Sustainable Development

Little doubt remains about the correlation between improved sustainability practices and better financial results: Exhibit 1 compiles the results of close to 160 research papers, most of which found a positive correlation between these two benefits. But which one is the trigger? In other words, do better sustainability practices lead to improved financial results, or does the availability of funds lead to increased investments in sustainability? In this article we explore the issue of causality between sustainability and financial performance, and what it means for various stakeholders.

March 2007 set the date for the “20-20-20” targets in the European Union: 20% less carbon emissions, 20% more renewable energy production and 20% more energy efficiency. Five years and an economic crisis later, and with only eight years left to reach 2020, a recent report states we will fall short of some of these objectives. In the midst of this grim scenario, something stands out: the Covenant of Mayors, a group of more than 4250 European municipalities voluntarily committing to surpassing EU’s “20-20-20” targets”. Can they do it? They can, but most of them probably will not.

I really enjoy that moment, when you finish an assignment and you look back at your deliverable - that handful of slides that kept you up and running - and feel that everything you put in there makes perfect sense. It’s like bringing order to chaos. Fighting entropy. But, is that all? Is this handful of slides the final stage? The result of a work well done? We don’t think so. To reach the final stage, you need to bring your slides to life, you need to make sure that all your ideas and conclusions are implemented (or at least implementable), even in challenging conditions (economic downturn, lack of liquidity, etc...). And one of the best ways to do so is by running a pilot: an old recipe for an emerging issue. 82DBNBG9S443

If you want to reduce energy costs but cannot afford the required equipment upgrades, you’ll likely find an ESCO (Energy Service Company) willing to install everything for free, in exchange for part of the future savings. But if your company is services based, most likely the bulk of the costs are in human resources and in the supply chain, not in energy. Applying the same ESCO model to these areas can thus make a lot of sense.