3 Mar 15

Greenbiz Forum Blog Series. Part 1: How does sustainability create value?

Greenbiz_DWGreenstone's Head of Client Services, David Wynn attended the annual Greenbiz Conference in Phoenix (17th-19th February 2015). In this blog series, he reflects on some of the key trends from the event [1].

“My flight was almost cancelled”. By 10 am it was the second time I had heard someone suggest they were lucky to make it to the Greenbiz Forum in Phoenix, Arizona because of unprecedented snowfall in the North-East of the US. As well as being a conversation icebreaker, extreme weather and wider climate change impacts underpinned why hundreds of sustainability professionals had gathered in the Arizona desert to explore the trends, challenges and opportunities in sustainable business.

A central theme across the three-day event was valued. More specifically creating value from a sustainable business. William McDonough from MBDC [2] succinctly explained the process of talking about value in his presentation on “Why the circular economy is going mainstream” by outlining the steps we take when moving from creative values to value creation. Often misused terms, it is essential as a business to consider your: creative values, principles, visions, goals, strategies, tactics, metrics and how these in order lead to understanding value creation across your organisation. This sits at the heart of the circular economy principle and the need for businesses to adopt a mantra that “we don't have end of life, we have end of use”. Reiterated by many of the speakers throughout the conference, this trend of adjusting thinking to a circular approach quite rightly needs to be supported by business structures and policies that can facilitate efficient operations. 

An organisation that has taken this value creation principle to the core of its business is global chemical company BASF. They’ve adopted the German principle ‘Verbund’ to identify sites that are intelligently linked and create value for the whole company. In their own words “the Verbund principle enables us to add value as one company through efficient use of our resources”. Whether the Verbund principle is applied to customers, employees, production or technologies it is about efficiency but importantly efficiency that creates value for the company. 

A not-so-unsurprising takeaway from the Greenbiz Forum is that communicating the value an organisation has created can be challenging. At a business level, a fundamental principle of Integrated Reporting <IR> is how an organisation leads to “the creation of value in the short, medium and long term”[4]. A workshop session taking a closer look at company reports venturing into Integrated Reporting made clear that, much like with materiality, the audience is key in communicating where value has been created. At a national level, a panel of US experts working in recycling from PepsiCo, Closed Loop Fund and Waste Management acknowledged a parallel difficulty in communicating national recycling rates when a mixture of best in class and trailing recycling rates across different regions results in a national picture where value is unevenly distributed.

So how should a company communicate value from sustainability? In a traditional sense, revenue and cost reduction are at the heart of the value a business creates where being sustainable fosters a healthier return on investment. However, in addition to these economic values, successful sustainability initiatives can contribute to mitigating risks and the value of a brand. Liz O’Neill emphasised this brand point when outlining the increased value Levi Strauss & Co have seen from their range of Water<Less™[5] jeans that use a finishing technique with up to 96% less water. A product’s positive impact on brand value may contribute to increased revenue but attracting new and retaining exceptional staff also creates value for a company. 

An opening message from Greenbiz Forum 2015 was that “less bad is not better: less bad is still bad”. Of course, it’s important for organisations to act in a ‘less bad’ way but as countries struggle with the impacts of climate change, it isn’t enough to just be ‘less bad'. Organisations doing ‘more good’ and positively communicating how they create value in an audience-focused way is fundamental.

In summary, it was very good to see the common understanding of the importance of those working in the sustainability space to be able to value and communicate their activities in a manner that will be understood by all stakeholders. Simply doing the right thing is not enough - we have to be able to demonstrate value and returns if we are to command continued investment in our activities. 

Subscribe to the Greenstone blog to hear more on key trends from Greenbiz Forum 2015.

Coming soon:

- Part 2: The 3 R’s of sustainability

- Part 3: Looking deeper into the value chain

[1] Reference 1

[2] Reference 2

[4] Reference 4

[5] Reference 5

Sustainability , Non-Financial Reporting