Sustainability Business Case

EcoSTEPS Sustainability Business Case is process that all organisations can use to develop their unique business case for sustainability. It identifies and priorities your sustainability value drivers.

In EcoSTEPS experience, there is merit in ensuring that explicit consideration is given to the TBL/Sustainability ‘business case’ to ensure it is congruent with overall business strategy, development and systems. With this in mind, below we give an overview of the EcoSTEPS Sustainability Business Case approach.

Broadening an organisation’s performance measurement systems to incorporate social and environmental performance indicators is crucial to long-term financial sustainability. The development of ‘learning cultures’, the championing of corporate social responsibilities by senior management, community engagement and the integration of management systems are some of the pivotal building blocks of a sustainable organisation.

Investing in Sustainability

Businesses have traditionally judged their own performance against one bottom line – the financial one. Increasingly, however, they are being asked to consider how they affect the environment and their communities. This is the so-called Triple Bottom Line (TBL) approach that allows organisations to assess their performance against three bottom lines: environmental, social and economic.

Every business is different and one approach won’t suit all organisations. It’s important for your business to develop its own organisation-specific business case. That is, to consider the value to your business in investing in sustainability.
The graph below considers two hypothetical organisations – let’s call them A and B.

Organisation A is well managed and develops a sustainability strategy that reflects its specific value drivers and needs. Financial investment in sustainability initiatives is carefully planned and phased to ensure that there is a net positive cost/benefit return from Day 1. Organisation B (not your organisation!) is more ad hoc. It follows what it perceives as the current market trends (fads?) without adequate and proper assessment of its own situation and needs. The result is that although some initiatives pay dividends, the experience as a whole is not satisfactory and there is an overall net cost to its approach to sustainability.

Generic Sustainability Business Case

There is an increasing body of evidence proving that organisations which foster sustainability thinking and practices enjoy positive benefits. The nature of the rewards varies for different organisations and is dependent on their particular sector, strategy and stage of development. Potential organisational benefits are illustratively listed below:

• Improved operational efficiency
• Preservation of licenses to operate
• Enhanced brand value and reputation
• Innovation
• Customer attraction and retention
• Access to Capital
• Employee satisfaction
• Enhanced human and intellectual capital
• Shareholder value
• Improved risk management
• Revenue enhancement and diversification
• Perceived as contributing to the wider community
• Etc, etc…
  

These can be broadly grouped across four basic elements as illustrated in the table below:

Generally, organisations wish to move strategically from the bottom-left quadrant, Risks (Uncertainty) towards the top-right, Revenues (Certainty).

While more responsible business practice will deliver traditional business benefits, many organisations are attracted by the prospect of being ‘architects’ of a better future for ourselves and others and for generations to come. Sustainability is a timely confluence of altruism, opportunity and necessity.

Developing your organisation-Specific Business Case

Organisations need to justify financially potential strategic options when it comes to decisions to invest in sustainability. To meet this need, EcoSTEPS has developed a process that your organisation can use to develop their unique business case for sustainability. The approach combines commercial common sense with informed sustainability know-how. It takes an organisation’s existing business model and key value drivers and interfaces that model and those drivers with probable and possible benefits that will accrue to the organisation if sustainability programs are introduced.

EcoSTEPS developed this approach in response to client feedback which highlighted the difficulty many organisations were having in defining a business case for sustainability that aligned with their own existing value drivers. Most descriptions of the business case currently being adopted in the market place provide a set of ‘common’ benefits (as noted above) that accrue to organisations that adopt sustainability programs. Many organisations are finding it difficult to translate these generic benefits to their own business case in any systematic way that provides a rational case for either adopting – or alternatively not adopting - sustainability programs.

EcoSTEPS has overcome these difficulties its Sustainability Business Case process. This starts with the existing business model and then examines what might be enhanced if sustainability is introduced. The approach recognises that all organisations are different and all will need to work through their own individual circumstances to determine whether sustainability adds value for them or not.

EcoSTEPS Sustainability Business Case Tools

EcoSTEPS has developed two important tools to assist with the development of the organisation-specific business case:

• EcoSTEPS Sustainability Business Case Decision Tree©
• EcoSTEPS Business Case Matrix©
  

When used in conjunction with the EcoSTEPS Sustainability Review© (Refer below), these tools provide a complete and persuasive report that management teams can use to justify their decision to implement sustainability practices. Applied to your organisation’s situation, they will provide the information that management needs to make a decision about the strengths, weaknesses, opportunities and threats of investing and progressing the TBL program.

The tools can be used for organisation-wide analysis or for various sections or business units of the organisation. They can be applied also to existing projects - to clarify the implications of sustainability initiatives in projects that are in the planning or early implementation stages. The SBC process and related tools will help your organisation to develop systematically an understanding of the likely financial value expected from the adoption of a sustainability approach to business.

Find out how EcoSTEPS can help your organisation, please contact us.

2. Understanding