THE BLOG

Why Going Green in This Recession is a Business Imperative, Not a Brand Choice

18/07/2012 17:33 BST | Updated 17/09/2012 10:12 BST

In the current climate, 'going green' might not be at the top of most company 'to do' lists. Times are tough and there are numerous economic headwinds keeping us busy.

So, am I wasting my time writing a blog post calling on companies to build sustainability into their business plans?

Definitely not and here's why.

In 2007 we set aside a massive £200 million for a five year project called Plan A (because there is no Plan B for the one planet we have), a sustainability programme that pledged to transform M&S by changing the way it did business.

Why so much? Because 80% of our customers were saying they expected us to change but far fewer were willing to pay for it. We had to become sustainable and we had to do it ourselves! There could be no 'on cost' to the consumer of going 'green'.

But in only its second year, Plan A delivered significant cost benefits to M&S and opened up new revenue streams. In year three it returned a net benefit, or profit if you like, and last year (year five) it had a net positive effect to the tune of £105 million.

That's £105 million to invest in the business that we would either have had to find from elsewhere or simply would not have been available to us.

And the figure is even more impressive when you consider that we continue to invest money in Plan A. We haven't scaled back our original plans, we've extended them.

So I'm writing a blog encouraging more companies to build sustainability into their business plans because there is a compelling business case to do so.

And now is the time to act.

Based on previous economic downturns, who would have predicted that during tough economic conditions in many western markets our input costs (energy, commodities, labour and others) would be at or close to a record high, increasingly volatile -and likely to remain so in the foreseeable future? Extreme weather events and growing competition from developing economies for finite resources are driving this volatility. Neither 'driver' is likely to diminish in the next few years.

This is why becoming a more sustainable business is such an imperative.

Using less energy saves you money - being more energy efficient saved M&S £22 million last year. Using fewer raw materials saves you money - reduced packaging saved M&S £16.3 million last year. Using less vehicle fuel saves you money - £2.1 million for M&S last year. Wasting less and recycling more saves you money and generates income - £6.3 million for M&S in 11/12.

And it's not just about resource scarcity driving cost inflation. We need to be very clear that economic hard times are masking some 'seismic shifts' under the established way of doing business. Social media means that everyone is an 'NGO', able to see, comment, recommend or boycott a brand. Consumption based business models are threatened by rapidly emerging approaches utilising swopping and exchanging, a new 'sharing' economy is emerging.

The business case is not just about making savings today but also about creating new revenue streams and preparing your business for a very different future.

So why aren't more companies, doing it? It's a great question that I wish I could answer.

Don't get me wrong. We're not the only company thinking along these lines. Companies like Walmart, Kingfisher, O2, Unilever, Du Pont, GE and Nike have also embarked on their own ambitious sustainability journeys. What makes these companies different? They are not seeking to protect the status quo via a bit of corporate social responsibility (CSR) but rather imagine a very different way of doing business and making money.

But still not enough companies are putting sustainability high enough up the agenda. Why? Perhaps it's the lack of a clear and compelling policy framework, maybe pre-occupation with short term survival during recession. But I think the key reason is fear about the cost of change and a lack of certainty about how to take sustainability to scale.

To the first point, I want to be very clear, there is a substantial short term business case that can accrue from taking early action on sustainability, a business case that can help deal with tough economic times today but also bankroll the sustainability journey into the future.

We've published a paper that shares our learning on this business case and hopefully will inform others.

Why would we share this information?

Firstly because we believe that sustainability is both a moral and commercial imperative. Unless we ALL respond to the social, environmental and economic pressures of the future, business as we know it will not survive in the future.

And because it's a virtuous circle. The more companies that get involved the greater the scale of the industry, the more savings that can be made. We can't build a purely sustainable business on our own, the whole industry has to move in that direction.

Our paper, http://corporate.marksandspencer.com/documents/publications/2012/plan_a_report_2012.pdf, includes eight key lessons:

  • Sustainability budgets should be owned operationally at the 'coal face', not centrally;

  • Engage the finance team; they are the experts able to take the business case on to a whole other level;

  • Looking at the business through a different 'green lens' enables you to spot new opportunities and challenge 'sacred cows';

  • Innovation is key and must be proactively supported;

  • The business case needs to be addressed across the entire organisation, there are so many 'moving parts' in a business and its value chain that they need to be considered as an 'ecosystem';

  • There are potentially much bigger benefits outside your organisation in your wider value chain;

  • Not all benefits can or should be monetised;

  • Sustainability is not just about making a business more efficient; it's also about creating new revenue streams.

Five years ago, Plan A felt a little odd in a busy 'here and now' retail business like M&S. Today it's rapidly becoming business as usual. This shift in acceptance is based to a significant extent on our ability to demonstrate to business people that there is definitely a business case for sustainability today and that it will only grow in the future.

None of us totally understand the huge economic, social and environmental changes that are occurring globally but we can reasonably predict that the businesses prospering in 2020 are very much more in touch with people and the planet.