Published 1 week ago.
About a 3 minute read.
Right now, far too much of the business world is giving sustainability a value
of zero, when nothing could be farther from the truth.
Years ago, MIT Professor John
Sterman told his students that if
something matters, but you don’t measure it, you are giving it the only value it
can’t possibly have: zero.
This is why I wrote my book, The Value of Values, from
which this is adapted.
Why is this the case? The first, most important reason is that the vast majority
of value from sustainability is
— hidden from view. To surface it, we have to see things differently and help
others in the company do so, as well.
An example I use in the book is that of a European manufacturing company that
once asked me for help making the business case for reducing waste in its
factories. They couldn’t demonstrate, to the satisfaction of their finance
department, that the benefits would generate a good ROI. What were they
including as benefits?
Lower waste-removal costs — which, at between $0.05 and $0.10 a pound,
represented a modest savings.
The ability to purchase less to begin with (because less was wasted), thus
lowering their material costs. (This was a noticeable cost reduction but not
enough in their case.)
While these two points are real and useful, the company was missing nearly two
dozen other areas of benefit. They hadn’t considered that buying less material
also meant the following:
No one had to process additional purchase orders, pay additional invoices,
put the extra material in the inventory system, take it off the boat and put
it in the truck, or take it off the truck and use a forklift to put it in
Less warehouse space was needed — which lowered heating, cooling and
In addition, no one ever got hurt moving material that they never bought to
begin with; plus, material that doesn’t get purchased need not be tracked
and rotated, and it also doesn’t require certification or compliance with
handling and storage requirements.
Wasting less also means there’s less waste material to take out of the
inventory system, put back on the forklift, put back on a truck, and pay
someone to take away.
During this whole process, unpurchased material doesn’t consume working
capital and also doesn’t raise inventory levels. This prevents many other
potential problems such as reduced flexibility and lower productivity.
Note that none of these benefits are intangible or “fluffy.” There’s nothing
intangible about having to heat, cool, and insure warehouse space. Nor is
there anything softheaded about the cost of someone getting hurt moving
inventory or the expense that comes from increased working capital.
Improvements in these areas are real, concrete benefits; they’re just
Because benefits like these are either unseen or unquantified, they’re
currently being given a value of zero. But they’re worth so much more than
that — for Valutus clients, the norm is for
submerged value to be worth 4-10 times as much as visible value.
(And sometimes more; here’s a 40-second
video about a
While the biggest reason to do the right thing is because it’s the right
thing to do, that doesn’t mean it doesn’t have business benefits as well.
By surfacing and quantifying them, sustainability practitioners can help
companies to really see the value of values.
Published Feb 12, 2024 2pm EST / 11am PST / 7pm GMT / 8pm CET