The importance of sustainable consumption will continue to gain momentum and with it, greater expectations placed on organisations to accelerate the move towards the circular economy.
As we saw in part one of this blog, the speed at which we get there, however, will be determined by how quickly organisations act on these consumer expectations and change their mind-set towards embedding sustainability as a key priority across the organisation.
Instead of being just pockets of initiatives driven in siloes across departments, organisations need to ensure sustainability becomes a strategic priority across all parts of the organisation and in doing so, part of their business purpose – exemplified in every strategic decision made, new products and services developed and day-to-day operations. This means focusing on three areas:
1. Empowering consumers and employees to practice sustainability
To accelerate the adoption of sustainability organisations should focus on addressing the end-to-end needs of consumers and employees to facilitate their desire for sustainable consumption.
As discussed in part one, consumers need organisations to encourage them by making green choices more accessible at the point of decision. This means improving awareness by educating and empowering consumers towards practicing sustainability as well as making the sustainability of products and services designed and consumed more transparent such as their environmental footprints. Moreover, helping balance the consumer’s desire for sustainable choices with their budgets and lifestyles at the point of decision can be a highly influential nudge. But, equally important is going beyond what happens once a product is purchased or a service consumed. Organisations need to start moving away from the traditional thinking that once a product or service is consumed it is no longer part of the organisations responsibility. Instead, understanding what consumers do post consumption is key towards helping facilitate the circular economy by designing products and services that support it, such as Adidas’ recyclable shoes and returns service.
Similarly, employees are equally vested in driving sustainability in their workplaces and increasingly choosing where to work based on an organisations practice of environmental friendliness and social inclusion for example. But, according to Capgemini’s latest report findings, with only 15% of executives saying they currently focus on sustainability initiatives internally, a lot more can be done to significantly increase their contributions towards it. To succeed, organisations need to go beyond implementing company-wide initiatives such as energy saving policies but encourage employees to embed sustainability in their everyday work from idea generation, product and service design to operational activities and how partners and suppliers are chosen and worked with. Embedding sustainable behaviours from the bottom up will serve as an accelerator towards placing sustainability as part of the organisations purpose.
2. Positioning technology at the core of sustainability
Technology will be key in helping organisations achieve sustainability at scale whilst generating various business benefits such as cost savings, profitability and greater customer loyalty. However, to experience these large-scale benefits, organisations need to have clearly defined use-cases on how a specific technology can support sustainability across the organisations entire value chain. This requires understanding how technology can support sustainability through two perspectives: supporting the consumer and employee journeys towards leading more sustainable lifestyles and improving their operational impact across sustainability indicators. By addressing these two aspects, organisations can ensure efforts are not only perceived as authentic but truly are authentic and in turn, derive large-scale benefits.
Organisations are increasingly investing across a range of emerging technologies such as AR/VR, 3D printing, 5G, IoT and AI to drive their sustainability initiatives and help optimise their operational waste, facilitate the circular economy and support consumer decisions. For example, H&M is using AI to support efficient fulfilment by predicting customer orders based on internal and external data sets such as past purchases, weather conditions and economic factors. This helps them ship only those orders that consumers plan to purchase, helping optimise demand forecasting and planning. Ikea is using AI and data analytics to identify the next best possible location for returned items so they can be recycled or re-sold to reduce the amount of returned merchandise in landfills. Using AI powered-dynamic pricing to automatically adjust prices of products approaching their expiry dates, Wasteless helps grocery stores reduce in-store operational waste by about 30%, resulting in around 40% increased revenues. These examples show that positioning technology at the core of sustainability can yield a number of customer facing and financial benefits.
3. Measuring the success rate of sustainability initiatives
Measuring the success rate of initiatives is crucial towards embedding sustainability as a key performance indicator. This means measuring initiatives in a test and learn manner to scale successful ones quickly but also understand those that can be applied within other areas of the organisation.
But, to do so sustainability needs to be included as a basic principle of the business case. Organisations need to not just add sustainability as a key objective but instead focus on business cases that are sustainable. For instance, Nike views 3D printing technology from the objective of reducing prototyping waste leading to less inventory and less CO2 emissions. Measuring success also means including tangible sustainability benefits such as energy savings, emissions reductions and water consumption savings as key metrics when measuring the success rates of technologies used to drive sustainability.
We’re increasingly seeing sustainably driven organisations deriving significant customer and financial benefits from improved customer and supplier loyalty to increased revenues and improved ESG ratings (63-77% increase). As an example, Unilever’s Sustainable Living Brands are growing 69% faster than the rest of the business and delivering 75% of the company’s growth. Unilever estimates that almost 70% of its greenhouse gas footprint depends on which products consumers choose and whether they use and dispose of them in a sustainable manner (e.g. conserving water and energy while doing laundry or recycling containers properly after use).
A single, unified view of data is critical for organisations to establish areas of focus for innovation, manage the performance of sustainability and establish the transparency needed across the value chain to track how a product flows from design through the supply chain and back. By understanding these mechanics of the organisation, they can ensure decisions taken around sustainability not only have the impact desired but can be learned and improved upon for better decision-making going forward.
To move the industry towards a sustainable future, organisations need to collaborate with the broader ecosystem they are a part of embedding sustainability throughout everything they do. This means ensuring economic growth is balanced with social inclusion and environmental protection and questioning existing business models. Technology will be key, helping organisations accelerate and achieve sustainability at scale while generating various business benefits too.
To read Part One of Closing the Loop on Sustainability click here.
Natalia Skaloud, customer strategy and sustainability consultant at Capgemini Invent