Sustainability causes firms to change

Warc, 6 February 2013

NEW YORK: Nearly half of major firms have adapted their models and strategies to meet sustainability goals, with Kimberly-Clark, Nestlé and PepsiCo among the leaders in this area.

A new study from the Boston Consulting Group and the MIT Sloan Management Review, that drew on data from 2,600 executives, found 48% of companies had made modifications to at least one aspect of their business.

A 40% share of participants reported that product or service offerings had undergone a shift of some kind, while 35% cited changes in the value chain and 30% had transformed organisational structures.

The fact customers prefer sustainable products prompted action at 52% of companies that had pursued such tactics, ahead of resource scarcity on 39% and moves by competitors on 38%.

"We have sustainability in all of our operations," said Hans Johr, Nestlé's corporate head, agriculture. "We don't even have a sustainability officer. We believe that you can't make good progress by using a 'doctor' prescribing to everyone what they should do."

Less positively, some 22% of enterprises stated that sustainability schemes had negatively impacted the bottom line. Another 37% , however, had seen income increase due to their eco-friendly activities.

"These things are clearly within the bull's eye of sustainable development," said Dan Bena, PepsiCo's senior director of sustainable development.

An additional 60% of the panel agreed that implementing strategies relating to this area was already vital to remaining competitive, and a further 31% believed it would become so in the future.

"Sustainability can create competitive advantage," said Thomas Falk, Kimberly-Clark's chief executive. "If we can make a towel that is good enough to dry hands with only one hand sheet and we can sell it at a competitive price, we create value for the customer and the environment."

When naming the "greatest benefits" of their eco-friendly programmes, brand reputation logged 40%, with better innovation on 29%, and improved perceptions of how the firm is managed on 26%.

"It is really core to our business," said Susan Voight, vice president for environment, health, safety and sustainability at Bristol-Myers Squibb.

One key obstacle is making a business case to support sustainability platforms: while 38% of players had achieved this aim, 32% had not, and 15% previously found it "too difficult".

Susan Fallender, Intel's director, CSR strategy and communications, said: "Just because you can't always measure and monetise a sustainability activity doesn't mean you can't see the strategic value it creates."

Data sourced from Boston Consulting Group; additional content by Warc staff