There has been an important shift in the past decade around how companies view sustainability. Once a back-of-the-house issue for risk analysts and facilities folks looking to reduce costs and keep the company out of trouble, sustainability has now emerged as a largely untapped front-of-the-house opportunity to create brand value, innovation, and new revenue streams.
To help make sense of this, Dimitar Vlahov, director of content development at Sustainable Brands Worldwide, a global network of brand leaders focused on these issues, shares four emerging trends that point to a future where sustainability will be a business game changer.
Over the past decade, large companies have become increasingly adept at analyzing their supply chains for environmental and social risks and, in turn, have been extending their responsibility more deeply into the supplier relationship.
However, a shift has emerged in which companies are upgrading the search for hidden risks in their supply chain to a wider search for shared value via new partnerships, product and process innovations, and as well as cost and profit-sharing models.
Global food and beverage giant Mondelez International provides just one example via their "Coffee Made Happy" program, which is investing at least $200 million to help coffee farmers improve coffee production and business skills. Another example is Brazil’s leading cosmetics and personal care company, Natura, which has developed the Ekos brand. Ekos partners with Amazonian communities to source its core ingredients and share in the line’s economic success.
Historically, marketing and consumer insights were driven by broad-sweeping quantitative techniques such as survey analysis and segmentation studies. However, these techniques have not effectively modeled consumer attitudes and behaviors around the highly complex set of issues related to sustainability.
While statistics-driven segmentation is still king, brands have discovered the value of augmenting it with the latest social and cognitive science advances and qualitative methods such as ethnographic research, empathy interviews, and applied meme science. One example is the Climate Meme project, which studies the spread of memes and ideas surrounding climate change to understand how they prevent or encourage people to engage with the issue.
In addition to a more qualitative approach to understanding the target consumer, a whole new quantitative approach is emerging around the measurement of highly individual, personal data. Technical advances are allowing individuals to measure and record massive amounts of data related to their health and environment, daily actions, movements, and purchasing decisions. This trove of data will allow companies to understand you on a highly personal level and modify products and services to fit your preferences.
Nest, a "smart" thermostat, learns your schedule and programs itself accordingly. Taking it one step further, Nest has recently announced a program for developers to hack the Nest system, allowing other items in the home to connect to it as well.
Just a few years ago, even advanced corporate leaders were still grappling with how best to determine the environmental impacts of products over their full life. Since then, a major shift has occurred, with social and environmental benefits regularly considered in new product and service design via Life Cycle Analysis (LCA), a technique to assess environmental impacts associated with all the stages of a product's life from cradle to grave (i.e., from raw material extraction through materials processing, manufacture, distribution, use, repair and maintenance, and disposal or recycling).
Beyond simply using LCA to tweak the linear take-make-waste product approach, a few leading companies are also seeking ways to close that loop and keep materials, energy, and waste embodied in a continuously cycling system. This approach is upending traditional design, distribution and disposal systems and inspiring whole new business models in the process.
One example of a leader pushing towards closed-loop design is carpet company Desso. A co-founder of the Healthy Seas initiative, Desso has been working with key supplier Aquafil to develop the capacity to continuously recycle old yarn from used carpets and fishnets into a new material. Another example is aluminum company Novelis, which has launched evercan, an aluminum sheet for beverage cans that is made from a minimum of 90% recycled content.
In the past, engaging employees in sustainability has been the domain of volunteer employees , working through green teams and environmental awareness events. However, there’s been a shift to more formal initiatives that embed sustainability into organizational cultures and specific job functions.
Alongside this shift has also been a growing realization of the positive impacts of such engagements on HR metrics like recruitment, employee satisfaction, and long-term retention. As a result, HR and sustainability leaders are teaming up to meet shared goals and address the critical need to build a workforce that can adeptly navigate important global megatrends.
HP’s Matter to a Million program gives a $25 credit to employees so that they can lend money to entrepreneurs on Kiva, an online lending platform. HP states that more than 86,000 employees have taken part and the company has received much positive feedback from participants.
Another approach is Microsoft’s Carbon Fee program that incorporates the cost of carbon pollution into the financial structure of the company. Microsoft reports that the program has helped to make everyone in the company more accountable for lowering its environmental footprint.
These emerging trends are already becoming a reality. And in an increasingly resource-constrained world, the companies that can best harness them will not only survive, but thrive in the future.