Social pressure and a few positive case studies have caused many corporate executives to consider adopting programs and moving toward more sustainable practices (i.e., investing in reducing energy and water usage, conserve resources, etc.). However, most CEOs and CFOs will still judge sustainability and potential strategies on the likelihood to maximize return for investors. If a project or a program does not meet a suitable return on investment (ROI) – say 15-20% – then it cannot be approved.

As has been shared in this blog, many sustainability practices, such as upgrading lights and installing more energy efficient equipment, should meet such an ROI criteria, if managed right. However, many other sustainability strategies, while clearly beneficial and cost saving, may not meet the criteria numerically. The problem is that many business benefits which are difficult to quantify are excluded from ROI calculations.

While many sustainability projects produce measureable monetary returns, such as reduced energy costs and reduced permitting or waste disposal fees, many other positive benefits are hard to quantify. For example, how can one accurately estimate benefits from more motivated employees and translate that into greater productivity? Even items like reduced turnover and improved health of employees have no clear cut procedure of quantification, leaving the need for assumptions or estimates. Therefore, these benefits are more often not included in the calculations, causing an underestimate of the ROI and financial benefit of a sustainability program and its projects. While your Financial group will undoubtedly perform its own analysis and perhaps calculate an ROI of a proposed project, your group should simultaneously perform your own financial analysis including the benefits of the other elements that Financial has not quantified.

Many sustainability projects require upfront investments of capital for equipment, consultants, designers, testing, etc. before the project begins to generate financial benefits. Getting approval of such capital spending, particularly for new technology of which many in the C Suite are unfamiliar, can be difficult. Change – or the fear of failure or risk – is a problem for getting approval of sustainability projects. It’s easier to stay with the status quo and not have a sustainability program. Thus, education of appropriate executives and demonstration that such projects have worked for other firms should be convincing. Showing that a competitor has successfully incorporated a strategy or that it will give you an advantage over a competitor should be a particularly strong argument.

CCES experienced experts can help you establish a smart sustainability program with a variety of financially-beneficial projects to choose from – to go slowly or “hit the ground running.” We can calculate financial ROIs and paybacks and utilize an interactive, site-specific program to anticipate potential specific roadblocks to good returns which you can address early. We want to help you make this a success. Contact us today.