Cost Saving a Reality of Sustainability – Carbon Consultancy Chief Speaks Out

Hugo Kimber

The recently expressed view is that Sustainability or CSR is a luxury that hard
pressed travel and tourism businesses cannot afford in these times of global recession. This argument is accompanied by the view that consumers are less interested in sustainability or CSR. Both views demonstrate a lack of
understanding and are fast becoming a mantra for inaction on sustainability.

The first issue is what is CSR and is it different from sustainability. The answer to
this is ­ not really, think different aspects of the same view. CSR – Corporate Social Responsibility is how companies take responsibility to minimise negative impacts for people, places and the environment and improve their performance to increase positive impact. Sustainability is an easier term to use that is focused on the sustainable use of resources, people, and the planet. The same outcome is
achieved irrespective of the terms used.

The problem with CSR is that it has strong connotations of just “doing good” – simply getting out the chequebook to support charities and local communities and buying offsets to save the planet. Clearly, seen in these terms, CSR looks like a luxury we can’t afford in these thrifty times. Indeed the Financial Times reports
this week that corporate charitable giving is expected to drop by a third this year.

This is not a surprise, but not as some recent research suggested, a reduction in the importance of CSR, more a focus on what it means. Simply getting out the chequebook on its own is not enough, without achievement in sustainable
operations.

Sustainable operations are those that do not use an excessive share of finite resources, maximise efficiency from resources, do not negatively impact people and last but not least are economically viable, the litmus test of their efficiency and relevance. It is not necessary to pay huge premiums to be sustainable and
although consumers are likely to reward companies heavily for being sustainable, it is more likely that they will punish those that fail to be sustainable. The consumer expectation is for companies to have embedded sustainable values into their operation, not adopt them for the purposes of marketing and charging premiums.

At this point in the economic cycle the focus is on reducing costs, reducing capacity, reducing stock, reducing workforce. The bunker mentality has arrived.

This should support, not limit, sustainability as companies awaken to the notion that the first place to look to reduce costs, without impacting operations or staff, is waste – hello sustainability.

The real cost of waste is enormous, in the UK the Carbon Trust estimates business could save £2.5 billion a year by reducing energy waste. Other
frightening waste cost statistics include an estimated £300 million for leaving PCs on overnight another £300 million in water waste for industry and a staggering £8 billion in food waste. In the boom years this waste and unsustainable consumption of resources was below the radar in an increasingly affluent society,
where business boomed and the future was a bounty filled horizon without end.

Fast­forward to today and this waste is a cost to individuals and businesses that could be in the bank and not in the dustbin, down the drain or warming the atmosphere. Companies who are addressing sustainability effectively will reduce
waste and thus costs and impacts and provide an increase in profitability, simple enough. The Cost Saving Reality of Sustainability.

The recently expressed view is that Sustainability or CSR is a luxury that hard pressed travel and tourism businesses cannot afford in these times of global recession. This argument is accompanied by the view that consumers are less interested in sustainability or CSR. Both views demonstrate a lack of understanding and are fast becoming a mantra for inaction on sustainability.

The first issue is what is CSR and is it different from sustainability. The answer to
this is ­ not really, think different aspects of the same view. CSR – Corporate Social Responsibility is how companies take responsibility to minimise negative impacts for people, places and the environment and improve their performance to increase positive impact. Sustainability is an easier term to use, that is focused on the sustainable use of resources, people, and the planet. The same outcome is
achieved irrespective of the terms used.

The problem with CSR is that it has strong connotations of just “doing good” – simply getting out the chequebook to support charities and local communities and buying offsets to save the planet. Clearly, seen in these terms, CSR looks like a luxury we can’t afford in these thrifty times. Indeed the Financial Times reports
this week that corporate charitable giving is expected to drop by a third this year.

This is not a surprise, but not as some recent research suggested, a reduction in the importance of CSR, more a focus on what it means. Simply getting out the chequebook on its own is not enough, without achievement in sustainable
operations.

