Posts filed under ‘Sustainability’
Adapted from a post that originally appeared on the Fleishman-Hillard CSR & Sustainability practice group blog.
Some phrases take on a momentum all their own. Such was the case at NAEM’s recent 20th annual Forum, as Deputy Director Virginia Hoekenga introduced Paul Hawken, eco-visionary and best-selling author of“Natural Capitalism: Creating the Next Industrial Revolution.”
“His book changed my life,” she said.
It’s a sentiment I can well appreciate, having emerged from the Forum with a new perspective – at least with regard to two conditions that are necessary for reaching the “sustainability tipping point” that MIT-Sloan Management Review claims we are now approaching.
The first is a sense of complicity. While the conference offered keen insights on what corporations, governments and non-governmental organizations can do, and are doing, to promote a more sustainable future, the fate of our planet is – to paraphrase The Rolling Stones – after all, up to you and me.
Until we as individuals resolve to waste less, recycle more and make and demand greener choices, a tipping point in the right direction is likely to remain elusive. According to a study cited during a session on green marketing, 95 percent of consumers entering grocery stores said they would consider buying “green” products. Only 22 percent actually did.
In a session on life cycle analysis, we were told that nearly one-third of mankind’s global carbon footprint results from food production. Yet about that same percentage of household food purchases end up in the garbage. Add to that the fact that residential recycling rates remain stubbornly modest, and hybrid vehicle sales make up only three percent of the automotive marketplace, and it’s easy to see a lot of low-hanging fruit still on our own vines.
Sure, inadequate infrastructure, artificially high pricing, partisan politics and market confusion create barriers. But it will take individual accountability, not just corporate responsibility, to get us over the hump.
A second condition that would accelerate our journey toward sustainability is greater savings for greener choices. According to the 2012 GfK Roper Green Gauge Report, consumers’ overall willingness to pay more for greener goods has declined in recent years. But depending on the product category, 40 to 60 percent are still willing to do so. This is what researchers and marketers call the “green premium”. It’s related to the common refrain among green marketers that “all things being equal” (i.e., price and performance), more people are apt to buy greener products.
What? A green premium? All things being equal? How about a green discount? What about lower prices for environmentally preferable products and services? If driving carbon, risk, materials and waste from the value chain is truly worth something, why not let that be reflected in the asking price?
Of course, not all greener choices command a premium, but many do. And yes, some green products or services cost more to bring to market, but others cost less. Or would, if the economies of scale were there.
I’m not suggesting that companies subsidize greener products. But charging more for these choices simply because under certain conditions they can, may be short-sighted. Wouldn’t it be better to build brands, increase sales and ultimately create healthier, more sustainable bottom lines by sharing the value of greener products with the people who purchase them?
In reflecting upon my experience at the 2012 EHS Management Forum, I’m a more discerning and informed person for having attended. I have a better understanding of how nongovernmental organizations help companies with limited resources engage with stakeholders around the world; how EHS skills transfer to the broader discipline of sustainability/CSR; and how a coating used in toilets can be applied on buildings to proactively remove nitrogen oxide from the air.
If we are what we think, then the conference did indeed change my life.
More and more companies are learning they can reduce their environmental and social impacts by minimizing the impacts of their products. Major companies like GE and IBM are making sustainability a platform for growth and funding significant advertising campaigns, while CEOs are talking about the good that their products are bringing due to their sustainability improvements.
The most important thing these campaigns must do is to clearly communicate the benefits of these eco-improved products. Based on my experience in product design and marketing at Johnson & Johnson there are three keys to proper green communications.
1. Have a credible product story: At J&J, we do this through our Earthwards® greener product development process, a four-step process that enables product developers to easily understand how to make products more sustainable. (I will be talking more about this at NAEM’s upcoming EHS Management Forum in Naples.)
2. Meet your customers’ product demands: Understanding what’s important to your customers helps inform greener product design. For example, our hospital customers are interested in reducing waste and energy, so any product improvements that address this issue should be emphasized.
3. Appropriately communicate the product’s greener attributes: We are very careful to communicate the greener attributes of products. The Earthwards® process helps because we know that any claims we make come through a rigorous process. One of the best ways to insulate your product from “greenwashing” is to use credible third party verification of your claims. This reduces the possibility of making a mistake. Also, research indicates that customers tend to gravitate towards products that have third party verification.
