As manufacturers continue incorporating sustainability practices within their product manufacturing processes and supply chains, the retail industry – as the main customer point of contact – bears the responsibility of educating consumers about the sustainability choices available in the market.
Numerous consumer polls proclaim increased spending on green products, but they fail to provide much insight into the actual purchase trends or specific decision drivers behind consumer choices. Instead of relying solely on such generalized market surveys, adoption of a strategic market research process will help businesses boost their revenue, reputation and competitive advantage from sustainability.
A recent study by A.T. Kearney indicates that firms with “true commitment to sustainability” outperform industry peers in the financial markets. Companies that embraced sustainability before it became in vogue, now have the competitive advantage. These companies increased production volume while reducing greenhouse gas emissions, decreasing water consumption, optimizing packaging volume.
There’s been a lot of discussion about elevating corporate responsibility to become a strategic driver of your business. Most companies would like to benefit from their ethical efforts in the form of increased customer attraction and loyalty, yet few have figured out how to do it successfully. When marketing and PR are relied on, it can often backfire in accusations of greenwashing. The secret is to apply brand-strategy principles to build your ethical reputation.
As consumer expectations rise and trust in corporations decline, the need for ethical business practices is greater than ever. Yet in a recession, companies seeking to cut costs will likely postpone important CSR initiatives or cut spending in favor of core business initiatives. But it doesn’t have to be either-or. Companies that consider social and environmental initiatives as potential innovation platforms and brand builders — not expenses — will come out ahead.
Your company has been progressing nicely up the sustainability curve from compliance to cost savings. The next logical step is reputation and revenue generation, and itʼs here that many sustainability pros hit a roadblock. Without a CEO mandate, business units usually have little incentive to deviate from whatʼs been working in the past. Sustainability and CSR initiatives have safely been tucked away behind the scenes, dealing with internal and supply chain issues that reduce risk and cost to the business. Objections to customer-facing sustainability initiatives range from “Why put our neck out and riskgreenwashing charges?” to “Itʼs still a niche market” and “Why would we promote our values for commercial ends? Weʼre doing this because it’s right, not to make money from it.”
I recently published a post on Triple Pundit that fleshes out the market-facing aspects of a model I’ve been working on with The FairRidge Group. Called the Sustainability Management Maturity Model (SM3), it’s a tool to help businesses assess their readiness to address business sustainability challenges and opportunities. The internal management components were outlined a few months ago on Triple Pundit – Strategy, Organization, Process, Measurement and People – which all relate to an inside-out perspective of the business.
