Blog
Brands Share Strategies for Creating Shared Value on SB London Day Two

The morning of day two at SB London was brimming with brands both large (Starbucks, MARS, BASF, Kering) and small (Fairphone, Honest By) sharing their perspectives on and strategies for creating value for all stakeholders, all of which are naturally enhanced by everyone’s favorite facet of corporate responsibility: transparency*.*

Emcee Rob Cameron, executive director at SustainAbility, set the tone for the day’s plenary presentations by stressing the importance of absorbing learnings from global travels as we get ready to change. He asserted this is no longer an era of change — more a change of era — and despite the challenges we face, it’s never been a better time to be on this planet.

The importance of adopting feminine values was again highlighted, with UNDP figures revealing that despite women carrying out 66% of the world’s work, they only receive 11% of the income and own 1% of property in return, a situation that’s clearly unsustainable. Cameron stressed the importance of using both a mirror and a magnifying glass as we strive to create change.

Ellen MacArthur Foundation CEO Jamie Butterworth kicked off the morning’s plenaries with an entertaining presentation offering some startling facts about revenues in the fast-moving consumer goods (FMCG) sector — some $3.2 trillion worth of value is fed into the sector, but $2.7 trillion is fed out, equaling some 80% of waste. In an economy where China has seen some 1 billion people step into the middle class over the last 10 years, this linear economy relies on cheap and readily available materials. Butterworth asserted that moving to a circular economy model will do less harm and accelerate the move to building more value. Although changes may be small, some $690bn worth of additional value in the FMCG market is thought to be available.

Butterworth cited collaborations with Splosh, Philips and B&Q, where the goal was achieving a position of net positive rather than just zero, all part of the fascinating challenge to completely rethink the sustainability framework.

‘Sustainability — Who cares?’ was an eye-catching opening, and Starbucks’ director of environmental impact, Jim Hanna, underlined this by proposing that the business case for sustainability has already become a cliché. Yet, Hanna said, too many businesses have still failed to ‘get it,’ and while we look to the horizon, we must also look back and bring these companies along for the ride.

Hanna admitted Starbucks is often quizzed on sustainability issues, and surprisingly, the nitrous oxide used in-store means that whipped cream suffers a larger carbon footprint than Starbucks coffee roasting operations. He outlined Starbucks’ main drivers for sustainability:

• Reductions in operating costs
• Capacity building in the Supply Chain
• Building a larger share of emerging customer demographic, and
• Greater brand love and existing customer loyalty

Hanna said quality employee retention is a key ‘baseline of credibility’ for Starbucks, promoted through better alignment of the company values to those of the employees’ own, rather than just concentrating on the paycheck. He offered key learnings from Starbucks’ experiences, including: Figure out your own unique niche, discover where you can lead that no one else can; and identify your own ‘who cares’ by finding your own drivers for innovation.

According to Vennard, MARS has three ‘Grand Challenges’: preserving the environment, spreading monetary wealth throughout the world and combating both hunger and obesity. He reiterated some of the key points of earlier speakers around the global coffee industry, where increased demand meets an aging supply chain demographic, an unsustainable position that could lead to a predicted million-ton shortfall in cocoa supply by 2020.

MARS is actively trying to combat this problem through scientific research, technology transfer and certification, with the use of key strategies around social, environmental and productivity issues. This approach also helps the company to benefit from applying these practices across other sectors in its portfolio, including fish, peanuts, rice and mint products. Vennard discussed the problems of valid on-pack sustainability claims appearing diluted when factored into consumer purchasing decisions, and the positive effect of choosing wisely when considering cause-related marketing.

Next, Royal DSM’s Corporate Sustainability Manager, Jacobine Das Gupta, explained that the B2B company is aiming for ‘guilt-free consumption’ that works both ways, for the company in production, and the consumer in consuming

To really capitalize on integrating people, planet and profit, data measurement was a key element for formulating a strategy and solutions. However, Royal DSM lacked a matrix to measure and assess the ‘people’ component. To build a complete picture, consultation was sought with all key stakeholders, identified as ‘all the people that we touch,’ including employees and end users of Royal DSM products. Operational areas to benefit from this ‘People Perspectives’ initiative include low-solvent paint production to reduce health risks, and fortified rice production to contribute towards reducing global malnutrition levels.

