Brand owners go green

27 January 2012

NEW YORK: Over two-thirds of major brand owners believe sustainability will become a source of competitive advantage, with Kimberly-Clark, HP and General Electric among the firms prioritising this area.

The Boston Consulting Group, the management consultancy, and the MIT Sloan Management Review, the business title, surveyed nearly 3,000 executives from commercial organisations worldwide.

Overall, 67% of the panel agreed sustainability programmes were now necessary to stay competitive and 22% thought they would be in the future. These totals stood at 55% and 32% respectively in 2011.

Moreover, 70% of respondents stated this issue is securely on their firm's management agenda, and 68% had seen the in-house corporate commitment to ecological matters intensify in the last year, versus just 25% in 2009.

"You would expect people to say, 'Sorry, sustainability is nice, but it's only really appropriate for boom times,'" Nick Robins, head of the climate Change Centre of Excellence at HSBC bank, said. "Actually, the perception has been the other way round."

When identifying the drivers for action, some 41% of interviewees pointed to customer preferences for eco-friendly products, ahead of legislative pressure on 35% and resource scarcity on 30%.

The fact rivals were making such moves logged 28%, demands for value creation beyond profit scored 25% and competing for talent hit 23%. However, a modest 20% reported that buyers were willing to pay a premium for green goods.

"It is very difficult to motivate individual consumers around sustainability," said Chris Librie, director of environmental initiatives at HP, the IT group. "It's a nice-to-have, but they're generally not going to pay more for it."

Elsewhere, 31% of the firms were described as "harvesters", pursuing environmental schemes that also boost profits. Businesses in this category are 62% more likely to link this area to financial incentives.

"For us now, it's about looking at the full spectrum of sustainability," Peggy Ward, director of the enterprise sustainability team at Kimberly-Clark, the FMCG group, which is seeking to generate 25% of 2015 net sales from sustainable products.

Innovation has seen similar trends, as 66% of "harvesters" now collaborate more closely with customers, as do 59% with suppliers and 47% with governments. These figures were all over 10% higher than the norm.

"The idea is not to put your pencil down and quit," said Mark Vachon, VP of General Electric's ecomagination green energy programme. "It's to go back and figure out what new level of innovation is required to get to the right answer."

Data sourced from MIT Sloan Management Review; additional content by Warc staff