It’s perhaps one of the most fundamental principles of management: you can’t manage it, if you are not measuring it. This force has always impacted the bottom line, but in a forming paradigm of corporate sustainability, measuring truly is one of, if not the most effective, change agents available. And yet, what is the driving force of measurement: shareholder activism, PR debacles or simply profits?
It was amazing to me to learn how much water is used to produce 1 liter of Coke: more than 2.43 liters which means Coca-Cola saved 8 billion gallons last year by simply reducing it water use by 9%. And as our planet’s population has exploded, the demand for water has similarly increased. And this has not gone unnoticed by companies reliant on water for their operations. A quick search on Google turns up that as far back as 8 years ago, Coca-Cola was getting into serious scuffles in India over water use. Likely this is one of the reasons why Coca-Cola began to take water scarcity seriously. And as they started to measure it, and a cost was assigned to it, reducing their use meant passing the cost savings through to their bottom line. Click here to read the full fascinating Fast Company article on water scarcity and multinationals such as GE, IBM and Coca-Cola.
And the bottom line, more than morality of conservation, is what motivates analysts. When a cost is assigned, it starts to get noticed, and when those costs are filtered into financial statements, analysts pay attention. I came across this powerful example in an another Fast Company article, which tells the genesis of why and how Bloomberg started to include ESG (environmental, social, governance) data for free in its terminals. “If companies wake up one day to find it costs $15 to emit a ton of CO2, a financial analyst considering ExxonMobil would see it emitted 128 million metric tons in 2009. That adds nearly $2billion to the oil giant’s operating costs – hardly extra-financial data.” With numbers like that, you bet the bottom line is impacted.
And as a self-defined reluctant capitalist, is it possible then that our worship of profits will save us?