A NUMBER of companies that have implemented the social, economic and environmental aspects of the business have proved that sustainability has unlimited ability to generate financial returns and enhance corporate reputation.
In an ever-changing world, every company’s management must demonstrate that it can overcome challenges and seize opportunities by convincing the market that it will continue to have access to renewable resources and create value in the long-term.
The corporate business world generally operates based on the pristine capitalist theory, which expresses the view that companies should only expend resources on activities that maximise shareholder wealth.
However, expenditure on sustainability, which does not seemingly pursue the above objective, actually turns out to underlay innovation, profitability and sustainable competitive advantage, as we shall see shortly in the BMW Group case study.
Last week, we looked at the concept of sustainability, explained the three types and further went on to depict a real life scenario on how ZAMBEEF PLC has espoused this concept in its operations.
It is important that we move on to demonstrate how sustainability ultimately results into enhanced profitability and operational efficiency.
One would ask, “After all is said and done on sustainability, what are the performance implications of adopting sustainability into a company’s strategy and operations?”
For this article, I am immensely grateful to the BMW Group Global and South Africa, for their generosity in granting me the privilege of an interaction with BMW, South Africa, Group communications manager, Lynette Kamineth.
The purpose of this interaction was to gain insights on a real life world-class sustainability success story for the benefit of this column.
Essentially, the BMW Group is the world leader in sustainability and has strived to achieve notable financial and operational efficiency performance.
Hopefully our local companies in Zambia will be inspired to achieve and even exceed such levels of sustainability vis-à-vis financial and operational performance.
BMW Group South Africa is a classical high profile example of creating shared value through innovative sustainability practices that has firmly established economical, environmental and social sustainability throughout its value chain.
These sustainability practices could be traced way back to 1973 when the company’s first environmental protection officer was recruited to pioneer environmental management.
In October 2015, BMW Group South Africa undertook a 10-year power purchasing agreement with Energy Company Bio2Watt.
This consistency has played a significant role in setting the company’s objectives, formulating strategies and making decisions.
Imagine, 500 tonnes of waste per day from cattle and chicken farms and other organic waste resources are fed into two anaerobic digesters at a biogas power station to produce the biogas feedstock for a combined heat and power application.
According to Ms.Kamineth, BMW Group South Africa, reduced the average fleet carbon dioxide emissions in 2015 by 3.3 per cent to 147g CO²/km in addition to reducing emissions in the European new vehicle fleet (EU-28) by at least 50 per cent compared to the base year 1995 The BMW Group has further created plug-in hybrid vehicles for four model series: the BMW 2 Series, the BMW 3 Series, the BMW X5 and the BMW 7 Series, which all have carbon dioxide emissions which are less than 50 g/km.
As a result of its continued commitment to corporate sustainability, the BMW Group has been listed in the Dow Jones Sustainability Index, the world’s leading index of sustainable companies, every year.
I am sure that sends you thinking!
That’s an amazing and unprecedented commitment and record, isn’t it? Yes it is! I eagerly yearn to see our local private sector rise to such a
challenge in industrialisation and sustainability, and even exceed the record set by the BMW Group South Africa.
Ms Kamineth further says that since 2006, the company has saved more than €158 million in costs with 2015 amounting to €8.3 million.
Additionally, the efficient dynamics strategy has helped the company to keep its competitive edge with fleet customers.
For example, customers now prefer BMW Group vehicles owing to their lower carbon dioxide emissions compared to competitors.
This has seen worldwide revenues rise in BMW i3 and BMW i8 sales in 2015 from 24,057 and 5, 456 respectively while Drive Now brand users increased by approximately 50 per cent by the end of 2015.
With clean production, the BMW Group has successfully implemented production processes that drastically reduce non-recyclable waste and the generation of solid waste, wastewater and emissions, as well as cutting noise and vibration to a minimum.
BMW’s Rosslyn plant production process now utilizes 34 per cent less energy, 50 per cent less water and 59 per cent less waste and currently, 25 – 30 per cent electricity requirements being generated from renewable sources.
It is clear that the voluntary adoption of sustainability in company’s business models inevitably results in long term innovation, operational and financial performance while minimising the economical, environmental and social impact of the company.
We implore our local companies to increasingly explore ways that make their value chains reduce climate impacts and waste and use sustainable raw materials, as the only way to gain competitive advantage.
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The author is the Managing Consultant at GN Grant Business Consultant, a fellow of the Zambia Institute of Chartered Accountants (ZICA) and the Association of Chartered Certified Accountants (ACCA), a Master of Business Administration (MBA) holder and a candidate for the Herriot Watt University (Scotland) Doctor of Business Administration (DBA).