Do Employee Sustainability Programs Lead to Greater Productivity?
A sense of purpose has always been at the core of outdoor apparel and equipment brand REI’s business. That’s why, among other strategies, they focus heavily on employee well-being – ensuring fair compensation and greater diversity as well as increasing employee sustainability engagement programs and improving benefits. Using ROSI to measure these practices, the company was able to see they’d successfully increased productivity and reduce turnover costs. The result was a net benefit of $34 million, roughly 5% of their payroll.
“We’ve seen this in many companies, regardless of sector,” says Professor Whalen. “When you have embedded sustainability and a really strong purpose, you can see much lower turnover and more engagement by employees.” REI had also done very extensive surveys of their employees, which supported the correlation between their purpose and sustainability focus and employee retention and productivity.
What Returns can a Lower Carbon Footprint Really Deliver?
Improving energy management is among the climate commitments for women’s clothing brand Eileen Fisher. Their strategic focus is on reducing greenhouse gas emissions and lowering the carbon footprint of their distribution. To achieve this, they put several internal and external practices in place, including reducing their reliance on air freight. They began by shifting some of their distribution to land and sea, both of which have lower carbon footprints than air.
With ROSI, CSB was able to quantify that shift – showing that the company had spent $1.6 million less on transportation in 2019 than in 2015. While they did find their overall distribution costs went up in 2020 due to COVID-19 nearly tripling air freight, their expenses went up far less than some of their competitors because they'd already started moving toward alternative distribution modes. "I think this illustrates we can look at some of these sustainability issues as a means for longer-term scenario planning around risk mitigation and volatility management as well," says Professor Whalen.
Of course, the results ROSI can deliver are only as good as the depth and quality of data that goes into it, says Sophie. “Cross-functional engagement within a company is essential," she says. In the case of REI, that meant bringing together human resources, finance and sustainability, while for Eileen Fisher it was logistics, transportation, finance and sustainability. “That’s not to say these groups don’t talk to each other, they do – but it's more about sharing data in a different way," says Sophie. Fisch agrees, saying that oftentimes the sustainability and financing teams have different initiatives and their languages don’t always meet up. “With the results of ROSI, a company can demonstrate what those initiatives look like financially so decision makers can get behind it.” Professor Whalen adds that this move toward finding the inherent value in ESG is critical. "What we're seeing right now is that investors are asking for ESG and for financials, but they are not asking for them together," she explains. That's likely to change as more investment is directed toward sustainability transformations, and the question becomes, 'what's the return?'.
“I think we’re only at the tip of the iceberg in terms of taking this framework we’ve developed in apparel and building out the corresponding monetization tools for other industries,” says Sophie.