Report: Why Environmental Investment Makes Good Business Sense

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The environmental benefits of being more sustainable in commercial operations are clear; but what about the financial gains that can be made?
Harvard Business School recently published an article discussing the key reasons why investing in environmental sustainability makes good financial sense for businesses. Obviously this is something that really caught our interest, and we were keen to discover Harvard University Professor Rebecca Henderson's expert thoughts on the issue.
Henderson consults with company leaders and executives who question the existence of climate change, and who therefore don't see the need to implement sustainability policies or invest in energy management software and equipment.
But regardless of their views on the environment, she argues that investing in environmental sustainability can only be a positive step if they care about their organisation's bottom line - which, of course, they all do.
"For many firms, it's possible to act sustainably and make money at the same time," she explains.
In her report 'Making the Business Case for Environmental Sustainability', Henderson outlines three fundamental ways businesses can make a profit from making that leap into sustainability. These include:
'Forestalling risk' - This essentially means taking decisive environmental measures now, to ensure that the business can continue operating even if potential future regulatory requirements arise. It can also help to protect the brand's reputation down the line.
'Increasing operational efficiency' - The report names several organisations who have saved money by reducing their waste or energy usage. One example is IBM, who saved $513 million between 1990 and 2003 by reducing its electricity consumption.
'Selling to the environmental niche' - While many consumers still aren't willing to pay over-the-odds for environmentally-friendly goods, they are becoming more aware of the issue; and these people are no longer in the minority, so it makes good business sense to appeal to them.
So it's not necessarily about whether or not you believe in climate change, but using sustainability analysis to prepare your business for possible future eventualities, and taking action where needed. Even if you don't think global warming is really happening, your clients and customers will certainly be thinking about the issue.
We'll offer Henderson the final word on the matter: "The scientists may be wrong, but do we want to gamble 100% that they're wrong? You don't have to be a believer, you just have to hedge your bets. That's good business practice."



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