Sustainability gains ground

23 March 2011

PARIS: Major European brand owners including L'Oréal, Bayer and Volkswagen are seeking to improve their sustainability credentials, and create a competitive advantage as a result.

Two years ago, cosmetics specialist L'Oréal outlined the objective of cutting greenhouse gas emissions, water use and waste resulting from manufacturing, hopefully halving 2005's levels by 2015.

"We are in the beauty business and want to be good citizens of the world," Miguel Castellanos, L'Oréal's managing director for the environment, told the Financial Times.

"We know it is a hard goal, but we are going to get there. We are thinking of further goals after 2015."

One recent project involved using biomass at a Belgian plant, through a tie-up with Eneco and Bio-Energie Europa.

This has yielded 40% more electricity than L'Oréal currently requires, which can then be sold on to the national grid.

"If we increase production, we will use the electricity we are producing ourselves. Our vision was to cut carbon dioxide, not generate revenue," Castellanos said.

Pharma giant Bayer published its first environment report in 1976, set out formal guidelines in 1986, has joined the UN's Global Compact and Environment Program, and is running 300 social schemes worldwide.

"The financial crisis has given us a very dramatic demonstration of where we'll end up by neglecting sustainability," said Wolfgang Plischke, a member of Bayer's management board.

Specific plans incorporate promoting energy-efficient construction via the EcoCommercial-Building platform, backing new farming techniques in Congo and Indonesia, and making goods with widely beneficial effects.

"We subject our activities and our products to a rigorous assessment in which we consider the ecological and social impacts, but also, of course, the economic consequences," Plischke added.

"Sustainability is not a pro bono project but a business model - indeed a very profitable business model if you do it right."

Elsewhere, luxury and lifestyle group PPR has this week unveiled the Creative Sustainability Lab, leveraging an alliance with Cradle-to-Cradle to adapt its approach in this area.

The organisation's PPR HOME initiative, carrying a remit covering design, carbon emissions and innovation, will be supported by €10m a year, supplementing individual brand spending.

"My deep conviction that sustainability creates value is part of my strategic vision for PPR," said Francois- Henri Pinault, PPR's chief executive.

"Sustainability can - and must - give rise to new, highly ambitious business models and become a lever of competitiveness for our brands."

Volkswagen is pursuing the aim of becoming the "most eco-friendly automaker in the world", and dedicates €8bn a year to delivering new cars and green technologies.

The firm has modernised and simplified its production matrix, enhanced vehicle performance and reduced energy and water consumption.

"Sustainability is a fundamental principle of corporate leadership and the key to long-term success," said Martin Winterkorn, ceo of Volkswagen.

"Profitability, environmental protection and social responsibility: these are the three aspects that, throughout the world, must be brought into harmony in the long run."

Elsewhere, software developer SAP has established a Sustainability Council which makes key decisions and boasts heavyweight board-level membership.

On the ground, all of its facilities are attempting to achieve silver Leadership in Energy & Environmental Design certification, while SAP simultaneously encourages partners to implement eco-friendly practices.

"Sustainability is part of strategic planning. Both for us and for our customers it is an essential factor, because we target long-term business success," said Peter Graf, SAP's chief sustainability officer.

Data sourced from Financial Times, Roland Berger Strategy Consultants, PPR; additional content by Warc staff