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Today’s leading companies are grappling with how to achieve progress on a complex array of sustainability-related goals, including the reduction of carbon emissions, toxic releases and water and materials usage.
While plenty of companies have made progress in assessing and reducing the impacts of their products, a nagging question has persisted in the C-Suite: Can these efforts really improve product costs and functionality?
The answer, according to ongoing research by Cornell University’s Center for Sustainable Global Enterprise, fortunately and not surprisingly is, yes. We expect our forthcoming study to show that firms are taking a variety of approaches to effectively translate broad corporate goals into measurable improvements over time, and that they’re doing this by emphasizing more than just the cost and risk reductions — factors which have motivated earlier iterations of such programs.
Currently there is limited academic research on sustainable product innovation and the value it creates. The goal of this study is to apply the rigor of a university-led approach to summarize existing literature and interview corporations about their experiences to date. Ultimately, the study should serve as a guide for corporations across sectors that wish to learn from other companies’ endeavors.
From risk-oriented to customer-centric
Some companies’ efforts to assess the impact of their product lines are evolving from that traditionally risk-oriented approach that seeks to increase efficiency and reduce the firm’s exposure to environmental problems. Instead, some product sustainability programs are focusing on improving sustainability while putting customer needs at the heart of the program.
When the focus goes from reducing risk and cutting costs to improving the customer’s experience, programs cease to be the narrow domain of sustainability professionals and engineers.
This evolution from risk-oriented to customer-centric is a promising trend that could result in both increased revenue and reduced environmental burdens for brands over the long term. For example, via Earthwards, an internal program meant to incentivize brands to improve product performance on multiple dimensions ranging from packaging, to transportation impacts, to materials sourcing, Johnson & Johnson starts with a focus on the company’s customers. “Meeting customer demand for greater sustainability in our products is the biggest driver for success of the program,” J&J told our researchers.
Other companies are at an inflection point where they are shifting from making a business case for their sustainability efforts anchored on cost savings and risk reductions into one that emphasizes revenue growth opportunities driven by product improvements. Some companies are setting aggressive sales targets for sustainability-related products to catalyze change.
At Hewlett Packard Enterprise, the sustainability team is partly evaluated by revenue growth that can be attributed to the sustainability advantages included as integral parts of their product and service offerings. “Sustainability advantages can lead to revenue when you start to hear a customer’s needs as a sustainability need,” the company told our researchers.
The research also is indicating that as companies change their approach to product sustainability, they face new challenges. Growth-oriented approaches to product sustainability improvements require firms to develop new, more effective processes that leverage internal awareness across functions and result in measurable outcomes that meet broader firm performance goals.
Sustainability professionals are helping their colleagues find ways to shatter the stereotype that sustainability and business goals are at odds with each other.
When the focus goes from reducing risk and cutting costs to improving the customer’s experience, programs cease to be the narrow domain of sustainability professionals and engineers, and start to involve all functions from brand management to finance.
For example, 3M, a company that practically defined the standards of technical life cycle analysis, now starts with “customer voice” which cuts across business functions to yield performance improvements. To meet this challenge, sustainability professionals in these companies are helping their colleagues find ways to shatter the stereotype that sustainability and business goals are at odds with each other.
At 3M, the teams are engaged in shattering the assumption of a tradeoff between sustainability and business goals, and the sustainability professional’s job becomes working with product teams and “teaching people that it is possible to have both sustainability and business improvements,” 3M stated in our research.
These internal education efforts are vitally important elements in the move to a more customer-centered sustainability approach, because the more that internal stakeholders understand that it is possible to both increase the product’s appeal to a customer and improve its sustainability across the life-cycle, the more such improvements will be explored and found.
When companies start to approach sustainability from more than just cost and risk reduction and take the perspective of “How does our market position with customers improve from products that respond to today’s challenges?” they gain the opportunity to reframe the business case for sustainability-related product improvements using principles of design, creativity and innovation. That is a winning combination for long-term growth.