Corporate spending on product sustainability initiatives will likely accelerate as sustainable product pioneers such as H&M, Nokia and PUMA share evidence of the business benefits they have achieved, according to a new report from independent analyst firm Verdantix. The study draws on data from a survey of 250 heads of sustainability in 13 countries, as well as interviews with product sustainability experts at PE International, PRé Consultants, Pure Strategies and Quantis.
“Adidas, Danone, GSK and Jaguar Land Rover invest in product sustainability and achieve tangible business benefits,” states Rodolphe d’Arjuzon, Global Head of Research at Verdantix. “The positive results from product sustainability investments include improved consumer trust in the brand, reduced logistics costs and lower exposure to supply risks. Insights into how to achieve these benefits are now diffusing across sectors such as footwear, consumer electronics and packaging.”
The report, “Product Sustainability: The Dos, Don’ts And Business Benefits,” found that 69% of the heads of sustainability polled consider it important or very important to improve performance on sustainable product innovation in the next 12 months. Thirteen percent of respondents anticipate increasing spend on product sustainability in the double-digits and 32% plan single-digit increases. Among the leading group of firms interviewed for the report, at least 80% achieved cost savings on logistics and materials; 67% mitigated resource scarcity risks and regulatory risks. But only 7% claimed to have achieved a price premium for their sustainable products.
Business benefits from product sustainability investments are emerging on an industry-specific basis. Consumer products firms target improvements in brand trust, mitigating risks from supply shortages and differentiating products in the eyes of retailers. Consumer electronics brand owners aim for an edge in the innovation cycle, anticipating the impact of new regulations on materials such as polyvinyl chloride (PVC) and improving value propositions through lower GHG emissions, which reduce road tax rates for customers. Suppliers to businesses and governments invest in product sustainability to meet strict green procurement rules and achieve preferred supplier status.
“It’s impossible to have a credible sustainability strategy without looking at the sustainability of your products,” adds d’Arjuzon. “By strategizing based on life cycle analysis, materiality and market research, and taking appropriate design, supply and communications actions, firms can win big. Why are firms not doing more of this? Most of the benefits of product sustainability investments are hard to anticipate, which makes building a business case difficult. This information barrier holds back hundreds of firms from exploiting opportunities to innovate, reduce costs and mitigate risks.”
The ROI of sustainability is also a huge topic of discussion at our upcoming New Metrics of Sustainable Business conference — September 24-25, 2013.
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Published Sep 3, 2013 5pm EDT / 2pm PDT / 10pm BST / 11pm CEST