Belfast Telegraph

Friday 26 December 2014

Companies learn how to go green and still stay in black

Can businesses reasonably be expected to fight the recession, improve competitiveness, capture new markets and improve their profitability, and at the same time tackle climate change problems and gain credibility through operations which respect the need for environmental sustainability?

Northern Ireland businesses are increasingly facing this challenge. This year, 56% of the larger businesses took part in the annual environmental benchmarking survey, organised by the Arena Network through Business in the Community (BiTC), which is published today. They answered questions on how they are coping with sustainability questions.

Each business was given an achievement score based on its actions and then ranked against the others.

Gaining a result of over 90%, top of the league table were: BT Ireland, Seagate Technology, Henderson Group, InterFlor, Diageo, Farrans, John Graham (Dromore), Phoenix Natural Gas and Belfast Harbour Commissioners - 32% of all the businesses scored over 80%.

In contrast, 10% of the results fell below a 40% outcome.

The league table, placing each of the 139 local businesses in an overall setting, can be found at www.arenani.org.uk.

The often unspoken attitude in many businesses is that, whilst 'going green' and reducing the carbon footprint are eminently sensible and desirable, the immediate pressures are to cut costs, protect sales and to keep the business going in difficult circumstances. Being politically correct calls for worthy gestures but not with extra expense or reduced trading margins.

Businesses sometimes reduce the sustainability, or 'green' issues, to an either-or dilemma. Can businesses be sustainable and also profitable? The local evidence is that it can happen. The real test lies in the question of whether operating sustainably needs to be a serious threat to profit margins.

Of course, operating within sustainability constraints can mean lower profit margins. When that happens, the decision making is less straightforward. Customers and shareholders might support a more ethical set of policies. Non-compliant competitors, however, may be only too willing to exploit such short-term opportunities.

The Arena survey points topics and behaviour questions where there is scope for improvement.

First, the evidence shows that even for firms in the same business sector, there is a large gap between the scores of the highest and lowest businesses. For example, the construction industry attracted an average score per business of 68% but whilst two large firms scored over 90%, five scored under 60%. This spread of results was found in diverse sectors such as engineering, food and drink processors, general manufacturing, retailing and general services.

This diversity in the overall results leads the survey authors to suggest that there can be a close link between improved business efficiency and environmental improvement.

Second, in a suggestion that businesses should be more explicit in taking the credit for improved environmental standards, the survey found that 98% of the participants have adopted explicit environmental policies and objectives. This high figure contrasts with the smaller numbers who make information about their policies more widely available.

Only 62% publish their environmental objectives and only 57% publish their targets. Whilst a degree of caution is not wholly surprising, the survey authors argue that, for the wider benefit of the community, greater disclosure would be a useful incentive affecting everyone.

Third, the survey points to caution on some aspects of environmental performance.

The number of businesses able to claim improved 'green' travel policies is lower than those who have active policies for energy or waste management.

Even in the areas of energy and waste management, the 2009 survey suggests that although most firms have explicit policies, demonstrable improvement has slowed. There are further challenges to tackle.

In a parallel development, invoking the support of managers in promoting leadership and sustainability, BiTC recently invited over 200 senior managers to meet and listen to Sir Stuart Rose, chairman of Marks & Spencer and also national chair of BiTC.

To encourage commitment to sustainability goals, Sir Stuart invited his audience to endorse six climate change pledges (listed in the box).

With the help of clever voting machines (and a progressive audience) the answers were never in doubt.

The question now is whether these answers will be reflected in local management actions.

The Northern Ireland environmental survey offers a unique factual base to show how environmental issues have reached the business agenda.

Following Sir Stuart's initiative, with more explicit action on carbon emissions, the challenge now becomes more testing.

Is business in Northern Ireland now ready and able to measure its carbon emissions and, just as important, can efforts to reduce carbon emissions be consistent with maintaining the profitability of local business?

Business viability must be maintained just as environmental damage must be constrained.

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