Sustainability is a big opportunity

Jan 31 2008 Agenda

By Geoff Percy

In the last year the enlightened in the business world have realised that not only is sustainability one of the 21st century's critical issues, but sustainable development is the bed-rock of future business growth.

Research from BASE tells us that UK business faces a potential £150 billion bonanza if it grasps sustainability as an opportunity. We are all in someone else's supply chain, and we all have one of our own. The lesson is to see the upside, to partner with suppliers and customers, and to make the shift to zero carbon models the norm and not the exception.

There is already change, real change happening.

Last November, the CBI published its much-heralded report 'Climate Change: Everyone's Business'. Its task force, headed by BT's Ben Verwaayen, determined that carbon will become the new currency and the cost of moving to a low carbon economy and meeting targets will equate to an investment of £100 per UK household per annum by 2030. This isn't as scary as it seems - it's under one per cent of GDP.

The report urges early action, places an emphasis on energy efficiency, calls for higher investment in clean technology, for empowering consumers to make low carbon choices and putting an effective price on carbon, alongside changes to the tax regime.

A good number of the UK's larger businesses are also making plans, ranging from significant growth in the take-up of participation in the Carbon Disclosure Project to the efforts of individual companies to reduce their own impact. Notable among these is M&S with its now famous 'Plan A', which includes targets for minimising the waste and emissions resulting from some 35,000 product lines.

As might be expected, BT has also taken the lead, producing a ground breaking report - 'Action or Aspiration? Sustainability in the Workplace'. This signals a shift in approach, and one that is fast being adopted elsewhere in the business community. Partnering with the Economist Intelligence Unit its main findings were that, while the majority of business lagged behind the rest of the world in seeing sustainability as an opportunity, change was afoot.

BT has taken up the baton and is introducing programmes across its business to achieve diminished climate impact, and at the same time is experiencing it as a value proposition. Much of its action reduces costs, and in future will mitigate penalties. Ben Clarke of Kraft has also seen the light, and says, in particularly blunt terms: "Sustainability is about profit."

As Tom Burke, one of the country's foremost commentators on the subject, explains: "Increasingly large global companies and public sector bodies are coming under pressure to manage their supply chain sustainably. Old-fashioned suppliers might see this as a threat; forward-looking companies will see the opportunity and seize it."

He uses Wal-Mart to illustrate his point. "In signing up to the Carbon Disclosure Project they have also signed up to reporting on the carbon footprint of their supply chain. This will inevitably lead them, over time, to prefer suppliers who have themselves reduced their carbon footprint."

So sustainability isn't about 'going green' as a reaction to reputational and regulatory risk, it's an enormous new business opportunity. Research released today by BASE breaks down that opportunity here in the UK, region by region, and for the West Midlands alone they put the potential gain at £11.85 billion.

So, what are we waiting for? 

* Geoff Percy is Chairman of the CBI West Midlands region and CEO of Accantia Health & Beauty Ltd, based in Solihull.