Many companies struggle with what the right goals should be in incorporating Triple Bottom Line accounting system in their existing bottom line structure. This stems from the view that sustainability measures are seen as an extra cost for doing business and the boards don’t always focus on the debate around sustainability and may not address it in a systemic way as is required.
But some of the early adopter companies have taken the lead and shown the path that it is not only possible to be a carbon neutral company with sound financials but also a naturally restorative company that does no harm to the environment and the community where its reach of operations exists.
Companies can set goals around energy efficiency while planning for renewable sources. Strategies around aligning the internal department structure and modifying the existing supply chain structure to accommodate the sustainability goals is another way a corporation can establish credible targets. Developing a culture of honesty and transparency – either top-down or bottom-up approach can be applicable depending upon the type of industry.
For example, in 2003, Xerox joined the US EPA’s climate leader’s program and set a goal to reduce their GHG emissions from their worldwide operations by 10% over 2002 base line by 2012. Inspired to act due to climate change implications, the company looked internally at their carbon footprint and decided on a 10% reduction goal, of which even EPA approved, as a challenging target to meet. Xerox saved $18 million in the process and surpassed their goal of 10% to 18%, six years early by 2006. Xerox attacked the goal by identifying 2 key areas to work on – operational changes and product innovation. They called it as ‘Energy Challenge 2012’
Operational Changes: Though simple yet effective, these strategies had a multiplier effect through out their global operations. Some of them were:
- Installing more efficient lighting through out their facilities
- Setting all their buildings at optimum temperatures (neither too cold, nor too hot)
- Designing intelligent buildings with direct digital control and sensors all over the factory, that allowed only a portion of the facility to be energized while the rest could be completely shut down
- Improving energy efficiency by upgrading equipments like boilers and compressors
- Reducing the miles traveled by their field service technicians through better scheduling and routing using GPS and remote diagnostic services.
- Double side print incorporated not only through out Xerox operations, but through out their supply chain as well.
These resulted in massive savings, adding to their 10% target. The second aspect of Xerox’s plan was to innovate and bring out new efficient products.
- Designing a new toner that was 25% more energy efficient over their existing model.
- Improving the toner manufacturing process by 22%
- Replacing all the existing single function machines with multi-function machines that did copying, faxing, printing and scanning – all in one device. And they encouraged all their customers also to make that switch.
- Incorporating End-of-Life design in new print cartridges so that used cartridges could be re-manufactured and when it was no longer possible to remanufacture them, the design was such that all parts could breakdown for easy recycling.
- Introduction of erasable paper ink was another breakthrough that came about after intensive research. Xerox found out that about 45% of all print paper makes its way to waste bin within 24 hours. So the paper with new erasable ink print could be reused.
- Making ‘high yield paper’ used 90% of the tree as compared to the existing 50% usage –which meant that half the trees were chopped.
At the time, 10% seemed like a stretch goal. But as Xerox progressed down its sustainability path, they were surprised by the enthusiasm of their employees that kept the momentum through even when they passed their goal 6 years earlier. Xerox, in 2007, then set another goal to reduce the GHG emissions by a robust 25% for the same 2012 target. By the end of 2008, they were at 21% mark and going strong. They were finally able to integrate financial and sustainability aspects together so that both risks and opportunities got reflected and the true costs eventually emerged. Xerox demonstrated that driving efficiency through innovation and operational changes directly affects the Triple Bottom line resulting in not only tangible savings but also increased stakeholder loyalty and brand good-will.
There is no one size fits all strategy to implement TBL. Each company has to look at its entire life cycle of the product or services it delivers – upstream at its suppliers and vendors and downstream at its distribution, packaging and customers – and then focus its efforts on the area where its biggest impacts lie. By not only factoring in the resources usage but also the waste and emissions the company and the supply chain emits, can the goals be prioritized to have the desired effect on the TBL.
Once the company understands that sustainability is not a cost but a way of doing business then truly good things can result which not only deliver immediate gains but are also advantageous in the long term for all its stakeholders.