Charges that sustainability costs too much are bunk

The state of California is a trend setter in many ways, not the least of which is in its approach to environmental regulations. It’s aggressive in setting pollution-abatement standards that, because of the state’s size, sometimes become de facto national standards.

The California Air Resources Board (CARB) is notoriously tough, and both widely praised and widely criticized for its policies. Last week, a trade association said that CARB’s latest regulatory move on diesel fuel was an attack on blue-collar jobs. I’m not qualified to comment on that charge or any of the other complaints about the Board’s rulings. Costs may well rise, but logistics costs have been rising anyway.

The Council of Supply Chain Management professionals says they did in 2010 due, in part, to trucking-company mergers, safety regulations, and reductions in driving hours. The 2011 report will be out next month.

But insofar as CARB’s rulings reflect broader efforts in sustainability and have an impact on procurement, it’s fair to point out that charges about environmentalism costing too much money and wrecking the economy are bunk. The opposite is true.

Walmart, for example, has a video showing that the company has turned waste into a revenue stream. The company has been able to reduce some of its waste by 12 million pounds a month and sell it on the open market. IBM too has found ways to turn sustainability into a revenue generator. Among other things, the company recently opened a server remanufacturing center in China where it will refurbish PCs and some servers, extending their life, reducing e-waste, and selling into a new market. In the services industry, global real estate company CB Richard Ellis realised added revenue from its sustainability programs.

Has the weak global economy slowed sustainability efforts? No, says a recent report from the MIT Sloan Review and the Boston Consulting Group. The report says that more companies than ever believe sustainability is a necessary business strategy, and many claim to be profiting from their sustainability activities. In fact, the report says, Kimberly-Clark has added a net sales goal of 25% of 2015 net sales from environmentally innovative products.

Cynthia Dautrich, global procurement officer at Kimberly-Clark, told attendees at the recent Procurement Leaders Forum in Chicago that embedding sustainability is one of the four key drivers for procurement to define and deliver value. She is right. There doesn’t have to be a conflict between sustainability and profits. So, forget the naysayers on environmental activities. They don’t have a case.