In the next installment of our “Golden Rules for Sustainable Business” series we hear from Josh Hendry on the opportunities your business can create by bringing your customers in.
In their recent blog post on the Golden Rules for Sustainable Business, Jim Fava and John Heckman discussed five key aspects of gaining business value through sustainability. These rules, as they noted, are being increasingly leveraged by business leaders; however, they suggested that we are just at the tip of the iceberg in terms of realizing the full value of these activities. So how can companies access that untapped value? To expand on Jim and John’s introduction we wanted to dive further into each of the rules and explore why each one stands out as ‘Golden Rule’ and to provide some examples of how some companies are already aligned with each of the rules. So, let’s start with Golden Rule #1: Bring your customers in.
You do not need to look very far to find a growing list of responsible sourcing certifications or sustainability reports touting engagement with suppliers to realize that we can no longer say we are lacking in information about how things are made. Yet, simply flooding your customers with every piece of supply chain and operational data and information you can find doesn’t necessarily address their specific concerns. These may be stemming from evolving consumer expectations or an increased focus on supply chain transparency within regulations. However, the specific topics of concern can be very diverse ranging, for example, from social impacts of raw material extraction through to carbon emissions from product manufacturing, understanding what is driving your customers’ requests and how you can help them achieve their goals is critical to enhancing your own sustainability activity.
Bringing the customer into your sustainability planning can take various forms. Some companies do this through direct engagement via materiality assessments or other market research, using these insights to shape their sustainability priorities (e.g., focusing on carbon emissions or worker rights in response to consumer demand). Other companies work to understand how products are used and disposed of and look to design in product improvements that minimize impacts beyond their own gates (e.g. water efficiency). Many leading companies do both.
Regardless of the approach taken what we have seen through these types of engagements is that those customer needs and concerns often vary by geography and demographics as well as current consumer trends which can change rapidly. So companies that have done well to have ongoing engagement with, or focus on, their customers have done so through first ensuring they have a solid grasp on the full life cycle impacts and benefits of their products. This provides the solid foundation from which they can then move forward on further improvements which align with the needs of their customers. It also allows for the flexibility to respond to a range of customer expectations, ideally enhancing their brand value and customer loyalty in the process.
Since many of the benefits and impacts of products can occur during the use of the product by the customer, working to address this in ways that also benefit the customer is a win-win. Whether that is through enabling customers to save money through energy efficiency improvements in their products or finding innovative end-of-life solutions like product take-back programs, these efforts help to tell the full value chain story of your product.
Unilever’s Sustainable Living Plan puts equal emphasis on including how they source raw materials and how consumers use their brands. Unilever realized early on in their sustainability journey that much of their product’s impacts occur while being used by customers and expanded their strategy to include improving customer’s health and wellness, reducing the environmental impact of their products (throughout the entire life cycle) and enhancing livelihoods – the three pillars of the Sustainable Living Plan. A recent GreenBiz article on Unilever’s program noted that the Sustainable Living products grew 30% faster than the rest of the business and represented over half of the company’s growth in 2015. Further highlighting the focus on customers the article also pointed out that Unilever conducted a survey of customers which showed that 54% of their customers want to buy more sustainably.
BASF’s Sustainable Solution Steering® (SSS ) is another prime example of incorporating a customer focus into the core sustainability strategy. Through materiality assessments and other customer engagement efforts, BASF identifies key business drivers for the customers and then systematically assesses how their products contribute to meeting these customer expectations. This information is then used to transition their product portfolio towards those innovative solutions which offer the biggest contribution to sustainability (for them and their customers). The sales of those highest ranked solutions, deemed accelerators, accounted for approximately 16 Billion Euros in 2015 and BASF has a target of increasing the sales share of the Accelerators to 28% by 2020. Any sustainability concept from the initial definition of sustainable development through to the current thinking around circular economy are all dependent on meeting customer needs (both current and future needs) and understanding how products are used. So, we believe, that as sustainability becomes mainstream the companies which recognize the added value of embedding customer expectations and needs into their sustainable business planning will be best positioned to succeed in the market. Two initial questions to consider as you think about how to bring your customers in:
- Do you know what your customer’s sustainability objectives and targets are?
- Are you helping your customers meet their sustainability objectives or designing products which enhance product sustainability performance beyond your operations?
If you cannot adequately respond to these questions, then now is the time to start bringing your customers in and aligning with this first step in the Golden Rules for Sustainable Business. To find out more on our Golden Rules for Sustainable Business please contact Josh Hendry, Jim Fava or John Heckman, or alternatively, fill out our form below.
Watch out for the next installment in our Golden Rules Series, Rule #2 “Success Requires Focus and Action”.