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.

Green is Lean: An Inside Look at Sustainable Purchasing at DHL Americas

Wayne Evans, Sr. Vice President for Procurement, the Americas, DHL

In our effort to explore green business issues and the impact sustainability has on organizations’ purchasing patterns, we are proud to interview  Wayne Evans, Senior Vice President for Procurement, the Americas, DHL.  During the interview, Wayne reflected on his team’s commitment to sustainability, and how he and his colleagues have found that green business practices can help save money.  If you have any questions that you would like to submit to Wayne, please let us know.

1.    Could you tell our readers a little bit about DHL and the kind of work you do there?

DHL is part of Deutsche Post DHL. The Group generated revenue of more than 46 billion euros in 2009. DHL commits its expertise in international express, air and ocean freight, road and rail transportation, contract logistics and international mail services to its customers. A global network composed of more than 220 countries and territories and 300,000 employees worldwide offers customers’ superior service quality and local knowledge to satisfy their supply chain requirements. DHL accepts its social responsibility by supporting climate protection, disaster management and education.

In my role as Head of Procurement for DPDHL Americas I am responsible for purchasing more than $1b of goods and services across 22 countries.  I manage a team of 70 individuals that have buying and sourcing experience in categories such as transportation, fuel, packaging, travel, production equipment, etc.  My day-to-day activities are focused on leading the team, meeting with business partners to understand their needs, and meeting with suppliers to better understand new products in the market.

2.    When did DHL first start talking seriously about green strategies?
DHL has been working on green strategies for many years.  In 2008 the company completed a major initiative designed to baseline the carbon footprint of the Company.  This was a critical step as it established criteria by which we can measure progress against an established goal.

3.    Would DHL pay more for a green-sourced product?
There are many considerations involved in a sourcing decision but in fact it is possible to pay more for a green product.  This can happen as the Total Cost of Ownership (TCO) is factored because initially it might appear that the cost is higher but when you factor the operational costs the product might in fact be lower in cost.  As an example, if we look at the TCO for a truck we may find Vehicle A has a slightly higher cost than vehicle B.  However, the higher-priced vehicle has greater fuel efficiency which is greener and over a period of time the total cost of ownership (TCO) is lower.  In another situation we did make a conscientious decision to buy recycled paper at a slightly higher cost because it is better for the environment.

4.    In which areas does DHL most frequently make green-minded business decisions?
Transportation has the largest impact on our carbon footprint and therefore it is the critical area to focus on.  This is a large part of our business and there are many levers that we can use to reduce the carbon impact.  We are heavily engaged in hybrid vehicles including trucks and we also look for ways to use electric vehicles and even bicycles where possible.

5.    What have been the major trends in green procurement over the last few years?

One of the core goals of procurement is to identify different ways to drive down costs. There are different ways that procurement organizations can combine cost savings with green initiatives.  One example is recycling items such as stretch wrap.  Many companies use a significant amount of this product to package and ship.  In the past during the unpacking process the materials were removed and thrown in dumpsters for disposal.  One of the more recent trends was to add a bailer which is a container used to gather the plastic waste materials and they are picked up by recycling companies who process this material into something like a pallet.  Companies can actually receive money for the used packaging materials and they use less space in dumpsters which lowers the cost of trash pick up.

Procurement professionals are also starting to look at ways to evaluate suppliers with regards to their “greenness”. Based on this evaluation, suppliers will be given credit for being a green company and in close bid situations it could be a deciding factor.

Another trend is demand management, where procurement professionals are getting engaged in minimizing the amount of product needed.  By using only what companies need there will be less waste and less cost.

6.    Can you tell our readers a bit about the GoGreen strategy at DHL?
Our goal is to improve our CO2 efficiency by 30% by 2020, compared to a baseline of our 2007 performance.  To help us monitor our progress towards our 2020 goal, we have set ourselves an interim target to improve the CO2 efficiency of our own operations by 10% by 2010. The ability to calculate our own carbon footprint is a key prerequisite of our GoGreen Program. We need to identify opportunities for reducing our footprint and to track how much we have changed our ways.  We also need the data to offset our GoGreen products and services, and in due course to calculate our customers’ individual footprints.

7.    Do you think the organization thinks about green issues differently since it is based in Germany?
It’s not so much that we think differently but more that we act differently.  Because we are a global company we act in a global way.  When we identify a key strategic initiative such as this it is rolled out across the world and implemented accordingly.  The green movement is a bit more obvious in many parts of Europe as they have been following some of the best practices in conservation for quite some time

8.    What kind of impact has the recession had in shaping or modifying the green strategy at DHL?
The recession has not had much of an impact because as previously mentioned “green is typically lean.”  Some of the projects with longer term ROI and high capital investments could have been impacted as companies were trying to conserve cash flow during the recession.

9.    What kind of difficulties have you faced implementing GoGreen with workforce and management?
Since the green initiative is a CEO-sponsored and lead initiative it has not been difficult getting support.  The only challenges come when there are large capital outlays required without a sufficient business case.

10.    What has been your greatest triumph in implementing the Go Green campaign?

We support four (4) businesses in the US and each is very independent.  We have been successful in pulling them all together and aligning strategies.  We have many projects that were initiated such as recycled paper, hybrid vehicles, alternative lighting, etc.

11.    What has been the biggest struggle or challenge in implementation?
In some cases it is not always easy to make clear sourcing decisions based on the supplier’s “greenness” as there are no real standards for accurately rating a supplier.

