For many companies, the environmental issues which were red hot a couple of years ago have taken a back seat to the larger financial issues. But if you look at the October 2011 list of America’s Greenest Companies in Newsweek magazine, it seems that several forward-thinking wholesale distributors have missed that memo.
In a comparison of the environmental performance of the 500 largest public companies in the US, fourteen wholesale distributors are included, nine of which received a “Green Score” of 50 or higher. Despite an unstable economy, these distributors are still thinking green.
Three cases for sustainability
Environmental impact will play an increasingly important role in the wholesale distribution industry as well as other industries. Here are the three main reasons why businesses, and wholesale distributors in particular, should make sustainability a priority now:
- We are facing a future in which resources that were once taken for granted – water, land, minerals, and fossil fuels – will be limited and costly. Preparing now to succeed in, and even profit from, such an environment could make all the difference for future growth.
- A heightened awareness of sustainability issues among consumers and trading partners is beginning to affect buying behavior. There is already an increased pressure on distributors to become more transparent and accountable. For example, in food service distribution there is a growing trend to support locally-grown crops, vegetables, and fruits.
- Global regulations for social and environmental compliance will only become more numerous and stringent, e.g. carbon reporting, product compliance in electrical wholesaling, and track and trace requirements in pharmaceutical and food service distribution. For now, companies might still be able to get away with a less-than-serious approach to sustainability, but that will eventually change.
Becoming a sustainability leader
Sustainability measures are often seen as threats to distributors, brands, and bottom lines. But, in fact, businesses that take into account the environmental impact of their decisions frequently discover opportunities to build new products, offer new services, and enter new markets. The NAED site, for example, examines how electrical wholesalers in particular can profit from the green market.
For companies in the wholesale industry, the first step towards becoming a leader in sustainability – like the companies listed in the Newsweek article – is to understand the baseline environmental impact of their operations. Second, companies should benchmark these results against their peers, and third, they must establish clear goals and KPIs to drive sustainability efforts forward.
The key to successfully executing on a sustainability strategy is to manage the social, environmental and economic risks and opportunities in a holistic manner. Companies need to consistently embed sustainability into their existing business processes. Moving forward, distributors should remember that wasteful behavior ultimately cuts into profits. Becoming sustainable will bolster the bottom line.
Neetin Datar is the Senior Director of Industry Marketing for Wholesale Distribution at SAP. His enterprise software experience spans ERP, E-commerce, Global Trade, GRC, Warehouse Management and Distribution markets. He has been with SAP since 1994 and is passionate about technology and its use by distributors to run better.