Measuring and Managing Sustainability
There is growing evidence that sustainability is no longer just optional. Leading companies—such as Unilever, SAP, Nestlé, P&G and Kraft—have made announcements saying they will/ are changing their business models to make the most of a changing business landscape, on that includes using resources more efficiently and in ways that are sustainable. These public announcements are mainly from “consumer goods companies”. But all their suppliers (B2B) will be impacted as well.
What are the challenges involved in becoming more sustainable? How does a company make it pay off for everyone?
∧Injecting Sustainability into the Whole Organization
A few years ago, when companies began looking into how they could do business sustainably, it was often in response to consumer demand for them to “be green”. But today, businesses are embracing sustainability because it can help them to focus on more efficient—and potentially profitable—ways of working.
Integrating sustainability into the corporate strategy
In the emerging new economy, more and more companies are making long term plans to gradually integrate “sustainability” into their strategy and “customer value proposition”. This enables them to identify and consider economic, environmental and societal risks and opportunities, and turn them directly into actions. They have adopted the business approach to sustainability, i.e. increasing short- and long-term profitability by holistically managing the economic, societal, and environmental aspects of their business.
Greater efficiency, better financial results
Companies taking a strategic approach towards sustainability not only minimize costs and risks, but also outperform the competition by developing more sustainable products and services. They become more efficient across their supply chains and drive superior financial results. Evidence of this can be seen in industry studies and analysis, such as PriceWaterhouseCoopers' Sustainability Asset Management (SAM) assessment of the Dow Jones Sustainability Index. The SAM results clearly indicate a positive relationship between sustainability and financial performance, as measured by stock returns.
What You can Measure, You can Manage
Today, businesses are beginning to understand that sustainability is not only about being environmentally friendly. It is about business, which ultimately means it is about money. If implemented well, sustainability can contribute positively to a company’s financial results.
Measurement as part of the strategy
The most important element in this approach is that you only can act upon things that you measure. Measurement is, therefore, a key element in a sustainability strategy. By extracting the right information from all your operations, you can easily make corrective adaptations. This needs to be an on-going cycle. So, a sustainability strategy should be an integral part of the corporate strategy.
Two Challenges for Sustainability Strategy
Unilever: One Company’s Plan for Sustainability
Companies around the world are re-aligning and adjusting their business models and strategy to include sustainable business activities. Why? For many companies, sustainability is a response to demands from their customers. But, as these same companies are discovering, sustainability can also lead to greater efficiency and profitability. One example is global consumer goods company, Unilever, whose products are used 2 billion times every day by people in almost every country in the world.
Near the end of 2010, Unilever announced its Sustainable Living Plan, a commitment to “develop new ways of doing business which will ensure that our growth does not come at the expense of the world’s diminishing natural resources”. The company announced plans to:
- Reduce the environmental footprint of its products by 50%
- Over the next 10 years, help one billion people improve their health and well-being
- Obtain 100% of its agricultural raw materials sustainably
The Sustainable Living Plan sets out more than 50 social, economic and environmental targets. It will see Unilever reduce by half the greenhouse gas emissions, water and waste used not just by the company in its direct operations, but also by its suppliers and consumers. More than two-thirds of greenhouse gas emissions and half the water used in Unilever products’ lifecycle come from consumer use.
“People tell us they want to reduce their environmental impact but find it hard to change their behaviour and don’t know how they can make a difference,” explained Unilever CEO Paul Polman. “By halving the total carbon, water and waste impact of our products, primarily through innovation in the way we source, make and package them, we can help people make a small difference every time they use them.”
Click here to read more about Unilever’s work in this area.
Three other examples:
There are two key challenges facing companies that are working to embed sustainability throughout their business.
1. They need to shift the corporate view of sustainability away from focusing mainly on philanthropy and corporate social responsibility. Instead, companies need to embrace the reality that there is a strong business case around sustainability. And, it has a direct impact on their revenue and margins.
2. Sustainability is often an isolated effort, as opposed to being an integral part of the goals and core processes of an organization and its supply chain. Due to this separation and the need to meet governmental and customer reporting requirements, companies often spend most of their effort aggregating data from many disparate systems rather than creating and executing strategies based upon identified opportunities. To make your sustainability strategy effective, data needs to reside in one place, where it can be analyzed for changes across a wide scope.
∧SAP’s Sustainability Map
The Sustainability Map provides a comprehensive view of the sustainability requirements of an organization and a framework to show how SAP solutions deliver value. Click on the graphic below to enlarge it.
For detailed information about the SAP Sustainability Map, click here.
Purchasing, Procurement, Contract Management, Logistics and Supply Chain
Your sourcing strategy is important but it’s not just about the cost of manufacturing and transport. Your competitive advantage concerns the total cost and viability of your whole supply chain.
Integrating All of the Parts of the Supply Chain
“Just move the goods from A to B as cost effectively and efficiently as possible!” It sounds logical. Yet it is precisely this approach that has built up the boundaries between company departments which should all be working on the same team. When you take a fully integrated approach from raw material purchase right through to customer delivery, you maximize the value chain without adding business risk. The greater the level of integration and understanding there is, the greater the chance that your supply chain people will make decisions in the true interests of your company.