12.    Could you highlight a few examples of unique contributions DHL has made in the area of sustainability?

Green Tips for Marketing Success: Part 1 of 4

My firm, Grossman Marketing Group, put together our 100 Tips for Marketing Success earlier this year to mark our 100th anniversary.  Over the last century, we have learned a lot about what helps make our customers look good, so we thought we’d share what we’ve learned.

21 of the 100 tips involve sustainability, and over the next few months, I’ll be sharing these with you, by category.  If you’d like to download the complete set of 100 tips, please click here.  They are free! The four categories covered in the “green” section are 1) General Sustainability, 2) Green Promotional Products, 3) Green Design, 4) Green Printing.  I’ll get started with the General Sustainability tips.

Research shows that Americans want to work for, buy from, and donate to organizations that make significant and sustained efforts to address environmental issues.

  1. Sustainability can help you cut costs as well as build sales. We have experienced both at GMG and are happy to help you do the same at your organization. To learn more, just contact Ben Grossman at 617.591.2919 or bgrossman [at] grossmanmarketing [dot] com.
  2. Be transparent about green marketing claims—make sure they are verifiable by an independent, third party.
  3. Include your colleagues in your sustainability efforts; often the best ideas come from the bottom up, rather than from the top down!
  4. Spread the word about the sustainability efforts your organization is taking. Your customers, investors and colleagues care.
  5. Simple changes in your office can have a huge impact: use energy efficient light bulbs and put recycling bins at every desk. We encourage our colleagues to bring in old batteries, light bulbs and other household materials to be recycled for free.
  6. Employee education is key—sustainability must be part of the company culture. If so, it is much easier to implement (and less likely to be cut).
  7. Make sure to back up your green marketing efforts with truly sustainable business practices throughout your organization.

I hope you find these helpful.  We’ll be back to you later this summer with more!  Many thanks for reading!

Whole Foods/Cork ReHarvest Partnership: A Best Practice in Product Lifecycle Management

Image courtesy of Whole Story - the official Whole Foods Market blog.

Earlier this spring, Whole Foods Market and Cork ReHarvest announced a partnership to allow Whole Foods customers to leave wine corks in drop boxes in all Whole Foods stores in the United States, Canada and the United Kingdomto be recycled.  This is an interesting program with a great focus on the lifecycle of products.

Although many people recycle cans, bottles and newspapers, too many other products slip through the cracks and end up in landfills.  I have written in the past that all products that cannot be recycled in towns and municipalities at curbside should come with instructions on how to responsibly be disposed of when finished.  Whether this includes empty toothpaste tubes or laptops, it is important for companies to not only focus on the green marketing message at time of sale, but also the environmental considerations at the end of the product’s lifecycle.

Whole Foods has been an industry pacesetter for some time, having announced a partnership with Preserve in early 2009 to allow customers to bring in hard-to-recycle #5 plastic to stores to be recycled.  This includes Brita filters, which too often find the trash after two months use.  Here is some additional coverage on the Whole Foods blog from April 2010.

My firm, Grossman Marketing Group, also tries to do its part by not only using environmentally-friendly products but also allowing our employees to bring in used lightbulbs (CFL), batteries and paint from home to be recycled.

Consumer goods and electronics companies have a long way to go to ensure that their customers know the facts about what to do with their products when they are finished using them.  However, these partnerships that companies like Whole Foods have created are an encouraging step – and probably a very good way to continue to build their brand and encourage store foot traffic at the same time!

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.

Green business: chief sustainability officers, product innovation and employee education

An interesting article was posted on CNBC.com last week by Aman Singh, who is an editor with Vault and works with Fortune 500 companies on reporting their diversity recruitment strategies and initiatives.  The piece started:

Let’s face it. Even though nothing came out of Copenhagen, awareness of easily avoidable phrases like “climate change,” “green careers,” even “green jobs” became hugely Googled, SEO-ed, categorized and tweeted. So, with this newfound green knowledge, how will we as employees, consumers and maybe more importantly, as decision-makers, inculcate sustainability in the workplace and bring it to the attention of the executive suite?

Singh proceeds to discuss how many large companies have added sustainability chiefs without “demanding that they embed sustainability in the company’s long term strategy and all operations. Until regulation and stakeholders support us, achieving corporate social responsibility remains an elusive goal, titles notwithstanding.”

Singh has a good point, but seems a bit shortsighted when he makes this blanket assertion.  More and more companies are coming to understand that sustainability is good for their reputation and employee morale, but also for their bottom line. Research has shown that people want to buy from companies that are seen as socially responsible.  I agree that regulation is important, but customers often drive innovation, and therefore new product development that considers the environment, like laundry detergent that uses 80% less water, will only continue to speed up.

In my experience working with clients to address sustainability in their business operations and sales and marketing efforts, I have seen companies discuss the environment without the ability and knowledge to execute – exactly the problem Singh highlights.  However, I have also seen companies who not only have sustainability offices discussing strategy but also working on the execution internally to make it a reality.  In these organizations, senior management includes their colleagues in the sustainability efforts and brainstorming, as they recognize that the best ideas often come from the bottom up, rather than from the top down.  In addition, employee education is key – sustainability must be part of the company culture.  If so, it is much easier to implement (and less likely to be cut).

Here’s a link to the full article on CNBC.