Becoming More & More a Part of Corporate DNA

Once seen as a philanthropic “nice to have,” top performing organizations now view sustainability – meeting the needs of your business today without compromising the ability of future generations to meet their needs – as a must have strategy for long-term business viability and success. In fact, according to a just issued report by the United Nations Global Compact and Accenture, 93% of the more than 750 CEOs surveyed see sustainability as crucial to the future success of their companies. Of these same CEOs, 72% said that strengthening their brand, trust and reputation with consumers was the primary driver behind sustainability initiatives. The survey also found widespread agreement that sustainability will cease to be a separate concern from business profitability, and will instead become fully integrated into the business strategy of the company.

And, certainly, there is a fiscal impetus behind sustainability. Given estimates of a “green” economy approaching $845 billion in the U.S. alone by 2015. Additionally, a recent report found that companies committed to sustainability outperformed industry averages by 15% and are well-protected from value erosion.

Yet, according to a survey just issued by the Connecticut Business & Industry Association, lack of knowledge and awareness is still a major impediment as it relates to implementation of corporate sustainability initiatives, with the gap widening significantly since last year. Twenty-nine percent of survey respondents said the greatest barrier to “going green” is a lack of knowledge, compared to 10 percent in 2009. Other barriers cited by respondents include cost (24%), a lack of clear business case for sustainability (21%), combination of several areas/other (16%), lack of company leadership (5%), and lack of tools and resources to implement and integrate sustainability (5%).

Still, corporate sustainability initiatives survive / continue to thrive despite a tough economy climate. GreenBiz Intelligence surveyed more than 100 companies (73% were in the “Fortune 500”) to determine the influence of current economic conditions on their “green” strategies and spending priorities, specifically in the areas of green products, environmental budgets, and other topics. Interestingly, big-company budgets are not being slashed, as they have in other economic downturns:

• 46% of companies’ environmental, health, and safety budgets will remain the same
• 30% said their budgets will grow
• 24% said their budgets will be reduced

As it relates to “green” product development, 47% of respondents said they would increase their investments in this area, while less than 6% said they would invest less.

Growing External Pressures Creating Immediacy for Corporate Sustainability | return to top Walmart: A Major Force in Driving Corporate Sustainability

From their bold plan (announced in Oct. 2005) to have “zero waste” by 2025, to their ground-breaking vendor scorecard (which includes more favorable status for vendor implemented sustainability initiatives), to their “sustainability index” initiative related to an eco-labeling system/approach for all products sold at Walmart stores (in two or three years), to their most recent commitment to cut some 20 million metric tons of greenhouse gas emissions from its supply chain by the end of 2015, Walmart has created a seismic shift in the sustainability landscape. In fact, it’s not a stretch to see that Walmart’s aggressive and boisterous environmental initiatives actually impact their thousands of suppliers more than themselves. Needless to say, this has left a majority of consumer product goods manufacturers, brands and food suppliers “dazed and confused” as they try to not only interpret Walmart’s vendor scorecard, especially as it relates to sustainability, but then figure out how to best implement efficiencies and sustainability initiatives into their operations.

The good news for the Walmart supply chain is knowing that Walmart does not do anything without a cautious eye to the bottom line. So, it can be reasonably presumed that sustainability must make good economic sense (or else Walmart would not have nearly the same level of interest in this area).

Walmart Green Assessment - PDF

Consumers Continue to Look for “Green” Products and Services | return to top

The average consumer doesn’t really know a lot about the intricacies of sustainability, only that “going green” provides a chance for their children, and their children’s children, to continue to enjoy the same existence on Planet Earth as they do. In a recent survey conducted by EcoFocus Worldwide, 87% of Americans agree that it doesn’t matter whether or not you believe in global warming, reducing waste and pollution is just good common sense. The “green movement” is somewhat analogous to the health and wellness movement of the 1970’s when Americans started rethinking the connection between their dietary choices and personal health. Americans in 2010 are starting to rethink their connection between lifestyle choices and the environment, as shown below through more, recent research from EcoFocus Worldwide:

So, clearly, “green” is a concern of consumers. In fact, according to a just released survey conducted by Cohn & Wolfe, 75% of American consumers consider it somewhat or very important to buy green. Further, 35% of Americans intend on spending more on “green” goods in the next year. Case in point, according to another recent report, sales of “green” toys may reach $1 billion by 2015, or roughly 5% of all toy sales. In fact, consumers are already spending generously on “green” goods when it comes to certain product categories – the largest of which being the natural or organic household cleaners space, which grew 35% to $737 million in 2008.

Sustainable Packaging is Leading the Way | return to top

The biggest contributor to overburdened landfills and fossil fuel consumption across the world is disposable packaging. So there is a lot of work that needs to be done to reverse this trend – and its already begun. By the end of this year, an estimated 27% of products at major US retailers will be sustainably packaged. By 2015, this figure is projected to reach 37%, according to Environmental Leader Insights. To put this in perspective financially, The Freedonia Group estimates that sustainable packaging in the US will become a $44 billion industry by 2013.

Recycled and certified paper (from sustainable forestry initiatives) have been the biggest drivers of sustainable packaging over the last several years. However, the next big opportunity as it relates to sustainable packaging is shifting to the abundance of plastic packaging in the world today. Further, given the scientific evidence mounting against continued use / exposure to packaging comprised of PVC, many of the world’s largest CPG’s are looking for plastic packaging alternatives. Given the advances and innovation taking place with respect to post-consumer recycled plastics, these materials are quickly becoming mainstream as they can provide a safe, economical and sustainable alternative for CPG’s.

Government Intervention is On the Way | return to top

Despite all the “noise” about the environment and sustainability, to date, our federal government has chosen to let the private sector handle the commercialization of “green.” This has created somewhat of a “wild, wild west” atmosphere in the “green” space, due to the lack of federal guidelines, standards, and/or legislation. However, this won’t be the case forever. In fact, the Federal Trade Commission (FTC) will be issuing new guidance on eco-marketing, green claims, etc. (for the protection of consumers) in October. Additionally, President Obama will be looking to deliver on his campaign promises related to the environment and America’s dependency on fossil fuels soon.

So, today, in the “wild, wild west,” there is still tremendous opportunities for companies / consultants that truly understand what it means to be sustainable, have established standards and/or offer guidance as it relates to sustainability best practices, to assist corporations of all sizes in the implementation of truly meaningful “green” initiatives. And, these same sustainability solutions providers will be just as critical, if not more critical, to Corporate America in complying with what are sure to be typical voluminous and hard-to-understand federal statutes.