The Business Case for Sustainability Assessment
Organizations managing for sustainability focus on the “triple bottom line” — the three bottom lines of planet, people, and profit.
The Business Case for Sustainability Assessment
Organizations managing for sustainability focus on the “triple bottom line” — the three bottom lines of planet, people, and profit. Done well, strategies and actions that improve sustainability on the planet and people bottom lines will also improve the profit bottom line. But it can be a challenging task for any manager to identify the specific strategies, actions, and investments that will support their organization’s sustainability goals.
In my experience, which ranges from startups to leading consumer packaged goods companies, managers who want their decision-making to produce the desired results must consider not only how their organizations operate as a system, but also how they fit into the broader planetary and social systems.
At the same time, it’s also important to acknowledge the fact that there is no one path to sustainability. Every organizations must forge its own path to sustainability, incorporating its unique goals and circumstances.
The combination of a systems-thinking approach and the need to craft a customized path puts great pressure on managers and increases the importance of well-informed decision-making. Fortunately, this is where sustainability assessment can provide measured, valuable guidance.
What is Sustainability Assessment?
Sustainability assessment is a scientific method of measuring the relative impact of an organization’s products, processes, and overall organizational activity. There are several well-characterized methods, including Life Cycle Assessment (LCA) and S-ROI (Sustainable Return on Investment). LCA is a systems tool that can assess the environmental performance of products, processes, and the organization through a supply chain lens. S-ROI broadens the analysis to include social and economic impacts and considers impacts outside of the supply chain.
How Sustainability Assessment Creates Value through Better Decision-Making
Sustainability assessment supports organizations in making informed, measured decisions about the materials, processes, and supply chains that affect their costs, risks, reputation, and innovation.
LCA and S-ROI excel at measuring the relative performance and tradeoffs associated with specific materials and processes. While both can be used at any point in a product’s life cycle, performing these assessments in the early design stage is particularly valuable in comparing the relative costs and impacts of different materials and processes.
Because much of a product’s environmental impact is locked in at the design stage, early assessment can provide critical guidance in the selection of materials and processes before the organization commits to higher investments in the subsequent stages of product development. For example, EarthShift Global recently worked with an early-stage firm in the energy industry and helped their team identify which process would provide the best performance and cost profile. This strengthened the value proposition in their business model and led to approval of the financing necessary to take the project to the next level.
For another client, we measured the relative impact of their raw material compared to competitors, providing valuable, verifiable information to help defend their raw material and reputation from competitor claims.
An important advantage of LCA and S-ROI is their ability to identify areas of greatest impact (hot spots) and help the organization make decisions that avoid shifting impacts from one part of the system (product/process/supply chain/geography/stakeholder) to another. This helps organizations make decisions that result in a net benefit and move the organization forward. A classic example: LCAs of laundry detergent identified the greatest environmental impact as the energy used to heat water at the consumer-use stage. This sparked development of cold-water formulas that reduce energy usage, cost, and environmental impact.
LCA and S-ROI can also help organizations identify opportunities for product and business-model innovation. Working with a client in the commodities market, we helped measure the relative impact and cost of one of their by-products relative to competitive options, identifying a potentially lucrative new revenue stream.
LCA can be used to help organizations earn tax credits. The IRS recently released final guidelines for Section 45(Q) tax credits related to carbon capture. We’ve helped clients earn these credits for 2020 and will help more clients going forward reduce their tax burden.
In summary, managers at all levels can improve their decision-making processes by drawing on the proven scientific method of sustainability assessment, advancing all elements of the Triple Bottom Line; in all the EarthShift Global examples presented above, the companies earned a sizeable positive return on their LCA investment.
As we’ve said since our founding, we exist to help our clients achieve their goals for better prosperity through sustainability. That’s why our team includes highly experienced experts in all types of sustainability assessment, ranging from screening LCA, full LCA, organizational LCA, critical review LCA, and S-ROI. We look forward to helping your organization succeed as well. For a free, no-obligation consultation, email us or call us (207-608-6228).