Updated: Apr 22, 2019
The following article appeared in Triple Pundit on April 12, 2017
“Keep your eyes on the stars, and your feet on the ground.” – Theodore Roosevelt
These are crazy times. Rarely has a political climate brought so much uncertainty, leaving companies wary of how shifting regulations may affect them, unsure of which side to take on a social issue (or whether to respond to a Trump direct tweet) and striving to protect their brands while staying true to their values.
Amidst all the distractions, we applaud sustainability corporate leaders working hard to keep their ships on course and “future proof” their businesses by showing how sustainability leadership drives resilience, efficiency and growth.
At Futerra, we use a Theory of Change to structure our approach to the many complexities of sustainability. Through our work with companies on their sustainability strategies, we’ve had the privilege of identifying characteristics that distinguish resilient and adaptive strategies from short-term patches. We hope that you can use these to help guide your own evolution or, at the very least, show you some tested roadmaps so you don’t have to spend yet more hours on benchmarking or the business case.
1. Imagining a better future begins with a clear vision and aspirational goals
Companies that have a vision for the future are far more likely to progress toward their goals. Despite the seeming risk of not being able to live up to a commitment, big-hairy-audacious-goals are the best way to push forward progress on things companies know they need to do. Unilever’s classic ambition to “decouple growth from environmental impacts,” Wal-Mart’s aspirational goal to “move towards 100% renewable energy” and Nike’s goal to “double the business with half the impact” are all great examples.
Yet, companies often shy away from aspirational goals because the path to reach them may be opaque or uncertain, requiring solutions that don’t yet exist. But as Europe’s largest do-it-yourself home furnishing store Kingfisher exemplified with its Net Positive strategy, its okay to set the ambition, then begin with short term targets that get updated over time as you make progress and work out what the path ahead can look like. For example, with timber, they articulated a vision of global net reforestation, aspired to “create more forest than the company uses,” and committed to a five year target of 100% responsibly sourced timber and paper.
Unilever, which set out its Sustainable Living Plan in 2010, refined its targets after five years with a new ambition to become “carbon positive” by 2030, among other commitments. And last year Walmart set out its first time-bound commitments for progress against the aspirational goals it established in 2005. Walmart set an aspirational goal in 2005 to operate with 100 percent renewable energy and it was only last year that they set a time-bound target of aiming to power half their operations from renewable sources by 2025.
Unilever has met many of its targets but not all of them. But stakeholders clearly appreciate the commitment and transparency, ranking it as the corporate leader on sustainability for the last 6 years in a row.
Tip: Be bold when imagining your vision and don’t be afraid to set aspirational goals!
2. Built-in sustainability leads to higher profits
It’s no longer just about reduced risks. More and more companies have turned sustainability into huge business opportunities as profiled in rich detail by our North America CEO Freya Williams in "Green Giants."
Among her first class of green giants – brands that have turned sustainability into billion dollar businesses – are well known companies with large, complex and messy operations – such as Nike, Unilever and Chipotle. We often note the financial success of these brands. Nike’s flyknit technology is now used in 28 of its top performing models while also massively reducing waste.
Unilever’s “sustainable living” brands like Dove, Ben and Jerry’s, and Comfort are contributing to half of the company’s overall growth because consumers are demanding responsible business and brands. Meanwhile, as of 2014, Chipotle outperformed McDonald’s and KFC owner Yum! Brands by 30 percent.
For other companies like Tesla and GE, their entire business model centers around innovations in technology, materials and process design to deliver products with improved economic and environmental outcomes.
Either way, as we now compile a list of the “next billion” companies, it’s clear that the confluence of purpose and sustainability has a critical role in developing appealing products and profitable businesses.
Tip: Position sustainability with leadership and colleagues across the business as a way to stay on the front foot with your consumers.
3. Taking back ownership of product lifecycles
In addition to focusing upstream where supplier impacts are often quite large – and often the first point for impact for companies with large and complex supply chains - more and more companies are now looking downstream by focusing on the full lifecycle of their products. And they are doing it with a view to capturing value along the full product lifecycle – not just reducing impacts.
Building on early efforts by companies like Interface and Xerox to take back their own products as a way of maximizing value without using new materials unnecessarily (e.g. by swapping out carpet tiles and refurbishing machines and parts), consumer goods companies across the board are quickly identifying new circular business models.
In particular, electronics and apparel companies like Patagonia, The North Face, Dell and many others have ramped up product take-back products initiatives, which have a big impact on reducing waste to landfill, increasing reuse and recycling. They are identifying more and more opportunities to save money such as by reusing parts and materials, and make money by capturing resale and rental markets.
Tip: Don’t leave money on the table! Capture missed profit opportunities and reduce waste by finding opportunities to resell, reuse, or refurbish.
4. Giving consumers a role in making change