How MCE Can Help
MCE’s Senior Associates can meet with you to discuss and analyze your sourcing strategy and identify areas for greater efficiency. They will work with you and your management team to bring all parties involved in the supply chain to a common point of understanding about supply chain issues. They can help your people examine what really works vs. what sounds good in theory. They tackle both the harder and softer sides of the supply chain, from building trust and breaking down boundaries to reviewing technical and financial benchmarks from your industry. If you would like to find out more about how MCE’s team of experienced Senior Associates can help you in this area, click here to complete a Contact Us form.
Adapting Your Sourcing and Logistics Strategy to Changing Global Economic Realities
Today, more than half of the people in the “developing world” are middle class consumers with disposable income. They live in countries that include China, South Korea, Brazil, India, Russia, Morocco, Mexico and Indonesia. Many of their consumer goods come from low-cost local suppliers. Most consumer goods from European companies cost more—which creates a competitive disadvantage. To remain competitive, European companies are beginning to offer differentiated, highest-quality products and services. These are often combined in a custom-designed solution backed up by expertise to solve clients’ problems. This is the best—if not the only way—for European companies to go to global markets.
All of this has a huge impact on sourcing, logistics and supply chain strategy and operations. Traditional ways of doing business are adapting to local markets. How do you people keep up with the constant change?
Assessing the Risks and the Value in your Supply Chain
Whether you are considering product liability, warranty impact, or environmental aspects, you need to examine the short and longer term impact of your sourcing decisions. Assessing the risks and looking at the potential added value aspect of your sourcing decisions can change the financial equation for your company.If you would like to find out more about how MCE's team of experienced Senior Associates can help you in this area, click here to complete a Contact Us form.
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Talk to MCE about Measuring and Managing Sustainability
MCE's Senior Associates
Our Senior Associates can work with management teams or individual managers to address all of the people and change management challenges facing industries, businesses and organizations today. They draw on their years of experience in top managerial and leadership roles to help you solve problems and identify "what works" in different circumstances, countries and cultures. Above all, they have led their people through the challenges of developing new capabilities and working in a different way. They apply their expertise in a wide variety of services, including:
Open Enrolment Workshops for Individual Managers
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In-Company Leadership and Management Development Workshops
Customized to Your Specific Needs. Talented managers and leaders in key roles make all the difference in taking smart decisions and leading strategy implementation to success. Identifying talent potential and developing that talent to take on greater responsibilities is crucial for ensuring leadership succession as the older generation retires. MCE can help you with talent assessment, pipeline planning, and tailoring career path plans to achieve your future senior management needs.
Your future leaders need to understand your business, the broader business environment, how to make strategic business decisions, and how to lead and manage people in complex organizations. They need a cross-functional understanding of how the organization works together to get things done. We can customize a programme to run exclusively in your company for your future senior managers.
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Business Coaching and Mentoring
MCE senior associates provide flexible one-on-one mentoring and coaching to key people in your organization at middle or senior levels. MCE associates mentor and guide based on their own business experience. This can be on a particular business issue or project, or for general career development. It could be about filling a knowledge gap in a specific area in preparation for taking on a more senior role.
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Advice on Organizational Development and Talent Management
Your people are your most expensive asset. Success depends on making sure this asset is productive. An important part of this is developing your people in the competencies related your your strategy. MCE can work with you flexibly and in a variety of formats. Management Centre Europe can help you custom-design a development curriculum for the individual managers in your leadership pipeline.
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∧Is MCE “Green”?
Surrounded by information we encounter through our business activities, we decided it was time to see if MCE is green. So, we made an initial analysis of our carbon footprint.
Much to our surprise, most of our carbon footprint is the result of people traveling to our conference centre in Brussels to attend workshops. And, of course, some of it comes from our own travel to meet with customers.
When we looked at possible ways to be “greener”, we identified four steps we could take as a starting point:
1. Bring the Workshops to You We offer our workshops in 19 cities across Europe and the Middle East. This also helps our customers reduce travel costs.
2. Virtual MCE We are looking into the best way to introduce virtual seminars and workshops. Look for developments in this area in the later part of 2012.
3. Only a Teleconference Away Our account managers will—as much as possible—contact clients using Webex and other virtual meeting technologies. This will help reduce CO2 emissions due to travel to meet with clients.
4. Electronic Courseware We are also looking at replacing workshop materials—such as notebooks and anything else in printed form—with materials in an electronic format. We are already experimenting with the use of “smart board” technology as a way of capturing the ideas and interactions of participants in some of our workshops. When they conclude the workshop, they can take away an electronic slide pack of concepts, ideas and discussions.
In this process, we admit that we can save costs, too. And it turns out that we have even more innovation possibilities than we thought we did. The bottom line for you, our clients: People who take part in our workshops will not have to travel over long distances to participate if they do not want to. We think that is a positive step in the right direction.
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