Strategic Sustainability in Business

Revenue minus variable costs.

Gross margin minus fixed costs.

Increasing profits by differentiating with products and services having less negative environmental/social impact.

Increased demand from customers valuing products and services with lower environmental/social impact

Increased costs of cleaner processes leads to higher costs.

The additional revenue earned from selling a single more unit.

Calculations demonstrating sustainability boosts profitability.

Costs that change with production levels

A linear equation (C = a + bQ) that predicts the total cost (C) based on the quantity produced (Q). 'a' is the fixed cost and 'b' is the marginal cost.

A linear equation (P = m + nQ) that predicts the price (P) of a product based on the quantity produced (Q). 'm' is the price at zero quantity and 'n' represents how price changes with quantity.

The quantity that maximizes profit from a product. Calculated as Q* = (b – m) / 2n, where 'b', 'm', and 'n' come from the regression equations above.

The price that maximizes profit from a product, calculated as P* = (b + m) / 2.

The increase in profit when replacing a product with a sustainability-oriented one (in this case 58,891).

Companies without a clear sense of purpose risk losing key stakeholders and ultimately their license to operate, impacting their potential and long-term profitability.

Environmental, social, and governance factors that impact a company's financial performance. Examples include climate change, diversity, and board effectiveness.

BlackRock, a major investment firm, advocates for stakeholder capitalism, where companies prioritize long-term value creation for all stakeholders, including investors, employees, customers, and the environment.

The risk a company faces from negative social impacts of its operations, potentially affecting brand reputation and consumer trust.

The risk a company faces from government regulations and compliance costs, potentially impacting profitability and operations.

The risk a company faces from market trends and customer preferences, potentially impacting sales and market share.

A business approach that prioritizes long-term value creation for all stakeholders, including investors, employees, customers, and the environment, leading to sustainable profitability and business survivability.

Creating value that is sustainable and profitable for all stakeholders over the long haul, considering both economic and social impact.

The process by which a social issue gains attention and eventually leads to regulation. It follows four predictable phases: Development, Politicization, Legislation, and Implementation.

Non-governmental organizations (NGOs) play a crucial role in raising public awareness and lobbying for social change. Their effectiveness increases during the Politicization and Legislation phases.

The expenses a company incurs to meet social regulations. This can include changes to production processes, investments in sustainable materials, or public relations efforts.

The difference between the potential gains from compliance and the costs of achieving it. Companies aim to find the point where this benefit is maximized.

The level of compliance that maximizes the company's profits. It's a delicate balance between minimizing compliance costs and maximizing the positive impact of social responsibility.

Certain company characteristics can influence the effectiveness of social targeting. Well-known brands, industry leaders, and companies with consumer-oriented products are more susceptible to pressure.

A company's past engagement with an issue can influence its response to social targeting. If a company has previously shown interest in an issue, it's more likely to be receptive.

Social regulation can be more effective than relying solely on the political process. It allows for direct negotiation between NGOs and companies, leading to faster and more targeted action.

Prineville, Oregon was chosen for Facebook's data center due to factors like a favorable climate suitable for cooling, access to renewable energy sources, available land, a skilled local workforce, and a supportive business environment.

The global energy usage of data centers is immense, ranking as the fifth largest energy consumer worldwide, exceeding the energy consumption of some major countries.

By 2020, Facebook's energy consumption was projected to surpass the combined energy usage of France, Germany, Canada, and Brazil in 2010.

PacifiCorp, the power provider for Facebook's Prineville data center, generated 60% of its energy from coal, a fossil fuel that emits significant greenhouse gases.

A specific cooling technology, called an 'airside economizer', was implemented at Facebook's Prineville facility to utilize outside air for cooling IT systems, reducing energy consumption.

Facebook's Prineville data center achieved noteworthy energy efficiency, consuming only 15% of the total IT power typically used by other facilities.

Prineville had a relatively high unemployment rate of 20% at the time Facebook's data center was built, suggesting the project could bring economic benefits to the region.

Facebook's data center in Prineville cost $188 million, spanned 147,000 square feet, and employed 35 full-time staff along with part-time and contract workers.

Greenpeace asked Facebook to commit to using 100% renewable energy for its data centers, but the demand had some flexibility.

Facebook saw some benefits in agreeing to the demands, such as improving its image and raising awareness about renewable energy.

Facebook worried about potential downsides, like being accused of greenwashing and facing increased pressure from other activist groups.

Greenpeace created this campaign to pressure Facebook into adopting renewable energy practices.

By 2020, Facebook found it more beneficial and less controversial to comply with Greenpeace's demands.

Making false or exaggerated claims about a company's environmental practices to deceive consumers.

Greenpeace's demands, while seemingly strict, allowed for some adjustments over time.

Taking a strong stance on a social issue could make Facebook appear less impartial, potentially damaging its brand.