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Resolution 2016 Sustainable savings

Experts: Going green can be daunting, but a worthwhile investment in your company's future

Bill Scalzitti, left, vice president, business development, and William Russell, principal, Transitioning to Green.-(PHOTO BY AARON HOUSTON)

Over the years, William Russell and Bill Scalzitti have seen a lot of resistance to their underlying principle: Going green is a good thing.
For your bottom line.

Few will argue that cleaner air and water are bad things, but Russell and Scalzitti say they have created a service that argues something much less obvious. According to their Montville-based company, Transitioning to Green, going green is good for business.

Russell and Scalzitti are so confident, they are willing to show businesses the light by putting their financials through their new “Profitability Model,” which teaches them how much money they can save by becoming energy-efficient.

“This particular tool that (Russell) has modified, developed and worked on for years is something relatively new that analyzes a company before they start doing things,” said Scalzitti, company vice president. “Before they start spending money and getting themselves into this, it’s nice if they have a road map.”

Using a company’s concrete financials, Transitioning to Green is able to account for various factors and calculate the potential business savings using this model.

Depending on the company’s size, accounting for number of employees or the square footage of a manufacturing facility, an initial run through the model can cost between $750 and $5,000.

“Most business people don’t think about what’s possible (and) when you take a company’s information right off their financial sheet — what they made last year — put them in the model and show them, if they are able to save this on energy and waste while increasing productivity, what their bottom line can look like,” Scalzitti said. “That way they know, when they start out, that there’s a target that they’re after and we can show them where the money comes from to pay for any additional things they need.”

For Russell, a company principal, the best way to cut costs is to make the investment in green initiatives immediately.

“Companies aren’t doing this because they have this expectation
that somebody else is going to pay for it, and that’s just crazy.”
William Russell, principal, Transitioning to Green

“The earlier you suck it up and make these investments, the lower the long-term costs of doing it is and the greater the return is,” he said. “Doing things sooner rather than later lowers your overall costs.”

Russell said he has seen many companies dig themselves into holes waiting for other entities, such as the government, to make the investments for them instead of being proactive.

“There’s a real problem that companies aren’t doing this because they have this expectation that somebody else is going to pay for it, and that’s just crazy,” he said. “This has real value for them and then they’re delaying this or not doing it because the government funds are dried up, so I have to hope that the government grants are not dried up for next year.

“In the meantime, they’ve lost an entire year of not doing something they could’ve done with their own means, but they don’t want to pay for.”

The money, he said, is there within the waste of their current practices. That’s the idea of the profitability model.

Russell said the model is designed to help businesses of all sizes, but it’s particularly helpful in illustrating to small businesses that going green isn’t simply doable, but profitable.

“The small businesspeople are in the day-to-day rut, trying to do the work, but they’re not thinking that much about how much it’s costing them to do their current work and if they could do a few things more efficiently,” he said.

Still, the growing social pressures to adopt sustainable practices will continue to affect companies of all sizes. And awareness of that is growing, thanks to the nonprofit Sustainability Accounting Standards Board.

“Our current accounting practices don’t enable companies to capture some of these biggest business risks to them because they’re currently considered low-probability or external risks,” Russell said.

To combat this shortcoming, SASB has created industry materiality maps that now link risks connected to sustainability with corresponding industries.

“Because they did that work, it’s going to make all the companies in that industry that have said it’s not a risk obligated to disclose material financial risks,” he said. “Now, the pressure they’re under to, if not report it, at least examine it and manage it is very high.

“There’s now this perceived legal obligation to report these risks.”

And, with that new level of transparency, companies that choose inaction may begin to see a decline in reputation.

“It’s reinforcing reputation in an actual cycle,” Russell said.

E-mail to: andrews@njbiz.com
On Twitter: @sheldonandrewj

Pros and cons
One way Transitioning to Green tries to illustrate its mission to its clients is through classifying various risks and opportunities that arise with the social challenge of going green.
The emerging risks, which include regulatory, reputational, physical, market, litigation and social risks, had the potential to diminish profits between 16 and 36 percent, they said.
The company also identified new opportunities, which include reputation and brand, new learning, innovation, products, services and markets, cost reduction and an increased access to capital. By capitalizing on these emerging opportunities, companies could increase their profits between 51 to 81 percent.
Based on the data, Principal William Russell says these estimates are conservative because, “If you set the targets to what is actually possible, it looks so high that the recipient of the information shuts down and they don’t believe it.”

Russell said the model is designed to help businesses of all sizes, but it’s particularly helpful in illustrating to small businesses that going green isn’t simply doable, but profitable.

“The small businesspeople are in the day-to-day rut, trying to do the work, but they’re not thinking that much about how much it’s costing them to do their current work and if they could do a few things more efficiently,” he said.

Still, the growing social pressures to adopt sustainable practices will continue to affect companies of all sizes. And awareness of that is growing, thanks to the nonprofit Sustainability Accounting Standards Board.

“Our current accounting practices don’t enable companies to capture some of these biggest business risks to them because they’re currently considered low-probability or external risks,” Russell said.

To combat this shortcoming, SASB has created industry materiality maps that now link risks connected to sustainability with corresponding industries.

“Because they did that work, it’s going to make all the companies in that industry that have said it’s not a risk obligated to disclose material financial risks,” he said. “Now, the pressure they’re under to, if not report it, at least examine it and manage it is very high.

“There’s now this perceived legal obligation to report these risks.”

And, with that new level of transparency, companies that choose inaction may begin to see a decline in reputation.

“It’s reinforcing reputation in an actual cycle,” Russell said.

E-mail to: andrews@njbiz.com
On Twitter: @sheldonandrewj

Andrew Sheldon
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