Monday, September 24, 2018

Sustainability isn’t expensive; it’s profitable

Sustainability isn’t expensive; it’s profitable
March 12
19:45 2018
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BY KENNETH AMAESHI

Imagine a bank with 600 branches and N1m monthly spend on diesel per branch. In a month, it spends N600m on diesel only. This year alone, it is likely to spend up to N7.2b on diesel. All things being equal, and if this trend is sustained, it will spend about N72b on diesel in a decade. Imagine the implications for telecom firms with diesel-powered masts in different locations across the country.

Think of a public sector organisation with 200 service outlets in the country. An outlet uses 5 reams of paper per week. That’s 1,000 reams of paper in a week, 4,000 in a month, and 48,000 in a year. Assuming a ream costs N2,500, that’s already N120m in a year and N12b in a decade.

On one hand, the question then is: are there alternatives to diesel? Beyond its financial implications, diesel power is also not good for the environment, climate, and air quality. In other words, can renewable energy (e.g. solar power), which is cleaner and in some cases cheaper than diesel power, help? On the other hand, can information technology (i.e. paperless office), which is cleaner and cheaper, help the public sector organisation?

These scenarios are eloquent testimonies to the benefits of sustainability. The same logic can apply to travel expenses in the presence of possible alternatives such as video-conferencing. Preventable human right issues, as well as health and safety risks, can save an organisation significant amount of money, and may even lead to innovative opportunities. These are only realisable with a sustainability mindset and culture.

Sustainability has become a new mantra, a philosophy of sorts. It however means different things to different people. If one takes the literary meaning of the word, it simply suggests longevity or the ability to continue to be in existence irrespective of counteracting pressures. Another word often used in this regard is resilience. While longevity and resilience are integral to sustainability, they tend to, somewhat, present a narrow and limited view of sustainability.

The broad view of sustainability goes beyond resilience and longevity and emphasises the need to balance environmental, social, and economic considerations in decisions. It is directly linked to the quest for sustainable development – a development that does not inhibit future generations in their quest for development. It recognises the nested interdependency amongst the economy, society, and environment.

In other words, the success of the economy is dependent on the viability of society, and the success of society is linked to the viability of the environment. As such, without the environment there will be no society, and without society, there will be no economy. The three are interwoven. Sustainability thus strives to ensure the integrity of this nested interdependency. This is very much at the heart of the Sustainable Development Goals (SDGs).

Unfortunately, sustainability is often and erroneously associated with high cost. It is also often assumed that sustainability is always expensive. This is a long-standing myth, which tends to constrain and stifle managerial and organisational innovation.

The other disappointing approach to sustainability is to view it as what organisations should do once they have started making money. In that regard, sustainability becomes a luxury good and not a contributor to organisational survival. This view is often peddled by small and medium sized enterprises as well as nascent entrepreneurs. What they often miss is the fact that sustainability thinking and culture can be an efficient way of utilising and maximising organisational resources for both short and long term profitability.

Sustainability has also been seen and described as Western concept and practice. This is not far from the view of sustainability as a luxury practice, given that the West is seen to have developed and can now worry about the exotic tastes often wrongly associated with sustainability. As much as sustainability is a quest for a higher quality of life, it is not a concept and practice restricted to the West. It applies to all. Some people in the developing world now see China as a role model. In their view, if China is able to lift more than 500m people out of poverty through massive industrialisation and aggressive international trade, without taking cognisance of the implications of that on sustainability, then it makes sense for other developing economies to do the same. What is often not considered are the untold environmental and health hazards many Chinese are currently burdened with. They also tend to miss the current efforts the Chinese government is making to curtail and contain these negative societal and environmental impacts at huge fiscal and human costs.

The often missing link in the sustainability discourse is the fact that economic growth can be greener and cleaner. Most developing economies, especially those in Africa starting from almost a clean slate, have a chance to embrace this way of thinking and working. Sustainability, as a way of life, is a hygiene factor, and doesn’t hurt. However, the absence of it definitely hurts, as has been shown through recent and rapid industrialisation and globalisation strategies.

African economies may be latecomers to capitalism; however, they have the opportunity to redefine capitalism in the continent for the world. African entrepreneurs and entrepreneurs in Africa can definitely take advantage of this opportunity to build competitive capabilities and excel. Such capabilities will not only contribute to positive bottom line, they will also have significant positive societal and environmental impacts – thereby promoting the triple bottom line in practice.

Sustainability is about efficiency. It requires a different mind-set to appreciate. Entrepreneurs and organisations, who are able to break away from the old frame of reference and embrace sustainability thinking as a new way of life stand to gain enormously. The view that sustainability is expensive is a gross and misleading myth. It can actually save your organisation money, promote innovation, create stakeholder goodwill, and translate to meaningful profit.

In other words, the opportunities inherent in sustainability thinking and practice outweigh any possible misconceptions of sustainability as an expensive endeavour. The cost of doing nothing and sticking with the status quo is even worse, as previous scenarios above have shown.

Amaeshi is professor of business and sustainable development at the University of Edinburgh United Kingdom and a Senior Advisor at ESG Advisory (a sustainability consulting firm). He tweets @kenamaeshi

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