There is growing evidence that businesses that integrate environmental and social issues into their core strategies financially outperform. According to a 2014 report by Carbon Disclosure Project (CDP), S&P 500 businesses that are leaders on climate change management achieved 18% higher profitability compared to low scoring peers and 67% higher than non-responders.
Despite such evidence, many businesses are still not clear on how sustainable business activities create value within the organisation. This is because the cost of implementing sustainable business activities are direct and easily accountable, however, the value generated is often indirect and spread within different parts of the business. For instance, investment in healthy workplace initiatives might result in higher staff productivity and reduced absenteeism, which would be realised as a benefit within the HR department.
A demonstrable link between sustainability and business value is crucial to building a business case. At JLL, we have been tracking the positive impact that sustainability has had on our revenue, bottom line and employee engagement. Capturing the value generated has helped us achieve greater buy in within the business and we are also starting to use this information to influence investments in higher value-add initiatives.
Fast forward a few years, as sustainability becomes truly mainstream, the need to demonstrate the business case for sustainability will perhaps not exist. But for now, the UKGBC’s recent report ‘Capturing the value of Sustainability’, co-sponsored by JLL UK, offers practical guidance on how to get started:
- Think holistic – Go beyond capturing cost savings (energy, waste, water) associated with sustainable business activities as these do not represent the full business case. Identify how sustainability impacts different areas within the business and try to link it with the most important value drivers for your business, whether its talent attraction, customer satisfaction or brand and reputation.
- Identify indicators – Understand which are the most useful indicators to measure based on sustainable business activities. Indicators should capture the impact (not input) and enable comparison over time. Start off by picking indicators that can be linked to existing data collection procedures.
- Methodology – Due to the widespread nature of impacts, a number of different departments within the business will need to collaborate on methodology and data collection. The methodology might be based on assumptions but the trick is to be consistent with measurements to enable identification of trends.
- Use of data – Consider how data will be used and the various ways it can inform decision making.
Article written by Sonal Jain, Sustainability Director within JLL’s Building a Better Tomorrow team.