Measuring Sustainability

As an eco-consultant, I am often asked by clients about how companies connect sustainability and green business initiatives to show that these measures result in real financial advantage. It is an obvious concern for any business focused on the bottom line. For a business, every action must have a proportionate change in its net profits and the impact of putting green business practices in place should be no different. In fact, ‘profit’ is one of the 3 principles of sustainability and plays an important role in whether or not more companies would get into the ‘green business club’.

But it is a complex question because, for one, the immediate effect of green business practices can be an increase in costs, albeit a marginal one if at all. Secondly, green business tips abound on the Internet and through green business guides and following them leads to more than one benefit in different areas. It is a task melding those benefits into a cohesive form.

One of the top ways of tracking and measuring the effects of sustainability and green business is to consider a company’s Triple Bottom Line. The ‘triple’ bottom lines are “People, Planet and Profits” and each is a stakeholder to a business since each one is in some way influenced by the actions of the business.

Several companies like Electrolux use Environmental Performance Indicators to measure the impact of their green business practices. These indicators help a company track different components of sustainability ranging from regulatory compliance to waste reduction.

However, EPIs may not do the complete job of measuring sustainability and newer methods are being formulated to do so. One of them is The Natural Step framework that “describes the minimum, non-overlapping, conditions necessary for…a socio-economic system that can be ‘sustained’ over time”

But are companies and businesses really going ‘green’? Available statistics show that for most companies, going green is not just ‘feel good’ anymore; sustainability and green business go together all the way to affect bottom lines positively. For example Texas Instruments has predicted that its new Dallas factory is saving nearly $4million a year by using energy-efficient engineering methods. Wal-Mart plans to put green stores in operations and achieve energy use reduction of up to 30% annually.

Johnson Controls, a Fortune 70 company that creates smart environments for vehicles, homes and workplaces has recently posted its 17^th consecutive year of positive earnings. Recognized by the Dow Jones Sustainability Index (DJSI) for its leadership in sustainability, Johnson Controls ties its enhanced bottom line to the positive impact of its sustainability initiatives.

Fairmont Hotels & Resorts has shown how small initiatives lead to big money savings. At the Fairmont Dallas, the hotel has initiated several steps to improve its energy and water consumption patterns. In its Tower Guestrooms, the hotel has fitted windows with reflective lighting that is expected to save the property $50,000 annually on its electricity costs. Also, by installing digital thermostats in all its rooms the company is looking at additional savings on its energy bills.

How do these and other profitable companies in the ‘green business club’ measure sustainability?

Since our understanding of the term ‘sustainability’ is still developing, so are its indicators and methods of measuring it. In this process, newer ways of measuring the impact of sustainability in a business especially those that affect its bottom line are also being developed. The good thing is that we are on our way; businesses understand the importance of sustainability and that in the long run it enhances financial performance, employee retention and long term staying power.