Climate Change: sustainability and being a trusted supplier

By: Christopher Gleadle ©2010

Addressing climate change is not simply a compliance issue: more importantly, it

has become a key commercial consideration.

Sustainability requires strategic decisions and active engagement at senior level to

ensure companies are best placed to seize the opportunities being presented in a
low carbon economy.

In a recent Carbon Disclosure Project report – CDP-2010-FTSE 350 - of the

companies who responded to the questionnaire: 96% of company’s have board
members or other senior executives responsible for climate change. This is up
from 86% in 2009.

For SMEs and larger businesses, these are the potential customers for their
products and services.

Through effective energy and environmental management come the benefits of

addressing customer needs. Customers are the lifeblood of all businesses and
there is a seismic shift in what customers want to see from their suppliers. B2B
and B2C; the rules of engagement are the same. They want to see more
environmentally friendly practices. However, it is more than just being seen to be
doing your bit. Proof and substance must be demonstrated at all times. If a
company tries to make what they see as the right noises without proof and
commitment (green-wash), then the effect will certainly be as bad as doing nothing,
and the chances of being de-selected are high.

It is important to understand that sustainability is more than addressing the triple

bottom line of economic, environment and social. Sustainability has gained such
traction it is a clear driver of the top line too.

In a recent Carbon Disclosure Project supply chain report written by A T Kearney:”

members with a strategy for engaging with suppliers on Greenhouse Gas
Emissions and climate change” rose from 81% in 2008 to 89% in 2009.
This attitude toward informal compliance on sustainability was further under-pinned
– in the same report - by “ members willingness to deselect suppliers for failing to
meet carbon management criteria” rising from 6% today to 56% in the future.

When directors of SMEs look at the cost of transforming their business to a

sustainability-focussed business, they need to factor in the initial investment and the
cost of doing nothing.

The metrics developed in undertaking the sustainability journey, whilst measuring

the environmental and social performance of the organisation, reveal risks and
opportunities and so begin the process of continual improvement. Furthermore,
new skills and competencies develop within the organisation in valuing efficiency
opportunities from operations to buildings. Hence, sustainability delivers value in
cost reduction through eco-efficiency as well as driving new sales and
strengthening brand and reputation.

Notwithstanding the direct financial benefits, sustainability also drives innovation as

the organisation and its people become used to the balancing act of profit and
environment being connected.

So, with an organisation making environmental considerations accountable and

treated with the same level of transparency as the financial metrics, it makes the
process of tracking true costs and benefits across the organisation and operational
activities easier.

This leads to environmental planning and strategic planning working together in

understanding what the year ahead and future horizon looks like in terms of
accountability life cycle and developing clear key performance indicators and
budgets. Additionally, it protects the company from random environmental projects;
creating a sustained process with intended actions and clear outcomes, delivering
the associated business benefits.

It has been shown through many studies that staff turnover drops in the companies
who take the sustainable route, so saving money. It has also been shown that such
companies attract the brightest and the best people, because the students of today
are growing up in an increasingly resource constrained world; they understand the
future difficulties, and most of them will live through them too. That is why they want
to work for the right companies, not any company.
The contribution of the team will always surpass the contribution of the individual.
Everyone pulling together will foster a wholly more stable and rewarding culture.
This higher emphasis on nurturing and developing team cohesion will improve and
go beyond customer expectation and enhance the customer experience – whilst
driving important innovation of new products and services further enhancing
market share.

Additionally, delivering the right communication can add great value to any company
that demonstrates, lives by and has sustainability at the core of its business.
Sustainability needs to be in the DNA of its operating models, business strategies
and critical processes. Through this recent recession, listed companies who are
sustainable, on average, have had a share price out perform non-sustainable
conscious competitors by around 7% according to the Economist Intelligence Unit
‘Doing Good Business and the Sustainability Challenge’. This is not a coincidence; it
is a fact of market forces.

Christopher Gleadle
www.thecmgconsultancy.com