Most companies pursue sustainability for one of two reasons: either an altruistic concern for the health and future of the planet, or because they are forced to by regulations or to meet customer demand. This cynical view of the world may have been true a decade ago, and may still hold for some corporations even today, but that hasn’t stopped companies from making the most from a difficult situation and actually making sustainability profitable.
A recent article published on Bloomberg.com appropriately titled “Corporate America is saving the world by saving money” provides some striking examples of how some well-known companies have done just that – found ways to turn the extra costs into profit-generating endeavors.
Nike Inc., for example, changed its weaving process to reduce that amount of waste from reaching landfills (more than 3.5 million pounds of since 2012). The change also reduced the amount of raw material and labor needed to make each shoe so saved money in production at the same time it reduced disposal costs.
Even simple things can have a big impact. United Airlines Holdings Inc. is in a constant battle to reduce weight to save fuel and thereby reduce carbon emissions. Printing the in-flight magazine on lighter paper stock saved almost $300,000 per year on fuel.
Patagonia Inc. has always been environmentally aware and dedicated to sustainability. Two years ago, the company added incentives for customers to return used items and not just to keep old clothing out of landfills. Patagonia repairs those items that can be salvaged and re-sells “Wornwear” on its website at a significant discount to the price of new. This is a profitable new product line for the company. As an example, a 3-in-1 Snowshot Jacket that retails new for about $400 was recently listed on Patagonia’s website for $187 to $207. Each re-sale of a high-quality used jacket can net $100 even after paying a reward to the customer for returning the worn jacket.
Nestle is using more recycled plastic to make ever-thinner bottles for its bottled beverages, greatly reducing the emissions from producing new plastic stock required as well as the amount of waste going into landfills. The lighter bottles also save on transportation costs. Nestle recently started offering a 100% recycled bottle for its Pure Life water brand. Coca-Cola Inc. switched its Dasani line from plastic bottles to aluminum cans that are easier to recycle and boost profitability. The cans weigh less, which cuts transportation costs.
Lagunitas Brewing Co. installed a new type of treatment system onsite that cleans the 7 gallons of high-strength wastewater made with every gallon of beer. The process generates methane as a byproduct that the company uses to produce electricity-saving more than $1 million a year on utility bills.
These are just a few examples of how sustainability can be profitable. Reducing the amount of raw materials directly reduces cost, of course. Using recycled and recyclable materials may not significantly reduce material cost, and may even increase it a bit, but the down-stream savings in transportation (lighter materials or less material), and disposal fees for production waste could easily eclipse any additional material cost. Similarly, any reduction in energy usage either directly by more efficient processes or indirectly by reducing product or packaging weight also lowers cost while reducing emissions from energy production and use. There’s also a sales and marketing bonus attached to sustainability efforts. Consumers and corporate customers alike appreciate sustainability and often prefer to buy from suppliers that showcase their environmental achievements.
Dave is an independent consultant, educator and freelance writer serving both the developers and users of software and systems for manufacturers. He has performed analysis, written hundreds of articles, blogs, white papers and case studies and advised software developers on direction and focus. He is an APICS Chapter President as well as a recurring presenter and instructor and is a certified trainer in The Fresh Connection supply chain simulation. Dave can be seen in print and on-line publications and his website is www.daveturbide.com