Why environmental performance matters more, not less, in an economic downturn
Two things happened to me yesterday that made me think about this:
1. someone asked me if they thought the environmental sector would be hit by the so-called ‘credit crunch’ and associated economic downturn.
2. I filled up my diesel car’s tank with fuel for the first time in two months and nearly passed on on the forecourt when I saw the cost.
It is fairly obvious that a good response to an economic downturn is to cut costs. If you have a 25% profit margin, then every £1 you save in your operations is worth £4 of sales.
The biggest cost in most businesses is staff. But if you cut staff you have to pay redundancies, you lose the investment you have made in training and development, and you hit the morale of those you retain. Plus, when things improve, you will have to rush around recruiting and training new staff which is both an additional cost and a delay which could cost you market share.
On the other hand, there are only ever benefits from reducing waste, energy costs, water costs, transport costs, raw material costs etc, etc. So if things are getting tight, why not divert some of that ‘redundant’ staff time into identifying and eradicating environmental costs? If you do it right, they should more than pay for themselves – and you will continue to see the benefits when sales pick up with the increased margin.