Why your business can’t afford to ignore sustainability any more

DUBAI: Does “sustainability” make you think of eco-friendly policies, green business, corporate social responsibility (CSR) and other useless phrases that go bump in the night?

If that’s the case, think again. Real business sustainability - as opposed to the public relations spawned phrases above - is about making sure a business itself is sustainable — that the company isn’t wasting money, that investments are future-proofed as far as possible, that the company isn’t exposed to unnecessary risk.

“When you talk to clients about sustainability their eyes glaze over and they think, ‘Oh God, here it comes,’” said Christopher Seymour, regional development director at consultancy Mott MacDonald. “When you say, ‘Well actually, it will definitely save you money,’ it’s a wake-up call.”

Basically, sustainability is about cost cutting, not just health and safety or the environment.

“It can be about Emiratisation, it can be about making sure your building stands up for 50 years or 100 years. It can be about protecting assets and it can be about efficiency,” says Adrian Bliss, Mott Macdonald’s Middle East technical director for environment and sustainability.

“It doesn’t necessarily mean the cheapest way, but we look at asset values and user approach and other kinds of metrics to do something for a client so that he doesn’t end up with a dinosaur that’s going to be worthless by the time he’s finished building it.”

Businesses have become leaner over the years, but many of the savings so far have been in obvious efficiencies, the quick wins. The sustainable approach examines processes step by step and looks for innovative ways to make savings.

“They’ve cut processes, improved production and now they have got to a level where it’s very difficult to do any more,” said Bakhtiar Hameed Wain, CEO of consultancy Avanceon. “But companies focus more on their core business than sustainability. It would help their business, but they’re usually involved in increasing sales, reducing raw material costs, which is the traditional way of doing things.”

Bliss admits the term sustainability has become a problem.

“I wish we could use a different word. It gets overused, and it gets misused,” said Bliss.

That doesn’t mean sustainability isn’t environmental issues — carbon costs money, and if new levels of business efficiency allow companies to do more with less, it lowers their carbon footprint as well as their costs. For some firms, particularly those engaged in environmental or waste services, carbon savings are the goal, but for others they are a fringe benefit to the cost savings.

“It’s not about ethics, but about imperative,” said Wain. “It should become a business imperative, and for some businesses it already has. It helps the bottom line, and that’s good for business — and that’s how you sell it to businesses. They’ve been selling it as an ethical thing for some time, and that’s worked for a while, but it has to go down as a business need.“

If the business case for sustainability is so strong, why isn’t it more widely adopted?

“It’s taken business around the world some time, because people we’d typically refer to as tree-huggers went to businesses and said, ‘Hey, it makes damn good sense for you to be green,’” said Dr Waddah Ghanem, Enoc’s Executive Director of Environment, Health, Safety, Security and Quality (EHSSQ) & Corporate Affairs, and author of the 2012 book Safety Management: A Comprehensive Approach to Developing a Sustainable System.

“In the past business were, ‘Hey, business is about making money.’ Today ... there’s a drive right from the top of nations. It’s pulled with it all the businesses. I don’t think, unless something very drastically goes wrong to this world, that we’re going to go back to a time where we’re purely looking at meeting the minimum levels of compliance. It goes beyond compliance. I think sustainability is going to be more and more sustainable in the future, but it needs to be integrated into the way that we operate.”

Wain agrees: “Management fads will come and go, but sustainability will become part of daily life. It will become the new norm, and it will become extremely difficult for people to move away from it.”

Sustainability does have its origins in regulations and social corporate responsibility — but in health and safety, not in the green movement. As they came under increasing scrutiny in the 1970s the oil, gas, coal and construction sectors — traditionally dangerous — began a drive for zero accidents at work.

“There was a lot of cost — factories took it as a cost,” Wain said. “But after 20, 25 years — and you can look at studies by DuPont, studies by Exxon — they evaluated that the companies that spent the most on safety have the best efficiency in production, they have the best return on capital. What happened was, when you set up systems and you decide they have to be perfect. that mentality, that way of doing business, comes to accounts, comes to finance and to actual manufacturing.

“That is the time when it stopped being about CSR and became a business imperative.”

Bliss outlined how he might introduce sustainable thinking to different clients.

