The role of sustainability in reducing costs

Most people don’t associate sustainability with reducing costs. More often than not they expect sustainability to be expensive. On the surface of things this can sometimes be true, but when you dig a little deeper and understand the full picture of how sustainability influences all the workings of a business, the financial contributions that sustainability makes start to become apparent. The most direct impact sustainability has on the bottom line is through reducing waste and increasing efficiency. This can even extend beyond your business to your supply chain, getting you better deals if you help suppliers solve challenges like carcass imbalance and delivery consolidation. However, there are many less direct contributions sustainability makes that often go unnoticed.

One of the key things sustainability suffers from is a lack of a clear benchmark. When you compare an industrially produced food product against a local, regenerative food product. You are comparing apples with pears, not only in terms of flavour, quality and nutrition, but also in terms of the value that product delivers to your business. The intensity of flavour may mean you need to buy fewer ingredients to create the same impact for customers. This has been Ollie Hunter’s experience at The Wheatsheaf in Chilton Foliat: “If I buy better produce, I’ve got more flavour. I do less to it. I need less ingredients to make that flavour taste good and the customer gets what they want, which is what is on their menu.” Moreover, the extra you pay for the local, regenerative food product will likely reduce costs elsewhere such as in recruitment or marketing.

Sue Williams, General Manager at Whatley Manor, has seen that employees are actively making decisions based on sustainability. She was able to recruit the top two hospitality students from the local college this year despite fierce competition from other employers, because Whatley Manor has an in-house sustainability manager and a thorough approach to sustainability. And according to a UK Hospitality survey, 80% of respondents said that sustainability was a deciding factor when choosing where to go for food. The problem is that very few businesses that have actually embarked on becoming more sustainable have benchmarked themselves against their starting point to look at costs across the business. This makes it hard to quantify the real value of their sustainable spend.

Sustainability is a holistic business approach

Becoming sustainable is as much a mindset shift as anything else. One of the things nature teaches us is to think in terms of systems and connections, yet, encouraged by the Industrial and Agricultural Revolution, we have come to think predominantly in terms of linear progression and isolated components. This goes for our approach to businesses too. Leaders have long recognised the challenges of operating a business where people work in silos, but often fail to find ways of removing the barriers and encouraging collaboration. The same is true of how we look at our financials. Most accounts will divide up costs into separate cost centres as if these exist in isolation of each other. To some extent when we thought that a carrot was a carrot was a carrot, this would have been true, because there was no chance that any old carrot would have contributed to the marketing or recruitment of the business. When a business starts to live and breathe sustainability, this is no longer the case and businesses are missing a trick if they aren’t getting that local, regenerative carrot to work hard for them in the marketing and HR departments.

But how do you report on financial contributions made across cost centres and feed those into procurement decisions? The effects of positive marketing, recruitment and employee retention are rarely seen immediately, so you can’t judge the carrot before it’s had a chance to show its true worth. You also need to establish that initial benchmark before you bring the local, regenerative carrot on board and give it some clear KPIs and targets to track. Without the initial benchmark, evidence can only really be anecdotal, which simply isn’t going to cut it with the procurement team. It’s also only fair to judge the carrot if you know your teams have been working well together to get the most out of it across all departments. Sustainability has to be a joint effort.

I attended the Boutique Hotelier’s Great General Managers’ Debate recently and speaking on the recruitment panel was Harry Cragoe, owner of The Gallivant. He was talking about how his business lives by the mantra Happy People, Happy Customers and even conducts a monthly Happiness Review to validate and reward both the front-of-house and back-of-house teams. It seems like a good idea for all businesses to be conducting a monthly Happiness Review, but the mantra could be extended to Happy People, Happy Planet, Happy Customers and connected to specific look at how these all cross pollinate for a Healthy Profit.

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