Sustainability offers growth

19 April 2011

NEW YORK: Major brand owners like IBM, Procter & Gamble and UPS are utilising sustainability to enhance their innovation programmes and revenue levels.

Business services group KPMG polled 378 executives worldwide, and found 62% of featured firms now have formal strategies covering this area, up from just over half in 2008.

According to Soren Buttkereit, head of Siemens' corporate sustainability external office, his company perceives the matter "not as a compliance topic, but as a strategy topic."

"Talking about 'green growth', you're saying you can actually increase growth if you are in the right industries, and by the way that will increase resource efficiency," he said.

More specifically, KPMG revealed 79% of publicly-listed operators currently have official frameworks in place, including 80% of consumer goods manufacturers.

Procter & Gamble is one organisation in the latter category that has acted quickly, outlining plans to cut 20% of packaging by 2020, when 30% of its energy is also to be renewable.

To ensure sufficient quality and rigour, P&G subjects all such schemes to similar return on investment calculations as deployed across the other aspects of its portfolio.

"We are in so many different businesses that size and breadth creates challenges," said Len Sauers, P&G's vice president, global sustainability.

The parent of Tide and Pampers believes making progress regarding both processes and products may offer substantial benefits to industry leaders.

"I think that's really ... where the competitive advantage can be for corporations, being able to overcome these barriers and implement these kinds of things without those cost increases," said Sauers.

In keeping with 44% of the panel, Sauers also suggested sustainability would become a key driver of innovation going forward.

"All issues of sustainability will be solved by innovation, I have no doubt in my mind," said Sauers.

In 2008, only 31% of private sector players anticipated boosting the bottom line by pursuing environmentally-focused initiatives, a figure which has reached 48% today.

This total was broken down into 27% who expected to see costs decline, versus 21% predicting such moves might heighten profitability.

UPS, boasting roughly 100,000 vehicles in more than 200 countries, delivers an average 15m packages each day, meaning impressive returns should result from even minor procedural streamlining.

"If I can take a second out of handling those every day, that's $30m a year," said Bob Stoffel, its svp, engineering, strategy, supply chain distribution and sustainability until January 2011.

The core facilitators behind corporate interest in this area cited by KPMG's interviewees were governmental regulation, on 42%, and a wish to augment brand reputation, recording 41%.

Managing risk logged 29% on the same metric, while a desire to trim outgoings hit 27%, the study stated.

Elsewhere, attracting and retaining customers posted 32%, and generating better goods and services yielded 25%.

Among the most widely-used tactics to date have been improving energy efficiency, securing 72%, reducing carbon footprints, registering 69%, and cutting emissions or pollutants, receiving 67%.

Pressing ahead with these types of programme can be costly, but Wayne Balta, IBM's vp, corporate environmental affairs and product safety, warned the alternative was less appealing still.

"If you think it is expensive to do things for the environment, you should try ignoring it," he argued. "You'll find how expensive it gets."

"For every dollar we spend, we are getting $1.50 to $2 back."

Data sourced from KPMG; additional content by Warc staff