18 Mar 15

Greenbiz Forum Blog Series. Part 2: The 3 R’s of Sustainability: Risk, Reputation & Revenue

image5Greenstone'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. 

There’s never a shortage of interesting job titles at sustainability events. You could be having coffee with the Head of Environmental Management, Business Risk, Sustainability, Business Resilience, Corporate Quality or Corporate Social Responsibility from any number of types of organisation. But does the title matter? Of course there are differences between these roles but at the heart their purpose is the same: to drive sustainability through their businesses.

The challenge of job titles in sustainability is at the centre of the industry’s inherent wider challenge. How do you communicate sustainability issues in a way that different audiences can understand? A key theme from the Greenbiz Forum conference in Arizona this year was the idea of the 3 R’s: Risk, Reputation and Revenue. The three terms aren’t new by any means but they give us three interesting lenses to focus attention on sustainability issues.

The Risk Lens

Some of the environmental risks facing businesses are obvious. Coastal erosion in towns, relying on huge amount of water to brew your beer, changing weather patterns for agricultural production and mining in areas where raw materials are rapidly depleting are just some examples of how environmental impacts could pose a risk to a business.

In addition to the talks at Greenbiz Forum about risks from a direct reliance on natural capital was an added focus on the concept of unknown risks and stranded assets. The Greenbiz State of Green Business Report[1] succinctly outlines the old financial concept of stranded assets with a new sustainability lens by highlighting the potentially devastating global risk of finances tied up in long-term unsustainable investments, particularly fossil fuels. Future taxes and regulations on fossil fuels are expected to cause these resources to be stranded in the ground and consequently trap any related financial long-term investments. A recently launched campaign by The Guardian newspaper[2] urging divestment away from fossil fuels is also looking to address this issue with the world's two largest charitable funds.

The Reputation Lens

Amazon.com founder Jeff Bezos wasn’t necessarily talking about sustainability when he said “your brand is what other people say about you when you’re not in the room” but it’s essential to consider brand when thinking about sustainability. Environmental negligence, law suits and a perception of disregard for sustainable business practices can harm a brand image but when thinking about sustainability through a reputation lens it’s imperative not to forget the potential to grow a brand through positive actions. SunChip’s[3] harmonious shift to solar power to produce 1 million bags of chips per day in the US and clothing brand Everlane’s[4] radical transparency on disclosing the processes in their supply chain are two examples that immediately sprung to the mind of delegates at Greenbiz Forum.

The Revenue Lens

In financial reporting, terminology is well defined (equity, expenses and income are all understood) so the process of reporting is consistent and comparable. In order to move sustainability away from being a parallel business operation (and department) towards being a ubiquitous business mind-set it is imperative to engage finance teams. As natural capital accounting[5] grows as a concept and large corporations (including ASDA, Mars and Nestle[6]) work with research leaders, proof of process and defined guidelines for applying familiar accounting processes to a business’s relationship with nature will continue to evolve.

In summary, within sustainability circles, communicating on key issues can transcend semantics because we’re familiar with the abundance of terms that can be used. At Greenstone we position our enterprise software solution as a ‘non-financial reporting’ tool to try and encapsulate the pool of terms used across reporting on sustainability. Those feeling indulgent can visit the Sustainability Dictionary[7] to explore terms right through from the Access Economy to Zero Waste but there are many more. The challenge comes when we’re trying to communicate consistently with external audiences and this is when we lean on the familiar language of risk, revenue and reputation amongst others to provide a familiar lens to a common challenge.

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

Coming soon

- Part 3: Looking deeper into the value chain

 

[1] http://www.greenbiz.com/report/state-green-business-report-2015

[2] http://www.theguardian.com/environment/ng-interactive/2015/mar/16/keep-it-in-the-ground-guardian-climate-change-campaign

[3] http://www.sunchips.com/our_planet.html

[4] https://www.everlane.com/about

[5] http://info.greenstoneplus.com/natural-capital-ebook

[6] http://www.cisl.cam.ac.uk/business-action/natural-resource-security/natural-capital-leaders-platform/news/university-of-cambridge-to-provide-business-case-for-safeguarding-nature

[7] http://www.sustainabilitydictionary.com/

 

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