This week was the week of the corporate sustainability conference in Toronto.
Hosted by Chartered Institute of Management Accountants, the focus was on the financial aspects of sustainability and making the business case for investment. An interesting and thought provoking discussion.
The argument made was sustainability is increasingly a necessity for staying in business. There is a cost benefit and in many cases this is compelling. Ie the savings generated increase profitability over the long term.
Jim Harris had a excellent slide, from a McKinsey study that detailed the cost/complexity of each sustainability initiative. At least 50% of the initiatives shown were ‘profit accretive’, with many easy to implement.
His comment, was that we could meet the Kyoto agreement requirements, simply by implementing these, becoming more profitable and efficient too…. it was compelling.
There are of course barriers to implementation. The longer investment horizon in particular represents a challenge, especially in a cost constrained world where there is a focus on immediate return.
The core issue here is really one of ‘externalities‘. Although whole life cycle costing tries to address this, it is still somewhat abstract in todays business environment being more complex to calculate and without wide adoption.
Successful examples seemed to be driven by either public pressure or associated legislation had converted the impacts into very real financial drivers, therefore helping the cost benefit analysis.
Certainly a thought provoking discussion and one to watch how it develops.