IN MY OPINION: Chartered Management Institute companion Robin Gourlay, chairman of AWG, urges firms to stress the cash benefits of sustainable development

IN MY OPINION: Chartered Management Institute companion Robin Gourlay, chairman of AWG, urges firms to stress the cash benefits of sustainable development - The world seems full of sceptical observers expressing doubts about the commitment of the corporat

by ROBIN GOURLAY
Last Updated: 31 Aug 2010

The world seems full of sceptical observers expressing doubts about the commitment of the corporate world to sustainable development. I find this odd when, for very good reasons, every large company proclaims its concern for the environment, its community-friendly policies and its charitable giving.

To win and retain a licence to operate in today's business and public arenas, most firms recognise that they have to meet the concerns of their stakeholders in many areas not usually associated with commerce.

The problem is that too little attention is paid to the financial benefits of operating in a sustainable way. Companies seem reluctant to speak openly about the positive contribution that community and environmental initiatives can make to the bottom line.

This might be because there is much confusion about what sustainable development actually means.

Often it is assumed to be based simply on altruism, focused only on environmental and social matters. This is quite wrong. In terms accepted by both government and industry, it is about the maintenance of high and stable levels of economic growth and employment while operating in ways that protect environmental and social systems.

I can illustrate this in action by taking the example of a piece of research and development carried out by Anglian Water, the water business of AWG, in collaboration with TXU Europe Power. Together, we have created a system that uses membrane filters to clean the final effluent from Peterborough's waste-water treatment works. This is fed into a nearby gas-fuelled power station and has saved about a million litres of fully treated drinking water, which would otherwise go up in steam - enough for 1,500 homes.

In economic terms, AWG benefits through the development of technology that can be sold throughout the world. We have contributed to profits by deferring the need for investment in new water resources.

The reduced demand for water protects existing water resources and wildlife sites, while social benefits flow from the enhancement of the economic value of both businesses, protecting jobs and local suppliers.

In a more direct example, we're also developing technology that will allow us to cut our energy consumption, a major issue for Anglian Water.

Not only is energy one of our largest costs, but the extensive work we have been doing on eco-foot printing shows it to be our biggest environmental impact too.

Reducing energy consumption clearly produces direct bottom-line benefits for the company, protects the environment from unnecessary pollution and saves precious resources. We're also, once again, creating technology that can be sold profitably to others.

Both these cases demonstrate hard-headed sustainable development in practice.

I am proud to be able to talk about them, and if this were simply a plea for senior people in industry to be more open about their initiatives, my article would probably end here. But it seems to me that the fact that we rarely hear these stories expressed in these terms betrays a more fundamental problem.

As another example, Anglian Water's parent company AWG has recently moved into infrastructure construction and development. The construction industry has an excellent track record of care for the environment and for the communities it serves. In comparing the sustainable development principles of the water sector and the construction sector, I have been struck by the imagination and skill employed by construction managers to reduce waste on site, to avoid unnecessary use of energy and to deliver a building or facility that actively enhances its surroundings.

This is an excellent story, but one that is rarely told. Working in a highly competitive sector, construction managers must focus on cost. In their efforts to keep costs down they do much that matches comfortably the principles of sustainable development. But many take the view - perhaps drawing on that of the sceptics - that if an initiative reduces cost and therefore improves profits, its environmental and social benefits are somehow cancelled out.

This view makes it much more difficult for companies to tell the world precisely how good they are at meeting diverse and apparently contradictory demands. It is a barrier to improvements in understanding of, and support for, business.

My only answer to this problem is to suggest that firms spend at least as much time promoting a full understanding of sustainable development among their employees as among other stakeholders. The benefits of doing so, not just for external perception of business, but for the pride that employees take in their work, can be enormous.

It's undoubtedly true that external commentators ought to have sufficient understanding of business to see the wider benefits of doing profitable things, rather than focusing solely on the concerns of the day. But if companies don't explain how sustainable development initiatives produce financial as well as social and environmental benefits, many will conclude that these initiatives are no more than window-dressing. Sceptical observers might be forgiven for retaining their doubts.

Find this article useful?

Get more great articles like this in your inbox every lunchtime