Sustainability: Embracing Green Initiatives
As companies attempt to address the increasing desire for corporate transparency among consumers, Corporate Social Responsibility (“CSR”) has yet to be clearly defined across companies, let alone be addressed in a uniform manner. The result is a mix in ways of responding to economic, social, and environmental responsibility.
Why should sustainability in business be embraced?
According to Charlene A. Wall-Warren, Sustainability Leader, North America, for global chemical company BASF, “Supply chain sustainability continues to be an important topic, the global nature and complexity of supply chains, the transparency created by the Internet and social media, and initiatives of groups like the Sustainability Consortium, are all adding increasing momentum, bringing value chain participants together to address this topic.” (http://online.wsj.com/ad/article/sustainability-improving)
Consumer preferences are changing in an age of social media and readily available information. In decades past, consumers were often driven by cost and quality of products; environmental impacts of corporate practices were often an afterthought. Today’s consumers are better educated. Information on corporate practices is now collected and analyzed, further studied, and shared with the public as the educated consumer craves and expects it. Consumers are looking beyond products to corporate image as an important factor in making purchasing decisions.
Leaders who understand the opportunities presented by sustainability will be able to position their brands for success. For some, the perception of sustainability initiatives as cost-centers is an impediment to adoption due to lack of understanding how consumer buying behaviors are affected by it. However, sustainability can lead to cost reduction and improved profitability in addition to branding benefits. In a marketplace saturated with comparable products at similar prices, incorporating sustainability into the brand image can improve reputation and develop a competitive edge.
Cost reductions can be achieved by re-engineering product designs and processes for sustainability. Solid, cost-reducing steps include eliminating excess packaging and waste and taking advantage of federal and state tax credits for expenditures on research and development and various green initiatives. Mazars leverages our expertise in this area to help clients maximize the benefits of the available tax credits.
While cost reduction is a strong motivator in the pursuit of sustainability, the benefits to brand positioning are undeniable. Proctor and Gamble (“P&G”) has boasted of surpassing its 2020 sustainability goals, raising the bar with “Ambition 2030.”
Said P&G VP of Global Sustainability, Virginie Helias, “Today, consumers want the brands they use to have a positive impact on the world. Our brands have the power to redesign the “The Good Life” by enabling and inspiring responsible consumption. This involves using our brand’s voice to promote responsible communication and our innovation capabilities to make sustainable innovation irresistible. Serving five billion consumers gives us the unique opportunity to promote conversations, influence attitudes, change behavior and help the people who use our brands have a positive impact. This is how we hope to redesign the Good Life – through our brands and enabling responsible consumption.” (https://sustainablebrands.com/read/organizational-change/p-g-smashes-2020-goals-raises-the-bar-with-ambition-2030)
With the largest consumer goods company fully embracing green goals and sharing its progress, it is clear that this positioning has become a cornerstone of the brand’s marketing, spreading the message – green is good!
Smaller organizations also embrace sustainability initiatives and reap the benefits, and sustainability should be addressed with a holistic approach.
Large and small companies alike should consider the same items when embarking on a sustainability program:
- Strategy – Leadership should develop an understanding of a company’s impact on the community and environment while weighing the value of adopting a sustainability program. Understanding the issues, engaging stakeholders, prioritizing and developing action plans are all part of developing a strategy to bring sustainability to a company. Leaders should consider cost vs. benefit in addition to looking beyond the numbers as social perceptions are an increasing factor in driving consumer behaviors. A well-developed strategy will maximize the economic and social impacts of a sustainability initiative.
- Management – It is necessary to incorporate sustainability across business lines, processes, and products. Implementing a defined roadmap to sustainability includes leveraging innovation, fostering a culture of sustainability, and executing on the strategy while ensuring methods are in place to collect data to measure impact. This is a challenging but rewarding change management process. Employees generally feel more involved with increased loyalty to a company that adopts sustainable practices.
- Reporting – Organize and analyze the data and results of the sustainability strategy through tracking progress and identifying difficulties. Transparent and informative communication with both internal and external stakeholders is crucial in maintaining the momentum of a sustainability initiative. Through communication, a company can reap the benefits of sustainability.
Examples of successful and fruitful sustainability strategies are seen in companies both large and small. B Corp certification points further the credibility of companies built with a sustainable mission at their core. Here in the United States, there is an opportunity to be ahead of the curve in implementing strategies before regulations are put in place.
Sustainability presents a great opportunity to engage with and anticipate consumer concerns, client demands, and investor expectations. Adopting a sustainability strategy that maximizes corporate impact and visibility is a proactive response to a trend that is here to stay, as green initiatives have become a requirement for successful companies.
Mazars can help! Contact Nathalie Gilet for more information on sustainability services.