By Mia Overall
“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
People want to be, and want their brands to be a force for good. So companies are connecting with consumers by providing them with opportunities to take action. Apparel companies like H&M are inviting consumers to bring their used items back into the store for recycling.
Others are inviting consumers to contribute to a cause by donating profits (or a portion of them) towards a specific cause, like Patagonia’s 100 Percent for the Planet campaign, or Macy’s Shop for a Cause. Companies are also inviting consumers to take action, like Heinz’s Selfie for Good campaign to fight hunger. Engaging consumers recognizes that they have a role in imagining a better future for all of us.
Tip: Make your consumer the hero in making change. Everyone loves being a protagonist.
5. Aligning with the SDGs to achieve focus
With the U.N. Sustainable Development Goals having honed the world’s focus by providing a roadmap and a timeline – “end poverty, protect the planet and ensure prosperity for all by 2030,” many more companies are aligning their strategies with them than we saw with the Millennium Development Goals. With 169 targets to pick from, companies are focusing their efforts on both core impact areas as well many of the less obvious areas of business impact.
According to initiatives tracked by the Business for 2030 portal, which tracks data from 47 global organizations, SDG No. 3 — ensure healthy lives – is the most popular choice with health-focused companies like Merck and non-health focused companies like Levi Strauss investing together in eradicating HIV/Aids.
SDG No. 7 — ensure energy for all — follows that closely with many companies joining hands to make a strong push toward renewables.
In third place for now is SDG No. 8 — promote economic growth and decent work: a clear area for businesses regardless of size or location can have influence by providing good jobs.
Then there are offshoot initiatives focused on specific SDGs that continue to start up as we settle into 2017, such as Alliance 8.7 focused on eradicating forced and child labor and Champion 12.3 focused on reducing food waste.
Tip: Take a moment to identify how you your sustainable development efforts align with the SDGs. You may be able to achieve a greater impact – and recognition – by focusing your efforts on these goals first.
6. Partnering with competitors to tackle industry-wide challenges
Challenges such as poverty, climate change and human rights remain bigger and more complex than any single company could take on alone. Shared recognition of this has encouraged companies to increasingly turn their strategic sights toward industry-wide collaborations.
Participation in long running collaborative initiatives like the CEO Water Mandate, Human Rights Working Group and Consumer Goods Forum have continued to grow and are giving way to an ever increasing number of initiatives such as RE100 addressing renewable energy, Fashion for Good driving improvements in fashion and a host of others issue building inclusive economies, gender parity.
Tip: If you are struggling with something in your business or supply chain, chances are other companies are too, so why not look around for pre-competitive opportunities to collaborate.
7. Setting environmental targets focused on outcomes
Companies are getting serious about measuring their environmental impacts, starting with carbon and pushing the boundaries from there. Science-based targets have taken hold with over 200 companies now committed to set greenhouse gas [GHG] emissions reductions targets based on scientific estimates of what’s needed.
Despite a political shift in the U.S. on climate change, many companies are continuing to plow ahead to power more of their operations with renewable energy sources. Google announced a full shift to renewable energy in 2017.
One thousand companies and investors — including Levi’s, Hewlett Packard and Mars — have taken an activist stance, signing on to the Low Carbon USA initiative urging the U.S. to re-affirm its commitment to implementing the Paris climate agreement.
But this has not stopped at GHGs. MARS, for instance, is extending the concept of setting targets based on what is needed rather than what is feasible to land and water, part of a broader strategy to focus on the impacts of their business.
Tip: Look for areas where you can challenge your company to go beyond the incremental improvements that seem easy to achieve and consider adopting one of the methodologies that help companies calculate backwards from what is needed.
8. Addressing inequality in the supply chain
Many companies are tackling growing labor shortages and dwindling small farmer communities by exploring fundamentally different business models that would give workers and farmers a bigger portion of the final product value. These are hard conversations – both for public and for private companies. Some companies like Barry Callebaut are beginning to set measurable targets here.
But as consumers grow more aware and therefore, less tolerant of inequality, companies are increasingly investing in the work required to map, understand and then engage with their supply chains.
Tip: Question the status quo. There may be ways to adapt business models to enable the lowest earning stakeholders (farmers and employees) a more equitable share of profits.
In a year underlined by a sense of uncertainty, there has never been a more crucial time to start mapping your sustainability strategy – one that can withstand political and economic headwinds, is measurable, intentional and can help your business grow resiliently. Where will you begin?
Image credit: Pixabay
Mia Overall is Strategy Director at Futerra, a change agency that brings the logic of a sustainability consultancy and the magic of a creative agency together to help clients build brands that are symbols of positive change, and unleash progress that has purpose. Mia has spent the last 15 years working on sustainability and sustainable development, designing programs for the World Bank, various UN Agencies, and advising companies across a range of sectors.