Why Does Environmental Sustainability Matter?
Today, environmental sustainability risks drive businesses to target alternatives for managing operations and the supply chain. The majority of Fortune 500 companies publicly report carbon emissions via their website and registries such as the Carbon Disclosure Project and the Global Reporting Initiative; companies that don’t, risk losing business. Corporate Social Responsibility (CSR) is no longer about labor issues – it is now integrated into the Environmental Sustainability initiatives of corporations.
“Supply chain and environmental professionals share a common goal: to reduce waste. While these supplier programs could be seen as a burden, they are actually great opportunities to cut costs while reducing an organization’s environmental footprint. The risks – once identified and managed for an individual organization – can help foster customer relationships and yield competitive advantages,” explained Steve Starbuck, Americas Leader, Climate Change and Sustainability Services, Ernst & Young LLP.
With a focus on costs and regulation, the U.S. government is not only focused on their own costs and reducing their environmental footprint, but it is also motivating a corporate focus on greening the supply chain. In November, 2012, the U.S. government – the largest supply chain in the country – announced the General Services Administration intends to develop an incentive-based approach to contracting to favor companies that track and disclose their greenhouse gas (GHG) emissions as part of the request for proposal (RFP) process.
Ratings from the Dow Jones Sustainability Index, Bloomberg ESG, Global Reporting Initiative (GRI) and Carbon Disclosure Project (CDP) are becoming influential to a company’s reputation. Product rating initiatives, like Good Guide and the Sustainability Consortium, are also maturing their approaches. Companies that ignore these current trends are at risk of being unprepared.
In addition, companies need to focus on five key sustainability risks to themselves and supply chain operations -
- Strategic – the supply chain improvements can improve competitive advantage, reduce costs
- Compliance – audits on green supplier programs focused on social and environmental costs
- Financial – supply chain has financial implications from penalties, fines and uncontrolled costs
- Operational – efficiency can drive innovation, reduce waste, transportation, logistics and facilities
- Reputation – shared reputation risk from regular audits of suppliers and compliance with emissions
Companies realize they need to address these risks as consumers, employees and shareholders are more aware of environmental sustainability importance, and greener investors demand sustainability reports. Sustainability information allows investors and corporations to make informed decisions and investments which take into account corporate risk from future government legislation’s, possible future lawsuits, and shifts in consumers perceptions towards heavy emitters.
As sustainability moves from the periphery to the heart of business and government, organizations are finding that the transition comes with a price and a prize. The price is the fundamental transformation required to integrate sustainability into the fabric of the organization. The prize, however, is tantalizing: the opportunities for organizations to outperform their peers, supercharge their brands and reputations, and achieve high performance.
For additional information, contact a CSRware representative at info@CSRware.com.