Environmental sustainability is a key consideration for business operations in the 21st Century. The imposition of emission trading schemes or carbon taxes requires that companies review and streamline their business operations to ensure as little environmental impact. Consumers are also calling for greater environmental sustainability (Ipsos MORI Reputation Centre – Sustainability Issues in the Retail Sector).

Projects that companies can undertake to improve environmental impact outcomes include:

  • eliminating waste in production methods
  • implementation of lean production systems
  • development of new technologies to reduce impact
  • voluntary participation in carbon offsetting schemes

Eliminating Waste in Production Methods

When producing any good, waste may also be produced. This can be eliminated in simple measures through reducing the amount of packaging or providing opportunities for recycling of components not used.

Another way to eliminate waste in the production chain is to undertake a review of current production methods and supply chain solutions and benchmark findings against industry best practice.

Implementation of Lean Production Systems

Lean production systems, such as the Toyota Production System, aim to eliminate waste and improve quality. Efficiency is the key to a lean production system and implementation of a lean production system based on work teams can also improve employee engagement. Based on a concept of work flow and an ordered work environment, lean production systems can improve both quality and output of work.

Lean production systems were originally developed in the assembly line process of the Toyota car manufacturing plant in Japan, however the principles and methods have since been adapted to fit other manufacturing industries and service industries.

Development of New Technologies to Reduce Environmental Impact

Supporting the commercial development of new technologies to reduce environmental impact may be a suitable strategy for companies involved in natural resource intensive production activities, such as brewers, electricity providers and mining companies.

Options for supporting the development of new technologies to reduce environmental impact include

  • participating in venture capital partnerships where the company assists an innovator to bring a new technology to commercial development;
  • creating a working group of employees to research and develop environmentally sustainable practices and technologies; and
  • partnering with a community organisation working in the environmental sustainability field in order to support the work of the community organisation.

Participating in a community business partnership may bring an advantage in corporate social responsibility ratings to a company.

Voluntary Participation in Carbon Offsetting Schemes

Although many governments have imposed emissions trading schemes on companies in heavy industries, any company may voluntarily participate in carbon offsetting.

Carbon offsetting provides an opportunity for a company to reduce its environmental impact by purchasing carbon offsets from a provider. The money exchanged is then used by the carbon offset provider to undertake environmentally sustainable activities such as re-forestation, research and development of renewable energy sources and energy efficiency improvement projects.

There are many benefits for business in improving environmental sustainability practices including an improved corporate social responsibility rating and increased trust among consumers. There is also the opportunity to improve market share through advertising campaigns targeted at the green consumer.

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Our LEP’s vision is

“To create and foster in Gloucestershire, a sustainable, low carbon economic environment in which businesses flourish, communities thrive, and individuals have the opportunity to reach their potential.”

These are laudable words in the ‘Integrated Economic Strategy’ but what does ‘a sustainable, low carbon economic environment’ mean and what will it look like for our £11 bn per annum local economy?

Slowness to adapt and lack of innovation drove retailers HMV, Jessops and Curry’s under. Yet this is also happening throughout all products/services and their supply chains. Suppliers in the built environment have to meet onerous environmental requirements which require massive investment in new skills and technologies often at lower margins. Food manufacturers are required to reduce impacts on energy, packaging, waste and poor nutrition…. in fact there are endless examples in every sector of how we are moving beyond incremental improvements in order to keep prices down and increasingly seeing innovation driving market advantage.

It is this holistic view which is known as ‘sustainable economic development’. The word sustainable applies to longevity – not just environmental considerations, although they are increasingly the key driver as energy prices increase and resource scarcity becomes a concern. For example, Avis recently acquired Zipcar for $500m as car ownership is being disrupted by the city car clubs where for £6 per hour you have the convenience at a fraction of the annual cost of ownership and worldwide accessibility under one membership. This is what’s known as a disruptive model. Providing customer value and creating a market opportunity which forces obsolescence in the traditional model. Great for one business; fatal for the other.

www.zipcar.com

Indeed, ‘ownership’ is one of the biggest issues in our consumer-based economies where intensive resource use and massive waste occur because we expect to ‘own’ things we seldom use. Transforming to these ‘closed loop’ models and their challenges takes strong strategic leadership but the rewards could be great for those who anticipate; and the writing may already be on the wall for those who dismiss ‘the shift’ and arrogantly assume it will fail. Remember HMV wrongly assumed music lovers will always want to browse in a store and own a physical CD – and they did, until they enjoyed the convenience and cost-advantage of downloading. All businesses should be thinking about the indirect, as well as direct risks to their businesses, collaborating with their critical supply chains and planning for proactive responses to create a truly ‘sustainable economy’ for Gloucestershire.

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