Last week a new study appeared that shows (once again) that improving environmental performance is good for business. OECD economists found that environmental regulations permanently boosted productivity.
The other finding of the new study: less productive businesses were likely to see costs rise. In other words, poorly run businesses don't use environmental regulations as an opportunity to stimulate innovation. They continue on as normal, pay the costs and then complain about the costs to anyone who will listen.
For fifteen years now I have been helping businesses improve their environmental performance. At Jimmy Possum we reduced power bills by an average 15% in their stores and they saved money. At Bendigo Community Health Services we reduced the power bills at two sites by 11% and 13%. At Swan Hill Rural City Council we reduced the power bills across four sites by 9%, saving money. At St John of God Hospital in 2014 we increased recycling by 700%, saving money. Yes, that was 700%.
Each of these businesses is in the early stages of transformation. They are reducing their impacts. Being less bad. But what about businesses that are further down the path? Interface Carpets have reduced their impact by 80% since 2004 and have a goal of zero impact by 2020. They report saving $400 million, a huge improvement in their products driven by design for sustainability, a massive improvement in attracting and keeping the best staff as they share a common higher purpose and that the goodwill of the marketplace has been astonishing. No amount of marketing for any price could have produced as much goodwill. Regulation anyone? Do you think Green Tape is ever mentioned at Interface?
“But it’s just not reasonable…” I hear the Industrial Revolution brigade pronounce importantly as they stare down from their dusty parapets, “…Green Tape compliance is a cost to be borne by business!” Australian Treasurer Peter Costello once said that only when the economy is strong can we afford to protect the environment. In 1992 George Bush senior spoke of a "balance" between protecting the earth and making money.
What they fail to see is that many of the costs of doing business are also environmental costs. Fuel, electricity, gas, water, raw materials, waste and fleet all impact on the environment. Reduce these costs and you have a more efficient business with a lower environmental impact. If business takes this thinking further and imagines how these might be eliminated through design, planning, goal setting, learning and trial and error, then culture, products and services can be remade, improved and reimagined in a big way. It’s a win-win situation.
Staff are generally the largest cost for business. As Interface found, their sense of a shared higher purpose attracted the best people and kept them together. That's hard to buy. Staff turnover and lack of quality people can ruin business. Investing in a green building can bring increases in productivity too; the City of Melbourne CH2 building boosts productivity through less sick days. A study by the Victorian government showed green buildings boost employee productivity, health and more.
I once heard someone say that regulation is a sign of design failure. The evidence suggests that if you have to even worry about "compliance" (what a horrible word) then you haven't done your job properly. Innovation is always a better path for your business than complying with regulation.