Environmental Analysis As A Business Plan Chapter

Environmental Analysis INTRODUCTION

In recent years, individuals, businesses, organizations, and various governments all around the world are working tirelessly to ensure the preservation of environmental components. This shouldn’t be surprising considering the fact that important environmental resources and the mother earth resources as a whole are gradually been depleted due to incessant usage from during socio-economic development and activities, which might not be unsustainable in the long-term. Assuming a middle cause in this regards, necessitate all stakeholders from around the world to lay emphasis on the concept of sustainability. According to the definition proffered by the UN World Commission on Environment and Development:  “sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” [1]

The concept of sustainability is further broken down into three core concepts or “pillars” which includes; economic, environmental, and social. The concept of sustainability often corresponds to the belief that without a paradigm change to the way the earth and its resources is run, it will suffer irreparable degradation.[2] Also, considering the efforts by various governments to ensure sustainability in all its entirety, there are major commitments been made in some of the countries and regions responsible that are responsible for significant resources use and waste. For instance, the US Government’s American Jobs Plan, now includes measures to retrofit energy-efficient homes, electrify the federal fleet of vehicles, including postal vans, and ending carbon pollution from power generation by 2035. [3]

Not only are the governments  championing sustainability, individuals and businesses are increasingly showing concerns in sustainability practises. Some big corporations like Walmart Stores, Inc. (WMT) has pledged to reach zero emissions by 2040, [4] Morgan Stanley pledged net-zero “financed emissions” by 2050, [5] and Google has also pledged to operate carbon-free by 2030[6]

As a business or company planning to establish anywhere in the world, most especially in the United States (U.S.), it’s therefore important to show how your business would ensure environmental sustainability in the U.S. and also help the government achieve same. Questions such as how your business will impact on the environment? What measures will be used to mitigate the impact? Thus, the new chapter that all business and public plan writers should consider including while writing a business plans for businesses anywhere in the world is the Environmental Analysis Chapter. Aside writing a business plan, business analysts roles should now include business environmental analysis, where they conduct environmental analysis for businesses around the world by using important environmental metrics to analyze the impacts of such businesses on the environment, and suggesting likely ways to mitigate the impacts. For such business, environmental sustainability strategies might include:

  • Utilizing sustainable materials in the manufacturing process
  • Optimizing supply chains to reduce greenhouse gas emissions
  •  Using renewable energy sources like solar and wind to power facilities
  • The strategies might be different and unique for various organizations, irrespective of what strategy is adopted, it should tie into the larger business goals and organizational values.

In addition to the above, environmental  business analysts can also assist businesses or organizations in energy-efficient computing; power management; data center efficiency; responsible disposal and recycling of IT resources; compliance with green regulations and internal policies; green metrics, assessment tools, and methodology; and in environment-related risk mitigation.

Key Characteristics of Sustainable Products and Services

According to Belz, Frank-Martin in his book “Frank-Martin B. and Peattie, K. (2009). Sustainability Marketing: A Global Perspective. Wiley, United Kingdom,” six characteristics of sustainable product were identified as follows;

Customer satisfaction: using this characteristics, a sustainable products or services that do not meet customer needs will not survive in the market in a long term. This is because product or services are actually being developed to satisfy customers, and anything short of this would not stay long due to available substitutes for such products or services.

Dual focus: compared with purely environmental products, sustainable products should not only focus on ecological significance but should be of social significance to the general public.

Life-cycle orientation: sustainable products are eco-friendly throughout their entire life. Which means that from the moment the raw materials are being explored, and exploited to the moment the final product is disposed of, there must be no permanent damage to the environment.

Significant improvements: sustainable products should contribute significantly to deal with socio-ecological problems on both national and global level, or at least provide measurable improvements in socio-ecological product performance.

Continuous improvement: as the state of knowledge, technologies and societal expectation develop from generation to generation, sustainable products should also continuously improve with regard to social and environmental variation.

Competing offers: even though sustainable products and services may still lag behind competing offers, the competing offers may therefore serve as a benchmark regarding social and ecological performance and can be improved accordingly.

The Unbelievable Benefits of Including the Environmental Analysis Chapter in Your Business Plan

1) Early Adopter:

Taking a glance into a business plan and coming across the environmental analysis chapter shows the reader that you are current and well-aware of important happenings in the world. This would surely give you a competitive advantage as a business environmental analyst. On the part of your clients, the environmental analysis chapter will give the readers an idea that your company is not oblivious of environmental sustainability goals, but is also at the fore-front of tackling environmental issues.

2) Success for Business:

By including the environmental analysis chapter in your business plan, the environmental sustainability chapter can help drive business success. As said earlier, individuals including investors today important metrics such as the use environmental, social, and governance (ESG) to analyze an organization’s ethical impact and sustainability practise. Important factors such as a company’s carbon footprint, water usage, waste generation and so on, will likely determine whether or not your business is worth investing in. To ensure success, organizations should request business environmental analysis to be conducted while writing the business plan.

