The ROI of sustainability

Sustainability is an important sector in need of focused investment analysis. Investing in sustainability initiatives and measuring the impact you have is not a choice for organisations anymore – it’s a matter of survival. The impetus for all organisations to be more sustainable comes from four major pillars: customers, employees, investors and government regulations.

 

Organisations are often at the crossroads of having to respond to these demands and prioritise concrete action. Technology professionals struggle to make the case to leadership and the board that these investments make sense for the health of the organisation. Conversely, leaders look for meaningful metrics to make sustainability part of the corporate culture. A justifiable sustainability strategy needs to account for the economic – as well as the altruistic – impact.

 

Sustainability is synonymous with optimisation and innovation. Optimisation is often a product of all sustainability efforts, which leads to indisputable business value. Returns from investments in sustainability come from both internal drivers and external factors.

 

Internally, some of the biggest drivers come from an optimised value chain, operational efficiency and workplace satisfaction. Externally, a clear sustainability roadmap leads to more client opportunities, better branding and compliance to government mandates.

 

The actions that an organisation can undertake in every industry fall into three main buckets.

 

Firstly, procurement: energy and water procurement are at the front and centre of sustainability efforts for most companies. There is also the procurement of sustainable materials for manufacturing and product development.

 

Secondly, operations: operational efficiency across the board – including energy demand side electrification and optimisation, process emission elimination efforts, Scope 3 partnerships and data centre management – are all actions organisations undertake based on their individual context.

And thirdly, end-of-lifecycle: e-waste management and participation in the circular economy not only ensures recycling but also provides a better customer experience. This includes designing products for reengineer-ability and dependability.

 

One example of where circular economy and value chain analysis can have a particular impact is the e-commerce and logistics industries. Increasingly, more vendors are realising that customers are willing to pay more if they can be more environmentally responsible during the purchase process. Packaging itself is a space for optimisation, where often the best solution may not lie in recycling material but in reusing it and extending its lifespan. Another area of research is in optimising package sizes to ship as much cargo using as little packaging material as possible while retaining the right balance of automation. The use of AI and IoT in package delivery has increased optimisation opportunities while providing an enhanced customer experience. Every industry thus has opportunities to optimise its value chain and address its Scope 3 emissions.

 

Of course, sustainability initiatives are first and foremost about the planet, and the total impact of these initiatives extends well beyond your immediate sphere of influence. This impact can be hard to measure and quantify – such as the benefits to flora and fauna, changes to corporate culture, the cascading health effects of a clean environment or the preservation of distant Antarctic glaciers. A safe and rich home – Earth as it was meant to be – that we can hand down to our children is priceless. However, businesses are discovering that being green for the planet makes you more green in the bank.

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Learn more about Forrester’s research on the ROI of sustainability

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By Abhijit Sunil, Analyst, Forrester