If companies are looking to cut costs, one strategy allows them to do so while also addressing another big issue—environmental sustainability. Water conservation, reduced energy consumption and increased recycling can pay dividends in terms of operational cost savings. Envirowise, a UK government-backed environmental consultancy, believes that British companies could save £9m a day through water efficiency measures such as fixing leaks.
There is a growing body of evidence to support the idea that resource efficiency and environmental conservation can contribute to cost savings. In the US, when KKR, a private equity firm, and Environmental Defense Fund worked with Sealy, a bedding manufacturer, improvements in process efficiency generated by the collaboration saved Sealy more than US$4m in material costs. Moreover, reducing scrap per bed by 16% avoided 650 tonnes of solid waste.
"There are enormous opportunities in creating process efficiencies using environmental controls as filters," says Erin Dobson, director of corporate responsibility communications at Nike, a footwear and apparel company. "Increased energy efficiency and reduced waste outputs, as well as harnessing the innovations that will come from working to solve environmental challenges, will provide unique opportunities for cost savings."
Our survey indicates that many manufacturers see the benefits of energy efficiency. Energy consumption cuts is cited by 36% of respondents as the best way to improve their company's cash position in the next year, and around 60% see environmental measures as helping to reach new customers.
However, a perception remains among some manufacturers that addressing climate change and environmental sustainability raises costs. A smaller proportion of respondents (45%) see this as generating cost savings than those who believe it would not deliver those savings (55%), compared with 64% who believe these measures would drive up their company's process costs.