Business models typically focus on achieving growth by exploiting money, people, raw materials and technology, while taking for granted that other resources, such as energy and water, will remain as cheap and plentiful as they have until now.
However, as global economic development increases demand for resources, and as governments worldwide implement policies to reduce the environmental impact of water and energy use, these business models will need to be reconsidered.
To succeed in the future, organisations must adapt their behaviour to reflect the increasing scarcity and rising cost of natural resources and implement strategies to minimise use. They must aim to become ‘low-impact organisations’.
Businesses can start to minimise their resource use by focusing on the following:
Establishing a framework for measuring resource use
With medium-sized organisations in Europe now paying £12 for every tonne of carbon they emit, it is clear that energy use and the associated carbon emissions need to be managed in the same structured and auditable way as money. To achieve this, organisations must implement systems and processes to gain a clear picture of how much carbon they emit, build the cost of carbon emissions into budgets and financial models and allocate responsibility for carbon emissions in the same way they allocate responsibility for financial expenditure.
Aligning incentives with low-impact targets
Organisations can encourage managers to control energy and water use in the same way they control expenditure and headcount, by rewarding them for meeting and exceeding low-impact targets. Likewise, buyers and major purchasing departments such as IT, marketing and HR should be rewarded for collaborating with buyers and encouraging them to reduce carbon emissions.
There are clear financial benefits to organisations that act to minimise resource use. Effective carbon management, for example, can reduce bottom line costs by 15-20 per cent, offsetting the cost of complying with environmental legislation.
A low-impact approach can enable organisations to differentiate themselves and their products and services in the marketplace, thereby capitalising on investors’ and consumers’ growing interest in sustainability issues. Wal-Mart Stores, for example, is developing sustainability indices for its customers that show its green performance, which it knows will be relevant to the next generation of consumers. Similarly, information about how much energy or water a product uses is now available to consumers choosing products such as cars and washing machines, with a product’s low-impact credentials acting as a point of differentiation.
PA Consulting Group has worked with a range of organisations to lower their impact, including helping Hawaiian Electric reduce its carbon emissions by generating more energy through renewable sources and enabling a manufacturing company to lower its CO2 production by 200,000 tonnes per year.
To find out more about adapting your organisation's behaviour to reduce environmental impact, contact us now.