The Green Advantage is comprised of the numerous ways in which a business will create value for itself and its stakeholders when it commits to a strategy of sustainability. Among these ways are cost reduction, product differentiation, risk reduction, brand enhancement, and employee attraction and retention.
Progress towards industry cost leadership through cost reduction utilizes green tools such as pollution prevention, energy conservation, and lean manufacturing, and these can be implemented with the assistance of a sustainability consultant. Pollution prevention involves such methodologies as source reduction by product and process modifications, reuse, and recycling. Lean manufacturing involves optimization of the internal value system to reduce waste of all types (not just pollution) and increase quality, and can be specially tailored to address environmental issues.
Achievement of competitive advantage through product differentiation uses sustainability techniques such as green chemistry and engineering, hazard assessments, alternatives assessment, product certification, etc. Green chemistry and engineering involve clean technology in the form of fundamental redesign of products to eliminate human health and environmental hazards, reduce energy consumption during manufacturing, reduce production waste, and increase biobased and recycled material content. Hazard and alternatives assessment involve identifying product ingredients and evaluating potential ingredient replacements that are less hazardous. Product certification can identify products that have been evaluated against recognized market standards of environmental quality to make them stand out compared to similar products. Many of these tools are outside of the areas of expertise of companies, and sustainability consultants (such as Green Advantage Consultants) are often utilized for guidance in their implementation.
Risk reduction can be achieved through employment of similar sustainability techniques as are used for cost reduction and product differentiation in order to reduce worker health and safety risk, brand risk (often known as “headline” risk, consumer health and safety, risk to communities and the environment, market exclusion, future liabilities (perhaps due to contaminated groundwater or disposal sites), and legal risk. Greener, more sustainable, more valuable companies are ones that take full advantage of sustainable methods to reduce their risks on many fronts.
Having a reputation for being more sustainable or greener than the competition can enhance the value of a brand – consider Interface, Seventh Generation, Toyota, Patagonia, and Method – all built not only on a reputation for performance but known for sustainability as well. Interface was able to sign a contract with Ford Motor Company to provide interior fabric for a new hybrid vehicle in part due to their reputation for sustainability. The prominence of the Prius hybrid car brought sustainable enhancement to the Toyota brand.
Having a reputation for being more sustainable than the competition can give a company a competitive advantage by giving it the ability to attract and retain highly qualified employees. Companies are finding that workers are increasingly showing a preference to work for companies that have a reputation for environmental and social responsibility, and when hired, they tend to stay there (which reduces turnover costs, which can be up to 1.5 times the annual compensation for a professional employee, thus contributing to a cost advantage). In various surveys,
- 71% of employees were found to want to work for companies that commit to social and community concern
- 70% of employed Canadians would consider changing jobs if their employers did not operate in a socially responsible manner
- 83% of employees in G7 countries say a company’s positive reputation for corporate social responsibility (CSR) increases their loyalty
- MBA students are expressing more interest in finding work that offers the potential of making a contribution to society (26% of respondents in 2007 said this is an important factor in their job selection compared with 15% in 2002)
- MBA graduates would sacrifice an average of $13,700 in salary to work for a socially responsible company
- 40% of MBA grads rated CSR as an “extremely” or “very” important company reputation measure when job hunting
- up to two-thirds of MBAs are looking for employers who share their values.
Staff retention issues can cause increased workload for remaining staff, increased operating costs, loss of business to competitors, fall in customer service standards, delays in developing new products and services, and difficulties introducing new working practices.
Thus, sustainability can play a key role in attracting and retaining top talent, thus minimizing the risk of such people going to the competition and giving them the competitive advantage that is engendered by having the best people in an organization. Sustainability draws job seekers because it can be a source of employee pride. Sustainability actions often lift a company’s reputation and status, leading many job seekers to believe they’d feel proud to work for a prestigious organization admired for its sustainability. Sustainability draws job seekers because it implies the company cares about its employees. To some job seekers, sustainability initiatives suggest that the company genuinely cares about the well being of society more generally, and therefore must treat its own people — its employees — well. Sustainability draws job seekers because it helps them connect specific organizational values to their own personal values.
Studies have shown that the more that they agree that the company is engaged in worthwhile sustainability efforts, the more employees are engaged in the program and dedicated to their work. Various studies have shown that higher employee engagement results in greater business benefits and organizational performance, greater employee retention and morale, better customer service, lower absenteeism, improved personal health, and less job stress. Most, if not all, of these can tracked straight to the financial bottom line. 83% of employees in G7 countries say a company’s positive CSR reputation increases their motivation. High performers have been shown to generate up to 67% more in revenues than average performers.
Companies are catching on that even working in sustainable buildings is good for their employees and good for their bottom line, in the following ways:
- increased employee goodwill
- improved employee attraction
- improved workforce productivity
- greater employee retention
- improved employee health