SUS 7000 Module 4 Final Project: A Business Case for Sustainability at an Elizabeth Printer Example

Printing a Lower-Carbon Future: The Business Case for a Three-Year Sustainability Program

Student Name

Master of Business Administration, Thomas Edison State University

SUS-7000: Designing a Business Case for Sustainability

Mentor Name

Month Day, Year

Printing a Lower-Carbon Future: The Business Case for a Three-Year Sustainability Program

Executive Summary

Our two largest clients now choose suppliers partly on sustainability, and a packaging contract worth $11 million a year depends on a funded plan that lowers our emissions by 30 percent within five years. This case proposes a three-year sustainability program costing about $3.0 million, including a coating line for recyclable trays. It would save about $810,000 a year in operating costs, protect $2.6 million a year in margin on the contract and open about $3 million a year in new tray revenue. The program pays back in under three years on savings alone and has a strongly positive net present value. I ask the owners to approve it and to review its first results at the end of the second quarter.

Background

The printer was founded in Elizabeth in 1978 and now employs 140 people on two shifts, running six sheetfed and two web presses for retail packaging, catalogs and point-of-sale signs. Most of our work comes from a few large clients, and most of our costs are paper, labor and energy. We have grown by being reliable and fast, not by being cheapest. That reputation is why clients now expect us to lead on sustainability rather than follow.

Section 1: The Opportunity

Retail clients are reshaping their supply chains around sustainability. Our home goods client's scorecard rates suppliers on emissions, recycled content, waste and transparency, and we ranked in its bottom third last year. Our grocery client wants recyclable paper trays to replace plastic. Few regional printers can meet these demands, so the pressure is also an opening. Nidumolu et al. (2009) argued that sustainability drives innovation and builds capabilities that competitors struggle to copy; moving early would let us win business from slower rivals rather than lose it.

Section 2: How the Program Creates Value

Midterm feedback asked for stronger support for the tray revenue estimate and for employee engagement in the value section. Both are added here.

The tray estimate now rests on the grocery chain's written volume forecast for its own-brand produce trays and a trial order commitment from its packaging director, rather than on our own guess. Engagement value is harder to price, but our human resources director reports that press crew turnover cost us about $210,000 last year, and research suggests employees who see their work connected to a larger purpose are more engaged.

Section 3: The Program

Year one focuses on quick, low-cost savings that build credibility with clients and staff. Year two adds the large investments. Year three extends the program into the supply chain, where much of our footprint lies.

The first year matters most for credibility. In month one, press monitoring will be installed on two presses and make-ready training will begin for their crews; by month four all eight presses will be monitored. The lighting and compressed air work will be done on weekends to avoid lost production. The solvent-free wash will be tested on one press for six weeks, with operators rating its cleaning performance, before it is adopted plant-wide. By month six we will publish our first emissions baseline to both clients, along with the year one results to date. These early, visible steps give clients evidence before next spring's contract decision and give crews a reason to believe the program is real.

Section 4: Financial Analysis

Including about $495,000 in federal solar tax credits, the net investment is about $2.6 million. Annual benefits from cost savings and tray margin reach about $1.35 million by year three, not counting the protected contract margin.

Even if the tray business never materializes, cost savings alone repay the investment within four years.

The financial case is conservative in three ways. It counts no revenue from other clients who may want recyclable packaging, though two smaller clients have asked about it. It assumes electricity prices stay flat, although they have risen faster than inflation for the past five years, which would make solar and efficiency savings larger. And it treats the protected contract margin separately, so the program does not depend on the contract to justify itself. If the home goods contract is retained, as the program is designed to ensure, the value of the program is several times its cost. Eccles et al. (2014) found that companies with early sustainability policies outperformed comparable firms over the long term, a pattern consistent with this analysis.

Section 5: Stakeholders and Innovation

The program depends on many stakeholders. Collaboration across organizational boundaries, which Senge et al. (2010) treat as essential to sustainability, carries the program in two places.

Inside the company, press crews hold the key to spoilage. A press crew challenge will let each crew set its own target, see weekly data and share 20 percent of savings above target. The union has agreed in principle, with a written commitment that press data will serve improvement and never discipline.

Across companies, a joint innovation team with the grocery chain, our paper mill and our coating supplier will develop the recyclable tray. Each brings capabilities none has alone. The tray capability fits what Hart (1995) called a natural-resource-based advantage: skills in preventing pollution and stewarding products that rivals find hard to copy.

Clients will receive quarterly sustainability reports with our emissions, waste and recycled content, including where we fall short. Neighbors will be invited to an open house and told how solvent emissions are falling.

