Business benefits of resource efficiency
Progress is being made to help businesses improve their resource efficiency and increase profits. Simon Drury from Envirowise reviews the evidence and considers the next steps.
However, there's also a need to make sure that we maintain a holistic approach to resource efficiency so as to address the wider environmental issues around sustainable production and consumption in business.
While climate change dominating the news headlines is good for raising awareness of the importance of environmental issues, the next step is to turn this increased awareness into action in the boardroom and on the shop-floor.
For businesses there are a number of good reasons why the environment is an issue on which further action is needed. Traditionally, actions have often been driven by the increasing levels of environmental legislation with which they must comply.
Today, there are also increasing pressures from within supply chains and from external stakeholders meaning requirements and expectations on companies are now greater than ever.
A barrier to action has been that many businesses have associated environmental improvement with higher costs - a perception often driven by the increasing complexity and demands of regulatory compliance.
Factors such as increasing waste disposal costs and the implications of obtaining effluent discharge and air pollution licences are all seen as cost burdens with minimal direct positive impact on the company performance.
By taking a more holistic view of resource efficiency, as a method of driving environmental improvement, this barrier can be overcome. When businesses review the true costs of inefficiency and waste around the use of raw materials, water, consumables and energy, as well as the associated issues such as wasted labour, these costs are normally 10 times higher than the more immediately visible costs associated with regulatory compliance.
In addition to cost savings, businesses are also starting to see the value of the reputational benefits of good environmental performance. Organisations such as M&S, Virgin and BP have joined some of the early pioneers of corporate social responsibility such as the Body Shop in promoting their efforts to reduce their impact, and play a more positive role in the environments and societies in which they operate.
While there is a growing trend towards a greater recognition of the cost savings and reputational benefits - a change no doubt helped by the heightened general awareness of environmental issues - actually driving behavioural change is now the vital next step.
Underpinning all of the best examples of where businesses have made significant improvements to the sustainability of their operations is resource efficiency. It is the clearest form of environmental action which can drive cost savings and most businesses can identify substantial savings from implementing a range of measures.
Resource efficiency should not be viewed as just an environmental initiative, but an important business process that can reduce costs and save money.
Research by Envirowise has found that waste (or inefficiency) typically costs businesses around four per cent of their turnover.
In addition, effective resource management and sound environmental performance have an increasingly important role to play in reducing an organisation's risks related to the liabilities of legislative non-compliance. A situation which is increasingly recognised and scrutinised by investors and shareholders.
In practical terms, resource efficiency is about reducing and, where possible, eliminating waste and pollution at source. There is a clear hierarchy for effective waste management from elimination, through reduction, re-use and recycling to ensure disposal is only used as a last resort for those materials which can't be managed further up the hierarchy.
At present much of the focus is on recycling, however, this should only be seen as a temporary measure to help reduce the amount of waste for disposal. The real benefits are to be had by reducing and eliminating the waste in the first place. The benefits of this approach to waste management are clear and well understood by businesses - especially in light of the increasing cost of landfill.
A number of organisations Envirowise has been working with in the food and drink industry provide clear evidence of the action that can be taken and benefits gained.
The big issues for this industry in terms of resource efficiency, are the use of water, packaging, energy as well as raising internal awareness, maintaining competitiveness and meeting the customer's requirements.
Carlsberg UK Ltd, for example, implemented a programme to improve process software, cleaning and metering while at the same time reducing solid waste, which led to a saving of £818,000 per year.
Another case saw a major confectionary manufacturer change the line speed at its packaging plant which helped reduce reject costs by £120,000 per year, avoiding 500 tonnes of waste making production cost savings of around £35,000. In both of these cases the cost and time involved in reviewing current activities and implementing the resource efficiency measures were far out-weighed by the eventual savings.
For those of us looking to promote resource efficient practices amongst business, the challenge is to get beyond the basic awareness of the benefits, which in many cases already exists, and facilitate action and ultimately advocacy on the issue.
For successful businesses, cash flow, customers, staff and quality are all seen as top priorities. The best way of getting the environment on this list is to demonstrate the positive cost implications of resource efficiency and the potential impacts of not taking action.
The demands for business to play an even greater role in protecting and maintaining our natural environment are only going to grow as is the scrutiny from stakeholders, who are increasingly considering environmental factors in their decision making processes, be that as an investor, consumer or supply chain partner.
If the moral case for more sustainable production and consumption is well established, we now also have the economic evidence to make the business case, there's no excuse for businesses to be resource inefficient.
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For more information on Envirowise and its activities visit www.envirowise.gov.uk or call the free helpline on 0800 585 794.