A recent post over on the Procurement Leaders blog asked how much should sustainability cost. According to the author, he commonly hears two views and suspects a third, specifically that:

• cost is not the issue as it is really an investment with a potential impact on the top-line that merits the effort and expense
• it should cost as much as it takes to avoid a scandal

and, most likely in some firms:

• cost is not the point as it is simply not worth it

Regardless of your view, the author notes that it is worth thinking about what the acceptable cost of sustainable sourcing is, given that, earlier this year, Cargill payed a US 2.2 Million (sustainability) premium to co-operatives on a delivery of cocoa, with about 50% filtering down to cocoa bean farmers in Cote d’Ivoire.

One could argue that it was an investment as the money could be used to further sustainable farming techniques. One could argue that it was paid to avoid a scandal, given the number of articles that have appeared lately on the plight of cocoa farmers along the Ivory Coast, as sometimes you can avoid a scandal simply by not being one of the worst offenders. One might even argue that Cargill might secretly think it is not worth it, and just paid the money to make the whole issue someone else’s problem. (“We paid extra so the co-operatives could be sustainable. It’s their problem if they’re not.”)

I agree that it’s worth thinking about, but I don’t think that any of the answers the author provided, or suggested, are right. I think the cost of sustainability should be:

• Less, in the mid to long term, than not doing it at all.

If you’re sustainable, you’re using renewable resources. While the cost of a renewable resource may be high at first, as there are up front costs for the new equipment and processes required to produce or harvest it, over time these costs should reduce dramatically. On the flip-side, it’s almost impossible to point to a non-renewable resource where costs are not skyrocketing. So if you’re switching to a truly renewable resource, within a few years, say 5 on the outside, the cost of doing so should be less than sticking with a non-renewable resource. If it’s not, then either the resource isn’t renewable, the harvesting process is inefficient or wasteful, or someone, trying to take advantange of the sustainability frenzy, is charging you a green premium for which there is no justification but greed. (In that case, find another supplier or do it yourself.)

That’s the doctor‘s view. Anyone want to provide a differing one?