Get C-level Executives to Understand It’s ‘Crunch Time’ for Sustainability Initiatives
Paul Marushka, CEO of Sphera, the largest global provider of integrated risk management software for the hazardous industries, shares the tangible business benefits of sustainability, not just environmental ones.
When it comes to getting a buy-in for a sustainability project—or any other plan that could be perceived as low priority—you cannot pull any crunches.
Number crunches, that is.
It is no secret that C-level executives want to see solid bottom-line results from their strategic business decisions. Who would not? They want to ensure there is a solid reason to act, and that it will be financially beneficial to do so. When it comes to sustainability, even companies that make decisions for the greater good also end up benefiting the greater good of their budgets. On the surface, procuring a budget for what some consider “nonessential” sustainability issues might appear to be a huge challenge, but it really is not. A sustainability focus is a sound business strategy. Forward-thinking organisations understand the importance of being good stewards for their organisations, their neighbours, the environment, and future generations as well. The real challenge centres around appropriately justifying and communicating the tangible benefits of sustainability
In his recent commencement speech at Tulane University, Apple CEO Tim Cook said: “When we talk about climate change or any issue with human cost—and there are many—I challenge you to look for those who have the most to lose and find the real, true empathy that comes from something shared. That is really what we owe one another.” Cook gets it: It is your job to make people in your C-suite understand sustainability’s importance as well. Making sustainability part of an organization’s DNA goes a long way toward developing a culture of action. The first step is to educate the organisation about the benefits of sustainability. Every year my company, Sphera, hosts a Sustainability Day, which gives our colleagues the ability to learn about the importance of sustainability and even a chance to volunteer for environmental initiatives.
Paul Polman, Unilever’s CEO, and CB Bhattacharya, a professor of marketing and management at the University of Pittsburgh, wrote in the Stanford Social Innovation Review in 2016: “The key to creating a vibrant and sustainable company is to find ways to get all employees—from top executives to assembly-line workers—personally engaged in day-to-day corporate sustainability efforts.”
That can pay big dividends. A 2018 sustainability study from ING Group, a Dutch banking and financial services company, found that 48 percent of the US companies surveyed said that sustainability concerns “actively influence their growth strategies,” and 68 percent of the companies with the most mature sustainability programs said their performance “has helped them to win new business from clients.” Additionally, the report explains how UPS was able to reduce CO2 emissions by 210,000 metric tons and save $400 million annually since 2013 by employing it’s On Road Integrated Optimisation and Navigation (ORION) program, which uses telematic data to make delivering packages more efficient.
To make the case for sustainability, the first number that needs to be highlighted in an extra-large font is “1.5.” This refers to the increase in temperature scientists predict the Earth will realise (1.5°C) between 2030 and 2052 – a generation or less from now—if global citizens do not do anything to combat climate change. As the Intergovernmental Panel on Climate Change reported last year: With increased global temperatures being caused by greenhouse gases and the like, sea levels will continue to rise, some areas of the world will be affected by heavy precipitation, others will experience droughts, and the frequency of extreme weather events will likely pick up. A recent World Bank report found that some countries’ gross domestic products could drop 7.7 percent because of climate change when people “live in locations that could become moderate or severe hotspots by 2050 under the carbon-intensive scenario.”
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After you have explained the problem and the importance of sustainable measures, the next number to focus on is “15.” In 2017, the World Economic Forum posted an article called “How Going Green Can Help the Planet and Your Profits.” The article states that companies that focus on eco-innovation grow at a 15 percent rate compared with a flat rate for their competitors. Indeed, Nielsen predicts the US sustainability market will reach $150 billion by 2021, and the millennial generation is leading the charge. In the survey, 75 percent of millennials said they are “definitely” or “probably” changing their buying habits to focus on sustainable products vs. 34 percent of baby boomers. It is no wonder why companies such as Method went from a small soap business in 2000 to a $100 million company, according to Inc. magazine, by focusing on sustainability.
Focus on the number “50.1 billion.” That is the projected number of Internet of Things devices expected by 2020. Why is that significant? Governments take environmental compliance seriously. The US Environmental Protection Agency in fiscal 2018 alone enforced $69.5 million in administrative and civil penalties. In fiscal 2017, because of Clean Air Act violations, penalties almost reached $1.7 billion.
By employing Integrated Risk Management 4.0 strategies that use data from Industrial Internet of Things sensors, which can play a key role in sustainability efforts, companies can monitor their environmental performance and make prescriptive and predictive decisions to lower their carbon footprint and their risk of being fined for not being in compliance. Although taking initiatives to lower environmental risks might not make breaking news, they still always trump the negative publicity and damage-control expenditures that come from being named on a news report for causing damage to the planet and not being a good corporate citizen.
This takes us to the final number that you should consider highlighting:
$3.3 trillion. The CDP is a not-for-profit organisation that helps companies manage their environmental effectiveness. Its 115 global members have a combined $3.3 trillion in procurement spending, which means they have mega purchasing power. Every year, the organisation surveys its members on supply chain sustainability initiatives. The most recent report found that the 5,500 suppliers queried were able to collectively cut their CO2 emissions by 633 million tons (more than 1 percent of all global emissions). Perhaps even more compelling, especially from a C-suite perspective: “[T]hese were associated with annual monetary savings in excess of US$19.3 billion for those companies, highlighting the frequently compelling business case for taking action on climate change.”
One More Crunch
The numbers add up. Sustainability initiatives promote the common good and are good for your budget. We just need to use the numbers to clearly articulate the economic case for the C-suite and the entire organization of the benefits of sustainability. After all, it is crunch time.
About Paul Marushka
As Sphera’s founding President and CEO, Paul Marushka is responsible for providing overall strategic leadership for the company in developing, directing and implementing go-to-market, service, product and operational plans. Marushka has grown businesses by bringing innovative solutions to market in leveraging software, analytics and technology services. Prior to joining Sphera, Paul served as President of Marsh ClearSight, a business unit of Marsh & McLennan and a leading provider of software, services and analytics for enterprise risk management, safety and compliance management and claims administration. Marushka also has held executive positions at software and data companies such as Fair Isaac Corporation (FICO) and CCC Information Services.
This post originally appeared in the United Nation’s 2019 Global Goals Yearbook, pp. 22-24. You can see the yearbook by clicking here.
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