Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 1

Achieving sustainability requires a carefully planned and executed policy for reducing the firm’s environmental and social footprint. This could be measured in a number of ways, such as the amount of waste products, workplace injuries, carbon and sulfur emissions (as indicated in Exhibit 2.8), and other social and environmental indicators.

Marc Epstein notes that Royal Dutch Shell and Alcoa, two large process firms, employ review processes to assess human rights risks, health, safety, and other environmental issues before investing in a new location. Other initiatives include those by Wal-Mart in recent years to redesign its product distribution system to reduce fuel usage by over 30 percent. Other companies are using solar energy, some to the extent that they can sell energy back to the energy grid provided by the energy companies. In other initiatives in agriculture, genetic engineering and improved seed and planting methods have reduced the need for fertilizer and other soil treatments, saving the cost and also the environmental impact of these chemicals. There are many other stories that you may know of. The Epstein publications cited below provide additional examples.

Source: Marc J. Epstein, “Implementing Corporate Sustainability: Measuring and Managing Social and Environmental Impacts,” Strategic Finance, January 2008, pp. 25–31; Marc J. Epstein, Making Sustainability Work: Best Practices in Managing and Measuring Corporate Social, Environmental and Economic Impacts (San Francisco: Berrett-Koehler, 2008).