In your experience with green product development and marketing, what are some of the strategies you’ve used to explain the value proposition to your customers? How have these products fared in the marketplace? Have they helped you gain competitive advantage?
Al Iannuzzi is a Senior Director in the Worldwide Environment, Health & Safety department at Johnson & Johnson, and author of the new book, “Greener Products: the Making & Marketing of Sustainable Brands” (CRC Press 2011). He will share more insights from his experience at NAEM’s EHS Management Forum on Oct. 17-19 in Naples, Fla.
Nancy Gillis, Director of Federal Supply Chain for the U.S. General Services Administration, talks about the benefits of integrating sustainability into government purchasing decisions.
With product sustainability and stewardship issues becoming more important and complex in the marketplace it’s still unclear to many organizations what is the best approach in finding ways to create business value and manage risk associated with product sustainability and stewardship.
More than 100 EHS and sustainability leaders attended NAEM’s Product Stewardship Conference last week in Framingham,Mass. to discuss product sustainability and stewardship issues. It’s rare when you get that many people together to discuss these topics so there was a lot of great information and insights shared between the attendees.
The topics varied and included the challenging global product regulatory landscape, leveraging life cycle management to create business value within an organization, managing supply chain transparency and reporting issues, and the different ways to design and implement product sustainability programs.
The thing that really caught my attention was how greatly companies differ in their approaches to creating value and managing risk from a transparency and performance improvement perspective, both key pillars to any product sustainability and stewardship program. The following are a few examples of the strategies companies are taking.
Intel shared the approach they were taking to address the pending conflict minerals reporting requirements in section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Conflict minerals such as tantalum, tungsten, tin and gold are an increasingly challenging issue within the supply chain, from the mining and extractive industry to downstream manufacturing companies in the electronics industry. Intel’s serious approach to providing transparency about the sourcing of conflict minerals, was quite admirable and isn’t something you see every day. The company believes transparency is “foundational to fostering understanding and acceptance in order to move suppliers along the sustainability maturity curve.” Since transparency is a critical part to any sustainability program so I’d suggest taking a look at a video Intel has created which explains how they are establishing a conflict free supply chain.
It was also very interesting to hear how APC Schneider Electric and WESCO International Inc. are using product sustainability programs to address customer requirements and create differentiation in the marketplace. These represent very good examples of the challenges of balancing transparency and environmental performance as part of a product sustainability program.
APC Schneider Electric has developed a ‘green premium’ program that focuses on the transparency and reporting of the environmental performance on a selected group of its products. These products must meet international standards and regulations such as RoHS, REACH and End of Life in addition to having a published and third-party-verified life cycle assessment. Because there isn’t an environmental performance threshold to the program per se (other than meeting international standards and regulations) their definition of ‘green premium’ revolves around transparency and less on improved environmental performance of the product. It will be interesting to see how their program evolves over time as they’ll likely need to answer more questions about the environmental performance of their products as this information is made available to customers and stakeholders.
Wesco has a fabric-based solution for laying cable in duct work called MaxCell. Across its life cycle, this product has superior performance related to carbon emissions, but the company struggled to communicate an effective ‘sustainability story’ to their customers. Ultimately Wesco chose to work with Carbon Trust, a third-party certification body, to verify their product carbon footprint. Although the company chose not to use the Carbon Trust certification logo, it still went through the verification process to confirm its environmental performance claims and as a demonstration to customers that the product would continue to reduce carbon emissions over time.
It’s clear that companies are challenged in finding ways to create business value and manage risk with product sustainability and stewardship. The level of transparency a company chooses to provide depends on the overall strategy, and each decision brings its own benefits and risks.
What are the elements that shape your product stewardship strategy? How is your company adapting to the demands of product stewardship?
Chris Nelson is a Partner with ERM, a leading global provider of environmental, health, safety, risk, and sustainability consulting services. He leads ERM’s Global Product Sustainability Services Practice which is focused on helping ERM’s clients design and implement product sustainability and stewardship programs that create business value from preferential environmental and social outcomes.