Are product sustainability programs at a tipping point?
Are product sustainability programs at a tipping point?
Over the last few months I’ve had a chance to speak to a large number of senior business, EH&S and sustainability leaders at a variety of Fortune 500 ERM clients about product sustainability and what it means to their organizations. What resonated in these conversations is that designing and implementing product sustainability programs at an enterprise level is now a strategic imperative for many companies. This was a consistent theme across many different market sectors and was being driven by the belief that a product sustainability program could create significant business value for their organizations.
Generally, these programs focus on improving performance across the enterprise in the following areas (including but not limited to): life-cycle management, product regulatory compliance, supply-chain management, materials, waste, energy, water, packaging and product innovation. Companies are finally being able to see that a product sustainability program can lead to opportunities to increase sales, reduce risk, improve brand recognition and trust as well as develop organizational capabilities related to sustainability and innovation. And, of course, an improvement in their overall environmental and social performance.
This hasn’t always been the case. Companies historically addressed product sustainability issues reactively, intended to deal with a specific customer request related to a product life-cycle or supply-chain initiative, or with a pressing regulatory issue. It was not because they saw the ability to create business value by designing and implementing product sustainability programs at the enterprise level.
Companies are now seeing that the status quo of reactive responses is no longer enough. Many of these companies are seeing their market leadership position erode as their competitors are beginning to make serious commitments — as well as substantive progress — towards product sustainability leadership. They are realizing that they need to be more proactive in understanding and meeting regulatory requirements to ensure they have a license to operate in an environment where the global regulatory landscape is increasing and becoming more complex. They have better access to product-level data and information as a result of the implementation of large scale EHS and sustainability information systems; these systems not only report what is — or is not — in a given product but can also indicate resource (e.g., energy) intensity to help manufacturers improve overall business processes. Some companies are losing business by not effectively communicating the environmental impacts of their products and operations in response to a customer supply chain initiative.
Next page: focusing on the most important opportunities
Most importantly, there is an increasing emphasis placed on product life-cycle management to ensure their companies are focusing their attention on the most important opportunities and issues across the product value chain.
Most of these companies are struggling to understand how to unlock potential business value from a product sustainability program and to indentify and access the resources they need to deliver on their vision for product sustainability. That’s where the challenges and complexity of designing and implementing product sustainability programs expose themselves. The business value is difficult to determine and in most cases the companies do not have — or are unsure as to whether they have — the right resources to make all of this a reality, from a people, tools and infrastructure perspective.
Considering a few important questions when designing and implementing a product sustainability program can help companies understand the overall investment and type of resources they need and can provide clarity on how and where business value can be created:
What global and regional macro trends are material to your company’s sector and business? Understanding key trends will help to identify the external environmental, social and economic factors that could have a significant impact on a company and the associated product sustainability program. Considerations for dealing with these macro trends should be integrated into the design and implementation of these programs in order to mitigate risks and take advantage of the opportunities associated with these trends.
How are your company’s sustainability goals linked to the overall business strategy? It’s critical that there is an understanding of the relationship between the company’s sustainability goals and business strategy in order to ensure the product sustainability program is designed in a way that helps to create a strong link between the two. This will ultimately create a "lever" that helps achieve both the sustainability goals and business strategy of the company.
How will your customer and stakeholders attitudes on sustainability evolve? There needs to be foresight into how customer and stakeholder expectations will evolve over time. Projecting where value can be created downstream for customers and stakeholders through a product sustainability program is important in ensuring the investment into the program has an actual impact over the long term.
What are your competitors business and sustainability goals and how have they performed against those goals? It’s important to consider your competitors business and sustainability goals — and their ability to meet those goals — in order to ensure you have the ability to create or maintain a leadership position in the marketplace.
How might product and technological innovations affect the company? It’s impossible to know with 100 percent certainty what the next -generation material will look like when it is introduced. However, developing a better understanding of how potential breakthroughs in materials, processes and technologies may impact both current and future state product sustainability programs will help you effectively design a program that aligns with — and adjusts to — these innovations.
- What are the organizational resources needed to ensure the program meets its objectives? The company needs to have a clear understanding of the resources required to deliver on the investments that are being made into these programs. This isn’t only people, but also the approach that a company will take and how that approach impacts the level of resources needed. The resources and expectations are much different if the company decides to ‘pilot’ a program within a selected business unit versus attempting something more broadly across the enterprise.
Obviously, these questions are difficult to answer and the impact of each to a company will vary. If they are well understood, though, they will help to highlight the opportunities and risks that the company needs to understand when designing and implementing a product sustainability program.
With the apparent momentum in investing in product sustainability programs it appears we might be getting close to a tipping point where these programs are seen as a clear way to create and unlock business value as well as improve environmental and social performance.
Image of pushing rock uphill by Sergej Khakimullin via Shutterstock