Dinah McLeod

It's true that times look tough. Thanks to the sub-prime crisis and the global credit crunch, many economies are in poor shape. Oil prices are continuing their upward spiral and rose by about 400 per cent between 2001 and 2008. And the increase in food costs is affecting most countries around the globe, with prices for dairy products up 80 per cent, cooking oils up 50 per cent, and grains up 42 per cent from 2006 to 2007.

As a result, it's already been suggested that tax increases designed to wean us all off fossil fuels are postponed, if not abandoned. The fear is that they will drive the developed world even deeper into recession. Commentators point to events such as the World Economic Forum in Davos in January, where some argue that climate change was bumped off the agenda by the turmoil on the world markets, as evidence that priorities are already shifting.

I'd argue, however, that people - and companies - who think sustainability is merely a fair-weather exercise have been missing the point. Indeed, as environmental entrepreneur Shai Agassi comments, the lack of an official green agenda in Davos is actually a good sign. He says: "It just shows that we are off the hype curve and into solutions."

And as Lord Stern, former chief economist of the World Bank and author of the UK Treasury's Stern Review on the Economics of Climate Change, said recently: " I think that difficult times should not derail this. There will be some ups and downs over the next 50 years but we have to push through that."

He's right. When times are tough, the onus on every business is to save money, protect and build revenues, and make sure that core business assets are being fully utilised. Running your business in a sustainable way can be a key driver when it comes to attaining goals – not just when times are tough, but actually because they are tough. In fact, I’d say there are three main reasons to ramp up your sustainability efforts when times are hard.

First, it’s a good way of responding to the three "Rs" – revenue, reputation and regulation. Take revenues. In times of rising prices, businesses need to manage their supply chains and business processes to ensure maximum productivity.

And according to consultancy McKinsey: "Most companies in most sectors have opportunities to save money by cutting energy consumption and gas emissions. Our studies indicate that a lot of companies can reduce them by 20 to 50 per cent". Pfizer, the pharmaceuticals company, for example, saved $30m a year between 2002 and 2005 with its programme to cut energy wastage and use more power from renewable sources.

And there are other ways to cut costs by running your company in a sustainable way, too. According to Fortune magazine, retailer Wal-Mart found that it could save $26m a year on its fleet of 7,200 trucks by installing auxiliary power units. These enable the drivers to keep their cabs warm or cool during mandatory 10-hour breaks from the road. Before that, they'd let the truck engine idle all night, wasting fuel.

Similarly, it installed machines called sandwich balers in its stores to recycle and sell plastic that it used to throw away. Company-wide, the balers have added $28m to the bottom line.

Then there's reputation. Abandoning environmental commitments can have a big impact on how a company is perceived – not something that any firm wants to attract when facing financial pressures, particularly when we live in a world in which a 2007 survey of MBA students quoted in the Financial Times found that " 77 per cent of them would willingly forgo income to work for a firm with a credible sustainability strategy".

Indeed, just because times are tough it doesn't mean customers have altered their behaviour. And perhaps particularly when times are hard, they still want to see companies doing the right thing, environmentally, economically and socially. How would customers respond if, for example, Marks and Spencer was to abandon its £200m Plan A environmental initiative because of fears of recession?

And then there's regulation. Recession or no recession, governments worldwide have plans to introduce low carbon legislation – indeed the European Commission plans to cut emissions by 20 per cent by 2020, and both US presidential candidates are talking about 65 to 80 per cent cuts by 2050. Clearly businesses need to take sustainability into account when they are developing regulatory strategies, and doing so can help them manage risk effectively.

The second reason to ramp up your sustainability efforts when times are tough is that crises often spur innovation and change.

In its 2007 special report on innovation, The Economist quoted Vinod Khosla, the venture capitalist who co-founded Sun Microsystems, as saying: "A crisis is a terrible thing to waste." Talking about car makers' addiction to oil and the consequent warming of the planet, he added: "The energy and car industries have not been innovative in many years because they have faced no real crisis, no impetus for change."

Indeed, a recent Boston Consulting Group report looking at the world's top 50 innovative companies noted that they tend to develop more during a recession, rather than scaling back on creativity. As BusinessWeek observes in its recent issue listing the world's most innovative firms: "No finger-wagging Wall Street analyst is going to keep them from doubling down on smart bets that will position them well when the economy rights itself again".

The 2008 leaders picked out by BusinessWeek include the Mumbai-based conglomerate, Tata Group, which entered the list for the first time thanks to its paradigm-busting $2,500 "Nano" car for the masses. This is the world’s cheapest car, thanks partly to a distribution model that sells the auto in kits to entrepreneurs who assemble them for buyers. Also listed was US firm General Electric whose CEO, Jeff Immelt, is so encouraged by his company’s " ecomagination" initiative that he's raising the revenue target for green projects from $20bn to $25bn by 2010.

Indeed, making sustainability part of your core business can lead to the creation of completely new markets for companies.

Take another of the firms on the 2008 innovation list – Toyota, creator of the new hybrid car market. Now probably one of the best known cars in the world today, the Japanese company plans to roll out a more fuel-efficient Prius in 2009 and expects to sell one million hybrid vehicles a year by the early 2010s.

Or BT. Our focus on driving CO2 emissions and costs out of our business has resulted in conferencing services that save our company £230m a year. But we don't just use these services ourselves – we sell them to companies all over the world. The supermarket giant Tesco, for example, has cut its carbon emissions by 2,446 tonnes a year, cut travel costs by more than £10m a year, and enhanced staff productivity by 18 per cent through the use of conferencing services.

Looking forward, our new immersive video conferencing solution is fast establishing itself as a real alternative to executive travel, putting us in genuine competition with the airlines for the first time. And the design changes we've made in our new data centres, which mean they use 60 per cent less power than traditionally-designed equivalents, give businesses an attractive ‘green’ alternative to operating their own power-hungry installations.

Jeff Bezos, Amazon.com's founder, said recently: "I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out".

We are undoubtedly in a period of constraint at the moment. But that doesn't mean we need to choose between averting climate change and growth and development. Far from being a bad time to think about sustainability, a downturn may prove the most fruitful time to do so.

Dinah McLeod is head of the sustainability practice at BT Global Services