“If you’re working with a waste management authority, they’re already thinking about waste as a sustainable resource,” he said. “It’s quite easy — you’re pushing at an open gate. We want to recycle more, we want to recover more, we want to sell our waste. A lot of things are built in to that and it’s just a case of shaping it the way the client wants and bringing in some fresh ideas.”

Mott McDonald believes properly applied sustainable practices can save property developers money. New building methods may not only use less steel and cement, but also increase the lifespan of a building. The process doesn’t start there, however. Bliss advocates advance planning, even before the design stage, to ensure a building is in a suitable location for its proposed purpose.

Creative thinking lies at the heart of sustainable practices. Because each industry, each corporate goal, each standard operating procedure is different, there is no catch-all solution that will fit all circumstances. Every step of every business process is analysed to see if it contributes to the overall goal.

“Innovation is incredibly important,” said Bliss. “It’s about approaching things differently. Innovation has to be there to do things differently and do them better.

“Having the tools to quantify what you’re doing and then being able to brainstorm and innovate in a different way is really most of what sustainability is about.”

One of Enoc’s goals is to reduce its carbon footprint. Dr Ghanem said one solution has been to redesign their petrol stations. Using data from the Roads and Transport Authority to choose station and design, Enoc have been able to cut waiting times for motorists wanting to fill their cars, meaning engines are not idling on the forecourt as long.

“Innovation plays a very, very important role as we move towards operational excellence, where we’re moving from a culture where typically business quality and EHS [Environment, Health and Safety], environmental issues and all that are really are really compliance, we’re trying to move the organisation in the next three to five years to be much more proactive, much more like stewardship, a kind of leadership within our business units,” said Dr Ghanem. “This takes time, because you can apply whatever policies and standards and systems — and we have some very clever people here who are very good at doing these things — [but] the challenge is really changing the mindset, changing the culture within the organisation.”

James Arnott, MD of Capital Project Services at Accenture, agrees with the value of changing mindsets. “It’s one thing to talk about being sustainable, it is another thing to be seen as being a sustainable organisation,” he said. “And that has a couple of leaders to it. One is the way in which people are viewing your organisation from a brand perspective, and if you are talking about driving out cost or reducing your carbon footprint or injecting monies into corporate social responsibility type programmes, that those are seen as being true, are seen as being reflective of your brand, and at the same time you’re operating in an ethical way.”

Arnott believes genuinely sustainable businesses are more likely to attract customers, and are better able to recruit talent, particularly among younger candidates, who value sustainability and seek to work in firms that reflect their values.

Leadership

Avanceon’s Wain says that for sustainability to work, an organisation’s leadership must not only believe in it, they must look for ways to encourage sustainable behaviour through staff rewards, appraisal targets, KPIs and bonuses. If a CFO knows his bonus depends on finding new ways of reducing operating costs without capital expenditure through sustainable methods — what Wain calls “perpetual savings” — he or she will seek to do so.

Despite their devotion to business sustainability, few of the experts we interviewed believe it has become established enough in the business mentality to survive without legislation and the need for compliance, but they believe that time is coming and that soon sustainability itself will be sustainable.

Bliss is one of the dissenters. “If we can demonstrate that it adds value to the business involved, and it makes sense to do so, why wouldn’t you?

“If you can build something that’s worth more, or infrastructure that’s more resilient, or your product or agriculture is more resilient, why wouldn’t you do that?

“There are vested interests in protecting your business. We find that if we can demonstrate the case, it doesn’t matter what the legislation says, because there is a business case for it.”

Box: Key features of sustainable thinking

PROPER PLANNING: Consider how sustainability fits into your overall business strategy, whether you want your business to be leaner, greener or more resilient to shocks. Develop a sustainability strategy.

CLEAR GOALS: Set targets in keeping with your strategy, whether they be financial targets such as reducing costs or protecting assets, or environmental ones such as reducing carbon footprint.

ANALYSE PROCESSES: Examine each step of the way your business operates. Consider why each step is important and why it may hinder or contribute to achieving your targets.

RETHINK OPERATIONS: If your operations do not contribute to achieving your chosen goals, consider whether there are alternatives. Innovation is at the heart of sustainability, whether it be doing old things in new ways or new things in new ways.

MONITOR EFFECTIVENESS: Keeping checking to ensure the new processes are working as you expect and making the savings you anticipate.