Deloitte Report – Sustainability in Business Today: A Cross-Industry View

By Marisa Greenwald (Green Marketing & Sustainability Practice, Grossman Marketing Group)

Despite widespread support for sustainability reforms, lofty rhetoric from CEOs and government incentivizes for businesses to “go green,” corporate sustainability improvements have been limited.  To further probe why companies are not moving more aggressively on this front, Deloitte recently published a study that delineates corporate perspectives on sustainability based on responses from 48 companies across different industries.  The report studies these perspectives in five contexts: general sustainable practices, sustainability related to innovation, corporate responses to sustainability incentives in the stimulus package, the relevance of new skills in pursuing sustainability efforts, and future sustainability trends.  Several compelling trends emerged from this study which I thought would be worth sharing with the Sustainable Ink community.

First, it is interesting to note the challenge companies face trying to innovate through sustainability.  The study found that in the area of product innovation, 23% of companies surveyed were developing entire sustainable product lines while only 25% of all companies surveyed indicated they were pursuing efforts to make their products more sustainable.  So while a considerable portion of companies are devoting entire lines to greening efforts, only a fourth of all surveyed incorporate the sustainability factor into innovation.  A major problem companies identify when trying to create sustainable products is the tension between willingness to pay and cost.  Even though customers may want sustainable products, they are not necessarily willing to pay more for them, so companies must find ways of keeping the sustainable measures cost-neutral.

Another interesting finding from this report is the corporate reaction to sustainability incentives in the stimulus package enacted last year.  While there was an overall mild recognition of energy efficiency incentives in the legislation (5.29 on 10-point scale, with 1 being not at all familiar and 10 being very familiar), there was the largest gap in understanding between the automotive industry, 6.38, and the technology industry, 3.91.  The gap in policy awareness between the industries supports the broader idea that there is a heightened emphasis on greening in the automotive industry, where carmakers have been under considerable scrutiny and consumers have a relatively high willingness to pay for a hybrid vehicle, compared to a willingness to buy energy efficient technology products.

Overall, this report offers strong insights into corporate perspectives and decision making criteria in the context of proposed sustainability reforms.  Sustainability advocates and policymakers must continue to consider the needs of corporations who are open to pursuing stronger sustainability standards but whose aims continue to be maximizing shareholder value and maintaining profitability.

Click here to download the full report from Deloitte.

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Making Apparel Transparent: Companies Team Up to Measure Sustainability of Shoes, Clothes

Source: Levi's

By Marisa Greenwald (Green Marketing & Sustainability Practice, Grossman Marketing Group)

We have written often at Sustainable Ink about the importance of transparency, as well as the need to account for the environmental impact throughout a product’s lifecycle.  With that in mind, we are pleased to see a positive step taken by some well-known corporations.

At next month’s Outdoor Retailer trade show in Salt Lake City, retailers will receive a new tool to help them pursue their sustainability goals.   A group of about 100 retailers and manufacturers, including Nike, Levi Strauss, and Target, have joined forces to develop software that makers of apparel and shoes can use to measure the environmental impact of their products and assign to each an “eco-value” similar to the Energy Star rating of appliances.

Known as the “Eco Index,” this software tool works by posing a series of questions to companies on their environmental and labor practices, including some questions directed towards the companies’ suppliers.  The software then assigns a score that represents a percentage of a perfect score.  The goal of the Eco Index is to showcase competing items in retail settings with various “eco-value” scores so consumers can easily factor sustainability considerations into their purchase decisions.  Firms like Timberland and Patagonia have publicly expressed their desire to move the conversation forward and gain consensus among similar companies so that an effective and meaningful eco index program can be implemented.

With the heavy use of chemicals and crude oil to produce and ship these items, apparel production takes a heavy environmental toll that warrants accountability.  While many consumers are increasingly motivated by sustainability concerns, it is often difficult for them to understand the environmental consequences involved in producing many of their favorite products.  If companies begin to report the environmental impact to create their products, and consumers react by choosing certain items over others on environmental grounds, companies may become even more motivated to improve their sustainability efforts.

For more information about the Eco Index, check out this article from The Wall Street Journal or this recently featured piece in Fast Company.

Highlights of Ceres Roadmap to Sustainability

By Marisa Greenwald (Green Marketing & Sustainability Practice, Grossman Marketing Group)

Ceres’ report, titled “21st Century Corporation: The Ceres Roadmap to Sustainability” which it released earlier this spring, contains noteworthy proposals for corporate governance and green marketing.  As a network of investors, environmental organizations and public interest groups, Ceres incorporates the private sector perspective into the sustainability movement.  The report encourages organizations to create serious internal metrics for sustainability rather than limiting their focus to their sales and PR efforts.  Out of the 20 expectations presented for new business standards, I wanted to highlight three in particular, which, if implemented, would help align business objectives with sustainability goals in a meaningful way.

The first expectation of note is “requiring clear public policy position statements” from companies.  Ceres believes that companies should disclose their public policy positions, as well as membership in and contributions to trade associations. When appropriate, companies should also develop public policy positions that support best practices in sustainability.  An example of this was in Fall 2009, when several companies, including Apple, left the U.S.  Chamber of Commerce because of the organization’s criticism of pending climate change legislation.  This expectation would go a long way in removing the current disconnect between lobbying and marketing by requiring companies to integrate sustainability messages into consumer communication, and actually prove that they’re truly committed to environmentally-sound practices.

Another standard worth mentioning is for companies to require “suppliers to meet the same sustainable standards as the company.”  As part of a marketing communications company with some of the strongest environmental standards in the industry, I understand the environmental impact that sustainable practices, and, alternatively, their absence can have across the entire supply chain.  This recommendation would reward suppliers with positive environmental practices, incentivize companies to work with environmentally-minded suppliers, and hold companies accountable not just for their own practices but for their vendors’ practices.

A final impressive expectation laid out in the report is “designing and delivering products [and services] aligned with sustainability goals.”  This expectation goes to the heart of a company’s work and places a high consideration on sustainability in product formulation and promotion.  By factoring environmental considerations into the creation of products, companies will be playing a positive role in shaping consumer behavior by moving consumption patterns toward sustainable ends.  As someone passionate about green pursuits, I see this expectation as the one with the most potential beneficial impact in the sustainability cause.

Ceres mentions one interesting way to implement this final idea: it recommends that companies “re-conceive the idea of a ‘product’ such as transitioning from offering products to offering utilities or services. “  In fact, Ceres mentions one of Grossman Marketing Group’s most sustainable-minded clients, Zipcar, which has reshaped the way consumers use automobiles.  As mentioned, Zipcar offers customers the use of a car in hourly units, which removes the need to own a car for urban use and moves toward offering the car as a service.  Zipcar also offers lower pricing for hybrid vehicles, encouraging customers to use this cleaner mode of transport.

While this report contains some impressive ideas for corporate reform, it is unclear whether and to what extent such expectations will be implemented in the coming years.  Regardless, the report serves as a positive sign that some agreement has been reached between private sector influencers and public sector opinion leaders on the need to move forward in implementing sustainability standards.  It also lays out for companies a sustainability roadmap, should they choose to use it.

Click here to access the full Ceres report.