What Does ‘Greening’ a Business Have to do with Profitability?

Consider sustainability as a profit center: crazy talk or real possibility?

According to an Aberdeen Group study, The ROI of Sustainability: Making the Business Case, top performing organizations view sustainability as a “must have” strategy for long term business viability and success. The top drivers for business sustainability implementation identified in the study include:

• Desire for Social and Environmental Stewardship – 56%

• Increase or Maintain Brand Reputation – 48%

• Need for a Competitive Advantage – 46%

• Stakeholder Pressure – 29%

• Rising Energy Costs – 22%

• Present or Expected Regulatory Compliance Mandates – 22%

While these drivers are appealing, business sustainability is best appreciated when viewed through the lens of your business. However, business sustainability is often reduced to environmental or social action. While certainly two very important areas of focus, business sustainability is really about taking action to maintain the on-going health and profitability of the company as a business strategy. This includes the importance of monetary circulation.

Sometimes viewed in terms of risk, sustainable business actions are activities which have a positive impact on either the inbound or outbound flow of money. How can greening a business and monetary circulation impact profitability? Consider the following:

Effective use of money going out:

• Reduction in procurement and supply chain expenses.

• Reduction in business and operational waste.

• Reduction in environmental and social impacts.

Efficient use of money passing through:

• Increase internal and external process efficiencies.

• Increase employee productivity.

Maximum capture of money coming in:

• Responsiveness to customer expectations.

• Openness to new markets with innovative products and services.

In far too many cases, business models and strategies become misaligned with some basic business sustainability concepts. Cash flow eventually slows and may even come to a stop.

By regularly reevaluating the company’s business model and its applied sustainability concepts, sustainable organizations are able to respond to the critical questions affecting the flows of the business.

Article by Julie Urlaub, Founder and Managing Partner at Taiga Company; appearing courtesy 3BL Media.

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