Company executives have moved way past questioning why sustainability is important.
Instead, leaders ask how to transform their business model to generate a triple win: operational efficiencies that cut costs, reduce demand on shared natural capital and improve quality of life for communities of people they serve. These leaders seek a new model that returns business value through efficiency and top-line growth drivers.
The sustainability imperative is particularly important for B2B supply chains. Large “keystone” companies in retail, health care, sports and entertainment have stepped up scrutiny of their suppliers’ sustainability profile, including environmental management systems, their engagement with consumers and suppliers, carbon emissions, waste, recycled materials, water and energy use.
“By the end of 2017, Walmart will buy 70 percent of the goods it sells in U.S. stores and in U.S. Sam’s Clubs only from suppliers who use the Index to evaluate and share the sustainability of their products,” according to Walmart CEO Mike Duke.
Working at the leading edge requires collaboration. Working collaboratively with supplier networks to amass materials recovery and sustainability best practice databases can help businesses meaningfully improve their profile through a triple win philosophy.
Here are three key tips to manage this transformation to a new model and improve your standing with your customers:
Customer sustainability indices, such as those we’ve seen at Walmart, Target and hospital general purchasing organizations, evaluate two levels of supplier performance: company and product sustainability. Most have set zero waste goals. A “brown” company will struggle to make a green product, and runs the risk of savvy consumers or the Federal Trade Commission perceiving environmental product claims as greenwash.
Get a comprehensive assessment of your company’s sustainability core competencies and product attributes. Then put a management system in place that assures both company and product sustainability indicators continually trend in the right direction and seek to eliminate waste.
Material choices matter in the design of products and packaging. Depending on the product, relative to other parts of the life cycle, the greatest environmental impacts may be associated with the extraction and manufacture of materials. This is especially true for short-lived, non-durable goods. Often it is assumed that renewable materials have a better environmental profile. This is not always the case and in a world where bio-based feedstocks for materials or fuels are vying for land that is needed for food production or set aside for conservation, the considerations are getting ever more complicated, especially in regions with dwindling resources. Materials need to be selected with their specific application and technical requirements in mind, balanced against pre-determined, prioritized environmental objectives and performance standards. Getting to these priorities means understanding impacts across the life cycle, taking a strategic approach, and effectively directing efforts. For instance, Nike shared in its fiscal 2010-11 sustainable business report that 60 percent of the environmental impact in its running shoes comes from material choices.
Outside of life cycle considerations, customer demands can set priorities. Recyclability is commonly an attribute in which customers are interested. Performing a recyclability assessment is a comprehensive way to understand and communicate recyclability.
While waste is not always the most significant impact on a company’s environmental profile, it’s everywhere and actionable. Collaborative stewardship approaches that pool resources are critical to helping achieve zero waste. Join or, if one doesn’t exist, form a private-public group that has a shared interest to overcome the barriers, such as lack of processing infrastructure. Sharing data and logistics capabilities to build infrastructure in a region or locality can attract new outlets for a range of recycling and reprocessing options, including material recovery, energy recovery and composting. Zero waste programs continue to produce significant cost saving opportunities that help finance participation in these collaborative efforts to transform business models.
There is much more to learn and do as we strive for growth by applying restorative thinking that optimizes shared value. One thing is certain: More can be achieved by working together across fence lines, thereby improving our chances of passing on a world that our grandchildren can enjoy.
Plan image by Ivelin Radkov via Shutterstock.
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