Outlining ROI to Sustainability
One of the issues that typically arises when a business first considers operating in a more sustainable manner is what the financial returns might be, and when they can expect them. According to Sustainability Dashboard reporting, this is reasonable and has been amplified in the past three years due to the struggling economy. However, enough organizations have developed sustainable operations in recent years that studies are now underway and some have been published, indicating what these near- and long-term expectations are likely to be.
One such study was conducted by the Corporate Executive Research Board in December 2007. According to their research, when business executives from a variety of companies that have adopted sustainable practices were asked, "Where have you seen the greatest benefit from your sustainability investments?" they received the following results:
• Energy savings, 41 percent
• Waste savings, 23 percent
• Raw material savings, 6 percent
• Water savings, 6 percent
As to when respondents expect a return on their sustainability investments, 35 percent indicated there was no "quantifiable cost savings necessary" for them to operate more sustainably or they simply were not expecting an "immediate cost savings."
Thirty-five percent answered they expected their investment to be "cost neutral." However, the others expected a return on their sustainability investments and indicated specific time frames, including:
• Nine percent expected a return in two to five years
• Four percent in five-plus years
• Seventeen percent in less than two years.
While the Corporate Executive Research Board is an advocate for reducing the environmental impact of doing business, they admit "quantitative evidence of the business impact of [sustainable] initiatives is often hard to come by." However, they do expect more studies to be completed in the near future that will help build the business case for companies to become more sustainable.
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