Two Kinds of Green: The Business Case for Sustainability

TWO KINDS OF GREEN: THE BUSINESS CASE FOR SUSTAINABILITY

By Michael Flood

You’ve been hearing about sustainable beef production for some time now. You know that McDonalds, the world’s largest beef purchaser, wants all of its beef to be sustainably sourced in the near future and that the world’s producers need to step up to meet that demand. You’re up to date on the broad outlines of what sustainability means and its major parts (social, economic, environmental) and you also know some of the things demanded by sustainable practices – like less use of antibiotics, less fossil fuel consumption in transport, and less greenhouse gas emissions from both your herd, manure, and your vehicles – things that will challenge the industry and your operation.

It’s all well and good to be environmentally sustainable, you may be thinking, but what if being sustainable means that I personally can’t sustain my family and farm? What if the costs of sustainability are too great? That’s a common and legitimate concern among ranchers and cow and calf producers across Canada. However, there doesn’t need to be a trade off between how green your operation is and how much green there is in your bank account. Here are a few of the direct business benefits you can expect from pursuing sustainable practices for your ranch.

Enhanced Fiscal Performance – Sustainable practices require some upfront investment but will yield substantial savings in the long run. For example installing solar panels will not completely replace your electricity needs (this is Canada after all) but can significantly reduce your power bill in a way that will, over years of operation, cut the amount of expensive power you have to draw from the grid. Choosing more fuel efficient vehicles will protect you against surging energy costs and potential future carbon taxes, as well as contributing to branding your ranch as sustainable and environmentally friendly. Learning to use Unmanned Aerial Vehicles (UAVs) is more economical than using a helicopter or a truck to locate your herd on the range, and requires less insurance and fuel spending. Healthier animals require some attention to your cattles genetics but will pay off in cattle that get less diseases, put on weight more quickly with less feed, and birth more easily.

As you can see, a lot of “sustainable” practices are in fact just good, prudent practices anyway, outside of their benefit to the environment. (1)

Enhance Business Value – As government regulations around the beef sector and land use change to reflect greater voter demand being ahead of the curve will be very valuable. When everyone else is trying to catch up, having to change their operations and processes quickly and expensively, you’ll already be in compliance and serve as a model others will want to copy. It’s like looking after your health by eating right and exercising while you’re young rather than waiting till you have serious complications like diabetes or heart disease when you’re old – in both health and business it’s always easier to start early.

Your sustainable practices also make your beef more marketable to your purchasers – being able to claim that their producers follow sustainable practices helps them appeal to the increasing number of consumers who are demanding “green” products. If, like an increasing number of ranchers, you direct market part of your beef each year you’ll be able to charge premium prices for certifiably sustainable meat from those same discerning customers.

In addition to being ready for regulation you’ll also enjoy greater access to capital; lenders are keen to see both regulatory compliance and strategic forethought on the part of their clients, which reduces their own risk. Banks and insurers are also sensitive to their own corporate image and are beginning to demand that those they do business with be able to demonstrate a commitment to sustainability and environmental protection. Public relations firms have already started saying they won’t take business from climate change denying organizations – is the day far away when banks start refusing loans (or insisting on much higher interest) from farms and ranches that aren’t sustainable?(2)

Reduced Risk – Finally, sustainable practices reduce your exposure to the risks of a changing climate. Sustainable operations are those that are not stressing their land, water, or herd and while being productive have slack that can help them survive and thrive through tough times. A prolonged drought in a forage growing region that increases the cost of feed, an outbreak of cattle disease prompted by warmer weather, and sudden price changes due to carbon taxes are all likely outcomes of climate change, ones which your operation, with a little preparedness, will be protected against.

LINKS:
(1) http://nbs.net/knowledge/improve-revenue-and-reduce-costs-through-csr/
(2) http://business.financialpost.com/2011/11/22/the-business-case-for-sustainability/
(3) http://www.epa.gov/climatechange/impacts-adaptation/agriculture-adaptation.htm

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