UK businesses could secure £100 billion pounds (nearly $156 billion USD) in annual productivity gains generated by innovations designed to address environmental and social challenges, according to a new report by Accenture, Business in the Community and Marks & Spencer.
Fortune Favors the Brave argues that companies must go beyond conventional corporate and social responsibility programs and place sustainability at the heart of business strategies and operations to unlock the full commercial potential and sustainability benefits.
Based on primary and secondary research by Accenture and in depth discussions with CEOs of some of the UK’s leading companies such as Kingfisher, BT Group and Jaguar Land Rover, the report suggests that scaling innovation in five categories – resource efficiency, the circular economy, new consumption models, shared value approaches and transparency and customer engagement — can improve competitiveness, grow revenues and better address changing customer needs.
“At a time of economic challenges and changing consumer expectations, there is an opportunity to make sustainable business practices a driver of growth and competitiveness,” said Olly Benzecry, Managing Director UK and Ireland, Accenture. “That requires companies to innovate and to embrace the disruption that new sustainable business models can create.” The report provides details of the commercial potential and sustainability benefits of a range of innovation opportunities:
Resource efficiency: companies can generate annual savings of £61billion ($95 billion USD) by scaling resource efficiency and energy efficiency initiatives and through the use of cleaner technologies, according to Accenture analysis based on data published by the Department for Business Innovation and Skills. For example, Marks & Spencer reduced its clothing delivery vehicle fleet by 25 percent and improved fuel efficiency by 30 percent.
Circular economy: the UK consumer goods industry could save £15 to £18 billion ($23 to 28 billion USD) annually by closing the loop on supply chains, extending asset life, promoting re-use and designing products for disassembly, according to analysis for the report by the Ellen MacArthur Foundation. Accenture estimates that circular economy approaches can achieve a 50 to 90 percent reduction in a product’s environmental footprint.
New consumption models: social media and other technologies are creating new ways of using goods and services and altering business models, such as by extending the pay-as-you-live and sharing economy and enabling consumers to live more asset-light lives. This market is currently worth approximately one percent of private sector turnover in the UK.
Shared value business models: Accenture estimates that businesses could generate cost savings of between £3 and £29 billion ($4.6 and $45 billion USD) through ‘shared value’ models, whereby they support the communities in which they do business to help create a more active and engaged workforce and reduce recruitment and retention costs. Shared value models can also directly contribute to building customer trust and loyalty.
Transparency and customer engagement: technologies that improve traceability and customer engagement regarding product origins can boost trust and loyalty, Accenture says, which estimates that the UK manufacturing sector could also generate cost savings of £3 billion per year.
Business in the Community says it is calling on more businesses to embrace the opportunity of sustainability. The organization is publishing a new Sustainable Business Toolkit alongside the report, which provides practical guidance on how companies can create and test new innovative ideas that deliver commercial, environmental and social benefit.
“Many companies have made progress in reducing their environmental and social impact, but we now need to make sustainability part of our targets and an intrinsic part of our brands,” said Marc Bolland, Chief Executive of Marks & Spencer, “If UK business wants to have more impact, it will have to make sustainability desirable, appealing and relevant by responding to customer wants.”
Marks & Spencer recently began requiring all of its new retail stores to have green clauses in new leases to facilitate the sharing of waste information and utilities data in a collaborative effort to reduce carbon emissions. The property lease policy aims to enable landlords and tenants to better manage buildings' environmental performance.