Bar none, the most persistent challenge that the sustainability movement faces is how to prove the business bottom line benefits of sustainability activities. This is particularly acute for small and medium-sized companies, for whom survival is the number one priority. When looking at who engages and communicates sustainability activities, a disproportionate number of them are large corporates with dedicated sustainability/CSR budgets, as covered in our previous post. All too often, sustainability is a ‘tack-on’ to what business normally do anyway, and not the reason for being. It is easy to be cynical and say that sustainability is reserved for the haves, the elite — the companies that have the luxury to care about social and environmental issues.
The proof is in the pudding, as they say. If sustainability truly benefits the bottom line, small and medium-sized companies would all be doing it, right? Not quite.
Well, it turns out that the benefits of sustainability are often indirect, intangible and almost impossible to measure. These benefits include things like customer goodwill, brand, reputation and certainty of supply.
In this multi-part blog series, we will show you five examples of sustainability strategies that companies have applied to create competitive advantages, which ultimately benefited the bottom line. These are companies large and small that all placed sustainability at the heart of their business offering and are winning as a result. For each example, we will show you their strategy, as well as the final $$$ result that we all care about.
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Proven Sustainability Strategy 1: Style and Substance
In the competitive sector of takeaway sandwiches and coffee, British chain Pret a Manger has ridden the growth of ethical consumers to carve out a lucrative niche for itself. Started in 1986 by a group of friends with no business experience, Pret a Manger has grown to an annual £450 million revenue company on a simple business offering: fresh, sustainably sourced, tasty, additives-free food — delivered fast.
Pret a Manger’s sustainability strategy is completely tied to its brand and offering, as can be seen by its logo (left). Its message is simple and the words “organic” and “natural” are used repeatedly in its messaging throughout an experience at a Pret cafe.
In fact, Pret’s sustainability messaging is consistent and persistent everywhere, from posters on its walls, on packaging, on the menu, on windows, one cannot help but feel that sustainability is something that Pret cares deeply about.
Such a sustainability strategy is not easy to pull off. Consumers are by nature skeptical and wary of greenwashing, so why has Pret been so successful with its strategy? The answer we think is
1) a healthy bit of wit; and
2) ability to back up its claims with real action.
1) Pret’s Wit
Pret doesn’t just deliver sustainability messages — it delivers them with wit, taking the lighter side of complex sustainability debates and distilling topics down to the main decision point, and adds a bit of humour in, as well.
The witty, quirky twist that Pret applies to its messaging underline an important concept — Pret doesn’t lecture about sustainability. As studies have shown, people do not like to be lectured or told what to do. Rather, people like to be helped or feel part of a discussion. Pret simply shares its views and lets the consumer be the judge of whether he/she agrees. There is infinite wisdom in this approach because Pret is able to take a stand on sustainability without shoving it down people’s throats.
2) Backing It Up with Action
Talk is cheap, as they say. Consumers are not stupid and will eventually see through your image — if it is simply that, an image. In Pret’s case, sustainability is part and parcel of its everyday operations. Here is a quick list of what Pret does on a daily basis that aligns with its sustainability strategy:
- Pret benchmarks the electricity consumption of most of its stores using smart metres
- Pret donates all unsold sandwiches to charities to avoid waste to landfill
- Pret has replaced all plastic bags with recyclable paper bags, and uses recyclable cardboard and plastic pots
- Pret has an no air-miles policy but does support farmers in developing markets through sea freighting of goods
- Pret uses free-range chicken, grass-fed beef and free-range eggs in all its food
More information can be found in the Sustainability section of the company's website.
Show Me the Money
Pret’s sustainability strategy has been successful because it has been a main contributor to the company’s bottom line.
Some of Pret’s impressive achievements as of April 2013 include:
- Opening 320 stores, including locations in Hong Kong, New York, Chicago and Paris
- Increase in annual revenues year-on-year by 17%, up to £443 million last financial year
- Increase in net profit year-on-year by 17% to £6.1 million
In the UK branded coffee market, Pret ranks 4th in number of stores, 3rd in revenues with an estimated market share of 16%. This is based on a conservative estimate that £350 million of its overall £450 million revenues are derived in the UK. The reality is that Pret's share of the branded coffee market is probably higher. See the chart below for our analysis.
Pret is not a perfect citizen, as evidenced by some recently stories regarding its employment methods. But what do you think of its sustainability strategy? How applicable is the strategy in other industry/sectors? Let us know your thoughts in the comments section below.
A version of this post first appeared on Sustainability Reporting Examiner blog on October 7, 2013.