3) Competitive Advantage:

In order to show ecological responsibility, companies around the world should assess and reduce their ecological damage. Through rare raw materials and increasing pollution, an environmentally friendly management gets spotlighted more and more by the public interest. Consequently, utilizing eco-friendly products or technologies can even signify a competitive advantage for your business or organization.

4) Increased Profitability: some consumers have the willingness to pay (WTP) for products that are eco-friendly, and being a brand known for this quality will significantly earn you a market share and increase your profit. A recent study conducted by Unilever found that 33 % of consumers want to buy from brands “doing social or environmental good,” creating an opportunity in the market for sustainable goods.[7]

Disadvantages of not including the Environmental Analysis Chapter When Writing a Business Plan

1) Likely Boycott by customers: with more and more individuals becoming more environmentally-conscious, more businesses are using eco-friendly materials in production. Not conducting an environmental analysis chapter in the business plan means likely boycott of such products and services by customers.

2) Reduced Access to Opportunities: most government grants and organizations offering grants are usually attached to environmental compliance goals, and not meeting the criteria might affect access to opportunities by such company.

3) Increased Overhead Cost: considering the total cost utilized in the production of some products from the point of raw material exploration to the final disposal, “going green” or designing a sustainable product can creates the need to analyze the business situation from an environmental perspective, looking into ways to redesign operations to use less energy and water, produce fewer emissions, and generate less waste. This in the short and long term will ensure business uses the least cost during production which would subsequently reduce profitability. However, not including this chapter by companies in the business plan, would of course, lead to increased overhead cost for the production of non-environmental friendly products by such companies.

Suggestions for the Environmental Analysis Chapter in the Business Plan

Communicating your environmental analysis goals to readers under appropriate headings is as important as the chapter itself. Below are suggestions for sub-sections under the chapter when writing your business plan.

1) Environmental Sustainability Assessment and Objectives:

Driving change in any sector involves a critical analysis of a goal, followed by the objectives to be met by achieving the set goal.

Thus starting this chapter with the “Environmental Sustainability Assessment and Objectives” section allow your business to critically assess what environmental sustainability means to your team, company, industry, and client.

What does your business team consider a priority when it comes to environmental sustainability. For instance, to a company in a restaurant business, using a biodegradable product for their packaging might be a better solution as compared to recycling such packaging material.

To guide this process, consider asking questions, such as:

How much waste is the organization generating?

Is your product eco-friendly ?

Answering these types of questions will help you establish your company’s environmental sustainability objectives.

Upon agreeing on concrete objectives for your environmental sustainability goals, it is necessary to develop a mission statement from the objective (s).

Here is an example of companies with effective mission statements:

Consider the Outdoor clothing brand “Patagonia’s” mission which can be broken down into four objectives:

  • Build the best product
  • Cause no unnecessary harm
  • Use business to protect nature
  • Do not be bound by convention

In this mission statements, it’s clear what the company’s values are and how they’re executing against them

2) Environmental Sustainability Standards:

In this particular section, two important standards would be critically examined to provide what the company is/will do to meet the International standards below:

  • Life Cycle Assessment (LCA):

This assessment evaluates and discloses the environmental benefits of products over their full life cycle, thag is from the point of raw materials extraction to final disposition. Following its standardization in 1997 by the International Organization for Standardization (ISO), the process of conducting LCA studies has been widely used by organizations around the world.

  • Nordic Swan Ecolabel

The standard of Nordic Swan Ecolabel, which is distributed in Norway, Sweden, Denmark, Finland and Iceland, mainly refers to distinguished products that have a positive effect on the environment. More likely, however, it has climate requirements that limit the amount of CO2 emissions where it is most relevant.[8] About 3,000 products, that are predominantly household chemicals, paper products, office machinery and building materials have been issued with this label. The criteria account environmental factors through the product’s life cycle (raw material extraction, production and distribution, use and refuse). Thus the most important parameters are consumption of natural resources and energy, emissions into air, water and soil, generation of waste and noise. Businesses should also aim to include if or not they meet the requirements of the organization in this section of the business plan.

  • U. S. Green Building Council LEED Rating System: ensuring the company is established following a sustainable approach, all buildings should be evaluated for environmental performance over their life in line with the LEED Green Building Rating System, which provides the definitive standard for what constitutes a “green” building. Consequently persuading the consumer and building industry to develop products that are more environmentally and economically viable.

3) Environmental Mitigating Landscape (EML): Following the identification of the various activities and operations from your company which could negatively impact on the earth, there is need to come up with a long term plan on how the identified environmental factors would be abated. Thus, there should be a table showing the various activities against the mitigating plan. Indeed, providing a mitigating landscape in this chapter of the business plan would give a general overview of the environmental impact activities at a glance.