As Joel Makower highlighted back in February of this year, sustainability standards, particularly those that represent the broad spectrum of indicators within sustainability, are needed and becoming increasingly common.
But the unanswered question is this: Does a company's investment in implementing a sustainability standard have tangible business benefits? The question remains no matter whether a company is exploring a product certification, operational system, investor ranking or set of supplier requirements.
To try to dig up an answer to this increasingly pressing question, I set out to speak to a few industry leaders about the sustainability standards they had implemented. In defining the term "standard" in this realm, I included product certifications, sustainability rankings, operation standards and supplier standards.
What I found was that, regardless of whether the company's experience in standardization was focused on the supply chain, on consumer-facing green labels or on broad industry rankings, some key themes emerged:
- The usual reason for creating or utilizing a standard was to clarify a fuzzy concept and create differentiation;
- The flip side of this is that standardization begets commoditization, and in some cases it isn't clear if these standards are a good use of scarce resources and attention;
- We should beware of trendy "declarations" or rankings that may not truly demonstrate environmental or social benefit.
Why Utilize Standards?
When a company creates or utilizes an industry standard, it requires time and financial investment. A champion inside the company has to make the business case to the organization's leadership that the standard will be accretive to the brand or produce some beneficial business result.
The champion then has to learn or teach the standard to affected stakeholders within, and outside, of the organization. The standard then has to be implemented, and product or operational changes made.
Invariably, there is then marketing cost to explain the standard or communicate benefits to consumers or other stakeholders. A company should also be transparent about the status of a standard's implementation within the company -- and its value chain.
This seems like a lot of work. So why bother?
As anyone working in sustainability or corporate social responsibility can attest, explaining what it means to offer a "sustainable", "green", "responsible" or otherwise environmentally or socially beneficial product or service is an uphill battle. These words have many interpretations. When trying to communicate intentions, requirements and accomplishments -- specific, measurable clarity is essential.
Next page: How Clorox, Bonterra Vineyards and AMD Put Standards to Work