This blog post was writ­ten by Christo­pher Rus­sell, Energy Manager.

To many observers, “sus­tain­abil­ity” is a trendy buzz­word, evok­ing a lifestyle image of tree-hugging peo­ple wear­ing beads and san­dals.  Detrac­tors per­ceive sus­tain­abil­ity and envi­ron­men­tal ini­tia­tives as an infringe­ment upon prop­erty rights and eco­nomic lib­erty in gen­eral.  How­ever, forward-thinking busi­ness and pol­icy lead­ers per­ceive a dif­fer­ent mean­ing.  In a hard-nosed busi­ness con­text, sus­tain­abil­ity has prac­ti­cal impli­ca­tions for the basic pil­lars of busi­ness per­for­mance:  rev­enue growth, expense reduc­tion, and risk abate­ment.  This alter­na­tive per­cep­tion sees sus­tain­abil­ity not as an eco­nomic restric­tion, but as a guid­ing prin­ci­ple for busi­ness growth and profit in spite of resource scarcity.  In this con­text, sus­tain­abil­ity is wholly com­pat­i­ble with eco­nomic growth in the face of finite resources.  This arti­cle explains why.

Regard­less of our polit­i­cal lean­ings, we all share uni­ver­sal eco­nomic con­straints:  lim­ited time and resources.  One of those resources, energy, is an ingre­di­ent of all busi­ness activ­i­ties.  This is true with­out excep­tion.  No con­tracts are ful­filled or oblig­a­tions met with­out some con­sump­tion of fuel or elec­tric­ity.  As the vol­ume of eco­nomic activ­ity grows across the globe, so does the demand for lim­ited energy sup­plies.  The most obvi­ous impli­ca­tion:  ris­ing energy prices.  Other commodities—including min­er­als, build­ing mate­ri­als, even food and water—are sub­ject to the same mar­ket forces.

Expense reduc­tion may be the most obvi­ous reward of applied sus­tain­abil­ity.  Energy expenses can be reduced by effi­cient tech­nolo­gies as well as smart energy behav­ior.  When energy waste is reduced through­out a sup­ply chain, the result is a lower cost of pro­duc­tion and higher profit mar­gin on final goods and ser­vices.  The impact on finan­cial per­for­mance is dra­matic, espe­cially for busi­nesses with thin oper­at­ing mar­gins.  For exam­ple, it’s not unusual for hos­pi­tals to achieve a four per­cent oper­at­ing mar­gin (rev­enue net of expenses but before debt and earn­ings dis­tri­b­u­tions).  At a four per­cent mar­gin, $25 of rev­enue yields only one dol­lar of oper­at­ing income; con­versely, one dol­lar in energy sav­ings is one whole dol­lar of oper­at­ing income– the same impact as receiv­ing $25 in revenue!

Increas­ingly, sus­tain­abil­ity pro­vides oppor­tu­ni­ties to make rev­enue.  In part, this is due to grow­ing con­sumer demand for goods and ser­vices that are pro­duced with a min­i­mum of envi­ron­men­tal dis­rup­tion.  Gov­ern­ment con­tract­ing reg­u­la­tions as well as mar­ket alliances increas­ingly require sup­pli­ers to demon­strate waste and emis­sions reduc­tion in their busi­ness processes.  In other words, sus­tain­able attrib­utes con­tribute to prod­uct mar­ketabil­ity.  Sus­tain­abil­ity thus becomes an  eco­nomic advantage. 

Why not main­tain the busi­ness community’s sta­tus quo?  This is a par­a­digm in which energy and other resources are sim­ply a cost of doing busi­ness and gen­er­ally ignored. Forward-thinking busi­ness lead­ers under­stand that resource sup­plies are not sta­tic.  They are sub­ject to deple­tion as well as sub­sti­tu­tion.  In either case, busi­ness decision-makers must adapt to chang­ing tech­nolo­gies and mar­ket con­di­tions.  Sus­tain­abil­ity, through its poten­tial for waste reduc­tion, is a hedge against the busi­ness risk of scarce inputs.  By reduc­ing the vol­ume of energy and other inputs needed to earn each dol­lar of rev­enue, busi­nesses are off­set­ting the risk of ris­ing input prices and pro­tect­ing their profit mar­gins.  In addi­tion, the adop­tion of renew­able fuel and power sources pro­vides a mea­sure of resource flex­i­bil­ity and inde­pen­dence from energy sup­pli­ers.  By adopt­ing these tech­nolo­gies now, busi­nesses gain valu­able expe­ri­ence to pre­pare them for tomorrow’s inevitable resource short­ages and shifts in tech­nol­ogy.  Busi­nesses that fail to antic­i­pate these changes will be forced to scram­ble for solutions.

For the astute busi­ness leader, sus­tain­abil­ity is nei­ther fad nor fash­ion.  Sus­tain­abil­ity sup­ports eco­nomic growth and earn­ing power in the face of change.  A sus­tain­able busi­ness is one with the means to nav­i­gate tech­nol­ogy evo­lu­tion and chang­ing resource availability.