How Much of Our Budget Should We Spend on Sustainability?
In our February 2023 Foresight Forum (our monthly sustainability webinar series), we covered all things Scope 1 and 2 emissions – everything from defining confusing terminology to setting organizational boundaries to strategizing reductions. As we should have anticipated, the most compelling part wasn't the content we brought to the table but the attendees' nuanced, complicated, challenging questions. Each question danced in the grey area of sustainability, stuck somewhere between what's practical, what's aspirational, and what's expected.
And at Foresight, this is where we love to be – in the space where answers aren't simple, and stakeholders seem at odds.
Among many curious attendee questions, one stood out the most: How much of our budget should we spend on sustainability?
Our answer? All of it.
This answer got a chuckle from attendees (and Mike would argue that a clearer answer is 3-5% of your utility budget), but allow us to explain.
You have electricity to keep your facilities open. The question isn’t if you’ll spend money on that, but how you’ll spend it. You’ll need to heat your buildings, but how? When you develop your product or service – you are investing in product design, materials procurement, manufacturing and distribution. But how are you spending those dollars? Is your energy usage brown or green? Are your buildings efficient or inefficient? Are you leveraging recycled materials or raw material extraction?
Every line item of your budget has an impact on your sustainability metrics. If we continue to treat sustainability as a line item, we miss the point. Sustainability is a shift in mindset where the focus is central to all that you do. It’s not the money you’re spending. It’s the impact you’re choosing.
Which areas of our budget should we focus on sustainability first?
To this question, we do have a more crystalized answer: Identify the intersection of what matters most to stakeholders, and where you can have the most impact. In our first Foresight Forum, we discussed where to start with sustainability (watch it here, read about it here). There are key steps you can take to understand which dollars to invest first, how to identify areas of potential impact, and how to quantify your efforts.
This process will look different for every company. Some prioritize energy procurement, some pursue higher recycled content in products, others in vehicle electrification. But for every company, it will involve every department in this dialogue. The impact is cumulative and exponential, and having the entire organization bringing sustainability central to the focus of the business is the surest way to success.
So we ask you: You’re already spending the dollars. How could you be using these investments to make the future of your company, employees, communities and environment flourish?
Interested in more specific topics surrounding sustainability? Check out our free monthly webinar put on by industry experts at Foresight Management.