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It’s not just large businesses that want to take action to reduce their environmental footprint: a group of smaller companies discuss how they can drive corporate environmental improvement as a profit centre instead of justifying it as a cost.
Last week we hosted our third "Getting to Zero" discussion dinner. Our guests were a selection of representatives from small and medium enterprises (SMEs), all with the common goal of integrating, retaining and improving sustainability in their business operations. Debating the topic of “how can businesses justify sustainability for profit rather than cost?” they felt that, depending on the nature of business, it will increasingly drive longer term profitability, but:
- There is little or no sustainability “premium” in pricing
- Communicating sustainability performance is increasingly important within their customers’ procurement, but rarely is it fully incorporated into the final buying decision
- Sustainability should be linked with the “Why?” or purpose statement of a business as it can be a motivator of people and performance
The evening was co-hosted by Richard Owers, Director of Pureprint Group Ltd, and our own Managing Director, Jonathan Shopley, with guests from a diverse mix of companies in energy, printing, manufacturing and professional services.
Investing in sustainability pays off
Pricing and product premiums were one of the first challenges raised in the discussion. Before sustainability became the norm, businesses embarked on sustainability programmes primarily for two reasons: because it was the right thing to do, and because it was a new form of differentiation in the marketplace. However, while sustainability features used to be something that customers would consider paying a premium for, now it is not so often the case, even though the importance of sustainability is better understood. Much of the cost now has to be absorbed by the business, with return on investment assessed through a range of hard and soft benefits: from winning new business, to loyalty of customers and positive reputational changes.
Over the last five to 10 years we have seen the rise of sustainability communications, evolving from a topic that was briefly mentioned in an annual report or on a product specification, to a subject that has dedicated pages on corporate websites and is shared across social media channels on a regular basis. Throughout the discussion it was confirmed that communicating and marketing sustainability practices is key to a company’s overall reputation and differentiation, enabling them to win and retain customers, distinguish from competitors and influence the marketplace.
While everyone agreed that the message used to sell sustainability credentials must be positive as opposed to creating a sense of guilt, there was also a desire for a common language to help stakeholders understand the value. Using KPIs with financial figures often hits home harder than a statistic about volumes of CO2e or litres of water reduced. For example, saving 10,000 litres of water by installing automatic sensor taps may not resonate, but equating it to £100 worth of water use creates an easier identification with the cost of leaving the tap running.
The use of visual communications to build a positive sense of action was also discussed: Phil Brady, Director of PR Print and Design, talked of the reaction he got from customers after installing 192 solar panels on the roof of their premises, which is also featured on the company website. Providing a visual example of the commitment to reducing their impact stimulated an interest in the overall sustainability of the company.
Implement initiatives you believe in
Pureprint Director, Richard Owers and Simon Graham, Head of Innovation at De Courcy Alexander (and previously responsible for Commercial Group’s sustainability success), talked us through their sustainability journeys.
It begins with an impulse from either an external shock or a key internal stakeholder whose personal values drive them to become the sustainability champion. After a lot of work to deliver sustainability action relevant to the business or industry, communicate the quality and integrity of the programme, and make it part of the company’s brand, typically the next phase is a lull: the day-to-day sustainability activities continue as the norm. To reinvigorate the initial impulse and keep the programme driving forward, a period of persistence and resilience is required, and that will drive new innovation.
For many SMEs, it’s hard to start on a sustainability initiative. This may be due to a lack of understanding of legislation or industry guidance, or simply down to the time required to learn and keep up. Many small businesses do not know enough about where to start and worry that they are not doing all the right things, but as Julia Young of WWF states: “It is important to start with what YOU as a business care about, otherwise it will never be sustained.”
It’s worth the effort
Although it may be difficult to encourage customers to pay a premium for sustainable products, our guests still see value in investing in their sustainability programmes, and harmonising the initiatives to the goals and values of the company is the best way to ensure actions are sustainable over the long term. For those that bite the bullet, they should communicate the action they are taking much more in order to realise the value for their business.
Simon Brown, our Managing Director for Europe, summed up the importance of this sector: “SME’s are the ‘tidal pool of innovation’ from where many environmental products, services and solutions are generated."