Sustainable operations are those that do not use an excessive share of finite resources, maximise efficiency from resources, do not negatively impact people and last but not least are economically viable, the litmus test of their efficiency and relevance. It is not necessary to pay huge premiums to be sustainable and
although consumers are likely to reward companies heavily for being sustainable, it is more likely that they will punish those that fail to be sustainable. The consumer expectation is for companies to have embedded sustainable values into their operation, not adopt them for the purposes of marketing and charging premiums.

At this point in the economic cycle the focus is on reducing costs, reducing capacity, reducing stock, reducing workforce. The bunker mentality has arrived.

This should support, not limit, sustainability as companies awaken to the notion that the first place to look to reduce costs, without impacting operations or staff, is waste – hello sustainability.

The real cost of waste is enormous, in the UK the Carbon Trust estimates business could save £2.5 billion a year by reducing energy waste. Other
frightening waste cost statistics include an estimated £300 million for leaving PCs on overnight another £300 million in water waste for industry and a staggering £8 billion in food waste. In the boom years this waste and unsustainable consumption of resources was below the radar in an increasingly affluent society,
where business boomed and the future was a bounty filled horizon without end.

Fast­forward to today and this waste is a cost to individuals and businesses that could be in the bank and not in the dustbin, down the drain or warming the atmosphere. Companies who are addressing sustainability effectively will reduce
waste and thus costs and impacts and provide an increase in profitability, simple enough.

Big examples can be too huge to have relevance to individual companies and employees, so lets see how this impacts at a lower level. Fairmont Hotels & Resorts are justifiably praised for their action and leadership in sustainability, but in an early example of the link between sustainable practices and cost saving they estimated savings from lighting at $61,000 per year at their Sonoma Inn property, equivalent to the gross room revenue of up to 140 room nights.
The cost of implementing efficiency based upon behavioural change is low and processes such as the new Green Globe Index to support achievement and peer comparison in sustainability or simply turning of unused equipment are two examples of how sustainability is not costly to embark upon. There are numerous free resources and it does not require costly external programmes to achieve
success.

The industry needs to make the link between sustainability and profitability fast. If it is able to make the link now and work to reduce waste and carry new behaviour into the next upturn it will emerge in better shape. Consumers
currently worried about carbon emissions, cultural footprints, pro poor tourism, environment, social impact and other issues will have the confidence that when they travel either for work or holidays their travel providers are working towards a sustainable outcome. Travel itself will become more sustainable as an industry, thereby better serving itself and travellers.

Any perpetuation of the ostrich approach to mass engagement with sustainability in the travel industry will degrade its long term commercial prospects and result in increased waste of financial and natural resources. Wasteful is not a good label to have, either actual or perceived, ask the US events industry who have been under strong pressure recently regarding event costs and relevance/value, against a backdrop of emergency federal funding for some of their clients.

Three years ago responsible and sustainable travel was still an emerging trend in travel supported by dedicated practitioners. Carbon emissions and climate change awareness acted as an accelerant, driving environmental concerns up the agenda, creating a trend from what many perceived (some hoped it) to be a short­term
fad. The recession will focus attention further on sustainability, commercial, social and environmental. This could be a great opportunity for the industry to rise to the challenge, save itself money and deliver a more sustainable experience that resonates with its customers. This will also ensure that with increased regulation likely in future, the industry will be well placed for compliance and reduced costs
that may be associated with, for example, carbon emissions reduction.

Embracing sustainability is not complicated and has non­cost spin offs, like increased brand trust and employee engagement for a start. The over 65s who lived through rationing and have an ingrained sustainability bias are amazed at the waste of the “must have” generations that follow them. Returning to the values of reuse, reduced waste and conservation that they would recognise will
maximise returns in the next boom and help many to survive until we get there.

These new habits and accompanying mindset could also provide the basis of sustainability culture with the potential to evolve and deliver the aspiration of a sustainable industry.

Hugo Kimber March 2009

The author is the CEO of The Carbon Consultancy, Co­Founder of Sustainability
Intelligence and an adviser to the travel industry on carbon and sustainability.