Brand owners struggling with sustainability

20 August 2010

NEW YORK: Many major brand owners are struggling to place sustainability at the heart of corporate strategy, despite the fact it is reshaping consumer preferences, innovation and manufacturing.

Deloitte, the consultancy, interviewed 48 senior executives, with respondents drawn from the FMCG, automotive, telecoms and technology sectors.

The panel agreed there was a "clear alignment" between sustainability and business aims.

More specifically, 65% of the sample hoped to strengthen the eco-friendly credentials of products, 46% cited improved manufacturing techniques and 31% named "brand enhancements and perception".

When identifying which functions had been impacted by sustainability, 51% said the activities of marketing teams were most affected, the highest score overall.

Totals on this measure rose to 75% for telecoms groups and 73% for FMCG companies, and declined to 38% in the auto category.

Looking to innovation, 25% of the enterprises concerned discussed attempts to make products more efficient, like by reducing energy use.

Another 23% were creating "new lines of green products to meet sustainability demands", where challenges included keeping prices down to attract consumers and matching the quality of traditional alternatives.

Two-thirds of participants said sustainability had either already reshaped their business model or would do so and 44% had adapted manufacturing process, but just 10% followed the same route for R&D procedures.

"In a world shaped by sustainability, product innovation and design will need to consider a much broader lifecycle, from the use of alternative inputs to designing for post-consumption," Deloitte argued.

"Successful innovation will require non-traditional collaboration efforts such as forming alliances with the scientific community and other non-traditional business partners to push technological advances."

The report added that such initiatives should also include consumers, both to build awareness and educate shoppers, and in recognition of their heightened role in "product stewardship strategy".

For 79% of executives, new technology and access to internal stakeholders had proved key to the success of sustainability programmes as a whole, with budgets mentioned by 68% and dedicated staff on 64%.

An ability to put planning and implementation ahead of financial metrics was considered essential by 62% of contributors.

"Our survey also suggests that many companies have a clear gap between their leaders' aspirations with regard to sustainability and the way that sustainability is enabled within their organisations," the study continued.

Given how rapidly the subject has assumed importance, Deloitte said this was understandable, although a lack of coherence and consistency was noticeable.

While the environment has been integral to most corporate initiatives, brand owners must endeavour to gain the support of the population and workforce in all the countries where they trade.

Accurately determining what is meant by sustainability, such as by looking for any "marketplace consensus", is another crucial task, Deloitte stated.

"Attention to social sustainability issues should help organisations in their efforts to drive for competitive advantage by helping them establish or maintain a 'Social License to Operate' in their target communities," it continued.

Spreading knowledge in-house is equally vital, as the need to respond to this matter tends to begin at a legal level, before extending to supply chain management, and finally to sales and marketing.

Forming a multidisciplinary "command centre" featuring members from R&D, communications, finance and operations might also help align and drive these schemes forward, Deloitte concluded.

Data sourced from Deloitte; additional content by Warc staff