standards. This allows your company to become a recognized spokesman for industry concerns and align your business practices with impending regulations in advance. This can also give your business advance notice and planning time to take advantage of any tax savings the government rolls out at the outset of a new program to incentivize businesses to get onboard.

Green initiatives will undoubtedly always be part of reputation management. Today though, the drive to use more sustainable business practices is also motivated by the desire to lower costs, encourage innovation, and gain a competitive edge. And we cannot forget that these initiatives are an important responsibility that all businesses have – the responsibility for our planet and its resources and eco-systems, which benefits us, our children and future generations. More and more, business leaders understand the myriad of benefits that come with integrating corporate social responsibility and green efforts into their overall business strategies.

 

[1] McKinsey & Company, “The Business of Sustainability,” October 2011, Accessed May 15, 2019, https://www.mckinsey.com/business-functions/sustainability/our-insights/the-business-of-sustainability-mckinsey-global-survey-results.

[2] Toronto Hydro. “Business tips & resources,” Accessed May 15, 2019. https://www.torontohydro.com/for-business/tips-and-resources.

[3] Tensie Whelan and Carly Fink, “The comprehensive business case for sustainability,” Harvard Business Review, October 21, 2016.

[4] Hohnen, Paul, “Corporate Social Responsibility. An Implementation Guide for Business,” International Institute for Sustainable Development. 2007.

[5] Nidumolu, Ram, “Why Sustainability Is Now the Key Driver of Innovation,” Harvard Business Review, September 2009.

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