Although known as “The Chemical Company,” BASF is actively trying to tackle serious issues in global malnutrition by using chemistry as an enabler for innovation and sustainable development. Global population predictions are set to hit 9bn by 2013, of which 4bn are expected to come from emerging markets.

Following a mid-morning break, BASF’s president of nutrition and health, Saori Dubourg told the SB London audience that between 150-200,000 children are currently suffering from malnutrition, which BASF is attempting to tackle though developing fortified foods, improvements to health education and increased productivity — but this is only effective if the quality is right.

BASF’s multi-stakeholder value approach featured in collaborations with third-party companies to use the benefit of BASF’s experience — for example, European meat processor West Fleisch challenged BASF to create a more sustainable meat value chain. BASF responded by identifying the most effective levers, recommending measures that led to a 9 percent saving in carbon footprint within three years. Dubourg said BASF’s philosophy includes employing cross-industry expertise to solve complex challenges, but stressed that answers can be found through simply listening.

The Fairphone project started as an attempt to combat the alienation that people feel from products, and the supply chain systems behind them. Much of the raw materials typically used in electronics manufacture are sourced from the Democratic Republic of Congo, a country ravaged by war, poverty and famine. Workers are exploited through terrible working and living conditions, yet this issue of ‘conflict minerals’ isn’t as widely recognized as that of “blood diamonds.” In essence, the human value in this has been lost.

Tessa Wernink, Director of Communications at Fairphone, realized that to produce a phone to the exacting sustainability standards they set — conflict-free tin & tantalum sourcing**,** rootable operating system, acceptable worker welfare and a replaceable battery — the only solution was to do it themselves. In the short lifespan of this project, all 25,000 of the company’s original batch of Fairphones have now been manufactured and sold, and workers lives transformed.

In a short but ‘personal’ presentation, founder Bruno Pieters took us through the story behind the launch of his clothing company, Honest By. Pieters, a respected Belgian fashion designer and art director, felt increasingly uncomfortable with the highly commercial environment of the fashion industry and decided to exit in 2011, giving away much of his wealth to SISP, a children’s charity in Southern India. A sabbatical in India then had a radical effect on his outlook on life, where he became increasingly concerned for the environment, animal welfare and children’s causes, and was determined to act.

The result was the founding of ‘Honest By’ at the start of 2012, the first company in the world to offer full price transparency to customers and make its entire supply chain public. Pieters underlined the value of respect towards customers, and cited transparency as the best customer service policy.

An Helena Van Hoofstat is a change management specialist working across Kering’s 21 luxury and sport & lifestyle brands, developing strategy and implementation tools for the company. Her presentation revealed background on Kering’s drive to ensure that transformative change for sustainability is embedded throughout the corporate culture and integrated across the business units of the group.

Van Hoofstat considers sustainability and change management as a marriage made in heaven, which touches the business at all levels. Kering’s methodology approach places a dedicated sustainability lead within every brand, with rather challenging targets for 2016. Collaboration extends across brands and throughout the company to exploit these synergies, encouraging freedom within the framework, right down to rewarding employees’ sustainability ideas.

Closing out the morning’s plenaries was Paul Dickinson, co-founder & executive chairman of the Carbon Disclosure Project (CDP), who gave a lively presentation of his thoughts on sustainability, starting with the simple question ‘What is it..?” His answer — the name we give to problems that governments can’t fix — drew laughs and applause from the audience.

Dickinson also considers that the greatest democracy in the world is how ‘citizens’ (rather than ‘consumers’) spend their money, so it’s no surprise that CDP is now a prime catalyst for change, with 81 percent of the world’s largest companies reporting through CDP, controlling some $87 trillion of worth. But high revenues and ROI alone don’t produce effective sustainability engagement; Dickinson proposed a simple “lack of imagination” is what’s stopping others from following the lead of companies such as Unilever.

He closed with several nuggets of wisdom:

• Marketing means giving people what they want, and no one wants climate change!
• Companies want to be associated with solutions, rather than problems
• For real change in corporate engagement, don’t wait for governments — a new network of associations, companies and stakeholders are forcing the issues.