Book Excerpt: Managing Sustainability

For the better part of two decades, John Friedman has been in the trenches, moving the needle with regards to truly integrated sustainable business in the companies and organizations with which he’s been associated, and now he’s giving all of us a playbook to follow. Managing Sustainability: First Steps to First Class (Business Expert Press, April 2020)—published just in time for the 50th anniversary of Earth Day—combines proven strategies with real-world examples. With the onset of the COVID19, there has never been a clearer nor more devastatingly demonstrable example that we have healthy business only with a healthy society and healthy environment.    

In the following excerpt John pulls back the curtain on how to go beyond traditional accounting to quantify the impact of sustainable strategies, thereby uniting employees, customers, and other stakeholders to pull in the same direction, aligning sustainability efforts to achieve measurable results—for the benefit of all.  


 

There are different kinds of results. The most obvious are those tangible results that benefit the business. There are also earlier implementation goals, such as measuring your efforts and results in rolling out a new program, that are necessary precursors to the impact results. 

Most people do not fear change—what they fear are the unforeseen negative consequences of change. Instead of presenting the idea of sustainability as a radical transformation of their core enterprise, a review of the foundational documents of the organization often provides ample evidence that building an enduring business model is a natural extension of the values that were responsible for its success in the first place. 

Whether through independent third-party certifications (such as EnergyStar for energy efficiency, organic for certain foods, etc.), recognized and respected awards, or reporting against trusted criteria, the public is skeptical of unsubstantiated claims, as are employees. In some cases, it is easy to point to results—wildlife habitats set aside are visible examples within a community that a company and its employees can see for themselves. That is why local examples are very powerful. 

Even those at a distance can be made real through photographs and stories of the good that is being done. But in some cases, it is harder because you are quantifying what did not happen—energy saved, trees that were not cut down, water that was not used, etc. In those cases, the use of social math—equating it to things that people can relate—is powerful. Gallons of water saved can be compared to the number of swimming pools it would fill. Power savings can be related to the number of homes’ worth of electricity saved, etc. 

For management, for measurable results to really be considered tangible, they must tie back to the organization’s strategy (as explained earlier). Showing quantifiable business results offers the opportunity to demonstrate that programs are working for the benefit of the entire organization. 

Consider the impacts of having more customers switch to electronic billing and payment, rather than mailings to customers. For the company, this may be a financial imperative because in addition to the cost of printing and processing those invoices, a company can also save the staff time associated with mailing, collecting, and depositing the payments. However, customers may be more motivated by completely different criteria, such as looking at ways to reduce their own environmental footprint. 

About a third of the customers of a Washington DC-based company participated in electronic billing, payment, or both. Based on the cost per customer mailing, it was determined that a 2 percent increase (from 33 to 35 percent) would result in a net savings of over a quarter million dollars per year. Using social math to determine equivalencies, the Sustainability Department established that the amount of paper used for the billings was just a bit more than 2,200 trees—which happened to be more than the number of Japanese Cherry Trees that surround the Tidal Basin and Jefferson Memorials. 

The Sustainability Department proposed an outreach campaign with Customer Experience to help them reach their Paperless Billing goal focusing on the number of trees saved as a pride point during the month of April (2019), which not only includes Earth Day, but also the annual Cherry Blossom Festival. The campaign included e-bill “thank you” messages, paper bills with “join in the effort” inserts, e-mails, hold messages, digital media outreach via the company Twitter account and LinkedIn page, as well as ads in local newspapers. The results showed that e-billing customer rate increased to more than 38 percent and a similar increase in electronic payments (which gets the money into the company faster). 

The time value of money (TVM) principle teaches that money available now is worth more than the identical sum in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received. That is why getting in payments faster is imperative, especially in lower-margin businesses. Some businesses charge late fees (usually a percentage) to encourage on-time payments. That value add is in addition to the avoided costs from mailings the company did not have to make. 

This program had both a percentage target and an associated absolute cost savings. 

Another example of this is a program for Lafarge Construction Materials. Some customers were very delinquent in paying—more than 90 days in a few cases. By simply empowering company delivery drivers to offer “Do you have anything I can take back with me?” when they handed in bills, each time they delivered construction aggregates to job sites it encouraged customers to prepare payments and have them ready when their next delivery was due. Originally the concept was to save the 4 or 5 days that the payment would be in the mail but adding the phrase “I’ll save you a stamp” ensured that the message was perceived as friendly and not chiding and resulted in a few payment delays being shortened by more than a month (in the most extreme example). 

This is an example of aligning benefits to the business with benefits to the customer. In this case, the money the customer saved was marginal, but the perceived benefit was of exemplary service (and not bill collection). 

 “Net gains” is the concept that something that benefits one group can also benefit another. For the above examples, improved customer service (e-billing and avoiding having to mail payments) have benefits to both the business and the customer. Customers also benefit psychologically when they feel good about the products or services that they buy. There are powerful ways that customers can feel good about purchasing sustainable products from companies that align with their personal values. 

Research shows that there is little risk, and much to be gained, when a company takes a moral stand. Automobile manufacturers were widely praised for resisting recent U.S. government efforts to roll back fuel efficiency standards by a public that recognizes and appreciates the benefits of greater gas mileage vehicles—whether they are motivated to save fuel costs, reduce air pollution, or address climate change. General Motors, Ford, BMW, and Toyota (among others) actually complained that the plans to weaken car pollution and fuel efficiency standards would actually hurt their bottom lines. 

The Business & Politics Do They Mix? study by Global Strategy Group found that 81 percent of Americans believe corporations should take action to address important issues facing society, and 88 percent believe corporations have the power to influence social change. A company should take a stance if the issue makes sense for the business is aligned with the company’s core values. You may alienate some, but if speaking up brings you closer to your mission, that should be okay in the long term. Ultimately, being aligned and vocal on a social issue can help you define and strengthen your true self and connect more deeply with your core audience. 

 

“Managing Sustainability: First Steps to First Class” by John Friedman is published by Business Expert Press © 2020. All rights reserved. 

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