Calculating Benefits

While cost-benefit analysis, net present value and internal rate of return calculations are valuable tools to sell a business on a sustainability project, other factors should be used when discussing the value proposition.

Author Bob Willard, The Sustainability Advantage, has done interesting research to calculate bottom-line benefits to businesses that implement sustainability projects. Employee recruitment, attrition and productivity factor into the calculus. So do market share and insurance costs. 

  • Reduced recruiting cost (-1%)
  • Reduced attrition cost (-2%)
  • Increased employee productivity (+10%)
  • Eco-efficiencies in manufacturing (-5%)
  • Eco-efficiencies at commercial sites (-20%)
  • Increased revenues/market share (+5%)
  • Lower insurance and borrowing costs (-5%)

In the aggregate, Willard argues that these benefits offer a profit increase of at least 38%. Add to this calculus the difficult to quantify, but nonetheless meaningful, spiritual benefit of being a good steward of our environment for future generations. 

For those who try to motivate business managers to implement sustainability projects, broaden the conversation beyond operational cost savings. Some of the benefits listed above may resonate with your target audience and inspire her/him to agree to implement your proposed sustainability project. 

Photo courtesy of Tecnowey

Benefits Besides Cost Savings

In 2003, Metro Portland’s government set out to study the barriers and benefits of donating surplus prepared food. The metropolitan area was throwing away 360 million pounds of food annually. While their overall recycling rate was 57 percent, the diversion rate for food waste was much lower. The solid waste agency wondered what factors motivated restaurants, cafeterias, grocery stores and schools to donate food; and what factors hindered them.

At the same time garbage trucks full of food waste were headed to the landfill, the Oregon Food Bank was struggling to find sources of nutritious food. This was when Oregon had one of the nation’s highest rates of food insecurity. 

As the solid waste agency studied the barriers to food donation for their "Fork It Over" food diversion program, they learned that businesses had many concerns. 

·        Will we be liable if someone becomes ill after eating this food?
·        How will we ensure the food will stay in the safe zones (<40 degrees or >140 degrees) until it can be consumed?  
·        How much additional time and labor will my staff need to spend?
·        Can someone come pick this up for us?

The most surprising point about this story has to do with the perceived benefits, though. When asked what motivated them to donate excess prepared foods, the staff at the restaurants and grocery stores did not say “avoided cost of disposal” or “tax write-off.” Those were attractive benefits Metro Portland had mentioned but not the businesses' main motivation. Most stated that they joined the program because “it’s the right thing to do.” Food service staff disliked throwing away whole pans of lasagna, platters of baked chicken and bowls of salad when they knew many people in the region did not have reliable access to affordable, nutritious food.

For those of us who work with businesses to implement energy efficiency, water conservation and waste prevention projects, it is interesting to hear that more than just operational cost savings motivate business leaders.  

No-Cost Efficiency Projects

A few years ago an accounting firm with 80 employees was using office paper at a rate of 200 tons per year. One of the senior managers thought the company could reduce this number and rolled out a comprehensive paper reduction program to all employees. She promised to throw a special party for all employees if the firm reduced paper use by 10% per year. By the next year the firm’s paper use had dropped 40%. 

No upfront investment was needed for the accounting firm’s paper reduction program; yet for the project to be successful, the business needed someone embedded in the company to shepherd employees through the change process.  The project manager worked with their green team to roll out one paper reduction strategy at a time. She tried to keep communications about the project interesting and fun.