Environmental strategy can bring profits, competitive advantage, says Ontario parts maker
Toronto—Canadian food and beverage product manufacturers are on the cutting edge of environmental sustainability, according to a KPMG report, but they shouldn’t be alone at the top.
The report, Making an Impact: Environmental Sustainability Initiatives in Canada’s Food, Beverage and Consumer Product Industry, shows manufacturers across the country are leading their global peers and competitors when it comes to water conservation, improved energy efficiency, greenhouse gas emissions reduction and sustainable packaging.
“We’re seeing companies dedicate vast resources … to help create and implement their environmental sustainability strategies,” KPMG carbon advisory services director Phil Ludvigsen said about the study. “These dedicated resources are much more than ‘going green’—these are fundamental shifts to their business models.”
And while KPMG’s study shows more food and beverage manufacturers are making these fundamental shifts, a Cambridge, Ont.-based custom parts manufacturer for the mining and forestry industries says there’s nothing stopping businesses in all sectors from making a similar push.
“If we don’t do it, we’re going to lose jobs,” VeriForm founder and president Paul Rak said about the decision to implement an environmental strategy.
Rak, who led his company through a green shift, said VeriForm’s profits have increased by 300 per cent, with 2011 earnings standing at four times the metal fabricating industry average.
“The competitive advantage of a company that goes green and sustainable is underestimated,” said Rak, who found it’s the little things that help gain that competitive advantage, such as changing-out tools and equipment to cut down on production and operating costs.
“We reduced our compressor from 20-horsepower to 10-horsepower, which you would think is a 50 per cent drop in energy (use),” he said. “It was actually 91 per cent, because the compressor we (chose) turns off when the tank is full (but) our old compressor would run continuously all day.”
What’s more, VeriForm’s compressor maintenance costs dropped 45 per cent.
Rak said misinterpreting the effects of sustainability is the biggest roadblock to business adopting more environmental practices.
“The overall misconceptions are outlandish, but that’s unfortunately what everybody believes in,” he said. “That it’s hard to go green, it’s costly to go green, it doesn’t make you more competitive, it will cost you jobs, it will make you more costly and (products) will cost more. It’s the exact opposite with every case that we’ve done and implemented.”
Jim Menzies, manufacturing and distribution national leader for advisory firm Grant Thornton LLP, said another factor hampering the go-green mantra simply comes down to a “survival mode” mentality.
“I’m not sure this is correct to view it this way, (but) looking at some of these longer-term issues like going green (has) been put by the wayside while (they) just continue to make sure (they) survive and exist,” Menzies said.
It’s only now, he said, manufacturers from all industries are taking the time to consider environmental strategies of their own.
“The notion of going green and the benefits to doing so are now being more fully considered than I would say they have been in the past few years by manufacturers,” Menzies said. “They are now looking at it in a much more significant way and I’ll be surprised if two years from now that same notion (isn’t) publicly shared amongst most of the manufacturing sector.”
While implementing an environmental strategy hasn’t necessarily brought new clients to VeriForm, Rak said sales and profits are up in recent years.
“It doesn’t give us more business,” he said. “But I can tell you the last two years we have had more sales and more profits than in our whole 15-year history.”
For those companies considering making the shift, Rak had a simple piece of advice: start simple.
“I would say do a preliminary analysis of your utility costs and see how much annually you’re spending on natural gas, water and electricity,” he said. “Whichever of those three is the largest, focus your efforts in that area.”
Menzies looks at it from a different perspective, adding the manufacture of eco-friendly products offers a big opportunity to those looking to cash in.
“There (are) two questions that have to be asked about going green,” he said. “What can we do internally with respect to our own processes to make what we do greener (and) the other thing they need to look at is how they as a company can capitalize from a revenue perspective on the fact that society is becoming greener.”
This includes the way products are manufactured, as well as specifically what products are made.
“That’s where the biggest opportunity is,” he said. “It’s not just a matter of figuring out how your plant can become more energy efficient and create less waste (but) it’s also taking advantage of this opportunity in (the) marketplace.”
As manufacturers from all sectors look to make a sustainable push, it may be time to take some food for thought from their comestible-making counterparts.