Employees beyond the press crews will be involved too. Prepress staff will help design the recyclable trays, shipping will look for ways to cut empty truck miles, and every employee will receive a short briefing on the program's goals and how their own work connects to them. Senge and colleagues stress that lasting change depends on people throughout an organization understanding the system they are part of, not only on decisions at the top.

Section 6: Alternatives Considered

Three alternatives were weighed before recommending this program.

The first is to do the minimum: report our current emissions to the home goods client and promise improvement without a funded plan. This costs almost nothing, but the client has said a credible plan means funded actions with dates, and a promise would likely leave us in the bottom third of its scorecard and out of the next contract.

The second is to buy renewable energy certificates to offset our electricity emissions instead of installing solar and reducing use. Certificates would lower our reported emissions quickly and cheaply, but they would not cut costs, would not address spoilage or solvents and would be seen by both clients as a weaker commitment than reducing our own footprint.

The third is a larger program that also replaces our two oldest presses with new energy-efficient models. That would cut energy use further, but it would add about $6 million in capital and stretch our borrowing at the same time as the coating line. The presses can be replaced on their normal schedule in four to five years, when the program's savings can help fund them.

The recommended program sits between these: funded, measurable actions that clients will credit, paid for largely by their own savings.

Section 7: Risks

Section 8: Measures and Governance

A monthly steering group led by our COO will govern the program, drawing members from operations, finance, sales and human resources and including a union representative. The operations director will manage the program day to day and report to owners each quarter.

Section 9: Why Now

Dyllick and Hockerts (2002) argued that corporate sustainability requires attention to economic, ecological and social capital together, and that firms focused only on the business case may miss risks that build slowly. Our case is strong on business grounds, but it also reflects the systems view that runs through this course: our paper, energy, solvents and packaging are part of larger systems that our clients, neighbors and future customers depend on. The contract decision comes next spring, and the first-year initiatives must show results before then.

Looking further ahead, success in five years would mean a printer whose clients choose it partly because of its sustainability record, whose press crews take pride in low waste, whose emissions are half today's and whose recyclable packaging line serves several clients. It would also mean a company that has learned to see its business as part of larger systems, the habit of mind the course's text treats as the foundation of lasting change.

How Progress Will Be Reported

Progress will be reported in three directions. Owners will receive a quarterly report with the measures above, spending against budget and savings achieved. Clients will receive the same environmental measures in the format their scorecards use, so our results feed directly into their ratings. Employees will see a monthly summary on the plant floor, with each press crew's spoilage results and the bonus pool to date. Reporting the same numbers to all three groups keeps the program honest: no group hears a better story than the others.

What This Course Changed in the Case

When I began the course, I thought of sustainability as a set of projects, solar panels and recycling bins, that we might afford once business improved. The course changed that view in three ways. The systems thinking of the first module showed me that our spoilage, energy and packaging are connected flows, not separate problems. The value framework of the second module showed that the strongest case rests on cost, risk and revenue together, not on goodwill. And the stakeholder module showed that the program's success depends on press crews and on partners outside the company, which is why the case now includes shared savings and a joint innovation team.

Recommendation

Approve a three-year sustainability program with a net investment of about $2.6 million after tax credits, beginning with the year one initiatives next month, a steering group to govern it and quarterly reporting to owners and clients.

Conclusion

The printer faces a choice between waiting for clients to decide our future and acting to shape it. A sustainability program built on cost savings, client partnership, worker involvement and a new recyclable product protects our largest contract, lowers our costs and positions us for growth. It is a sound business decision and a responsible one, and its first steps can begin next month at little cost.

References

Dyllick, T., & Hockerts, K. (2002). Beyond the business case for corporate sustainability. Business Strategy and the Environment, 11(2), 130-141. https://doi.org/10.1002/bse.323

Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The impact of corporate sustainability on organizational processes and performance. Management Science, 60(11), 2835-2857. https://doi.org/10.1287/mnsc.2014.1984

Hart, S. L. (1995). A natural-resource-based view of the firm. Academy of Management Review, 20(4), 986-1014. https://doi.org/10.5465/amr.1995.9512280033

Nidumolu, R., Prahalad, C. K., & Rangaswami, M. R. (2009). Why sustainability is now the key driver of innovation. Harvard Business Review, 87(9), 56-64.

Senge, P., Smith, B., Kruschwitz, N., Laur, J., & Schley, S. (2010). The necessary revolution: Working together to create a sustainable world. Broadway Books.