Greentech Lead America: Corporate sustainability efforts are having direct impact on business productivity, says new analysis from Verdantix. This will accelerate corporate spending on product sustainability initiatives.
Leading sustainable pioneers such as H&M, Nokia and PUMA have already achieved business benefits, Verdantix report, “Product Sustainability: The Dos, Don’ts and Business Benefits,” says.
Other companies like Adidas, Danone, GSK and Jaguar Land Rover have invested in product sustainability and achieved tangible business benefits. Some of the positive results from this investment include improved consumer trust in the brand, reduced logistics costs and lower exposure to supply risks.
According to Verdantix report, 69 percent of 250 heads of sustainability consider it is important or very important to improve performance on sustainable product innovation in the next 12 months. Thirteen percent of respondents anticipate increasing spend on product sustainability in the double-digits and 32 percent plan single digit increases.
Among the leading group of firms interviewed for the report, at least 80 percent achieved cost savings on logistics and materials; 67 percent mitigated resource scarcity risks and regulatory risks. But only 7 percent claimed to have achieved a price premium for their sustainable products.
Business benefits from product sustainability investments differ according to industries. Consumer products firms target improvements in brand trust, mitigating risks from supply shortages and differentiating products in the eyes of retailers.
Meanwhile consumer electronics brand owners aim for an edge in the innovation cycle, anticipating the impact of new regulations on materials such as polyvinyl chloride (PVC) and improving value propositions through lower GHG emissions which reduce road tax rates for customers.
Suppliers to businesses and governments invest in product sustainability to meet strict green procurement rules and achieve preferred supplier status, the report said.
According to Rodolphe d’Arjuzon, Verdantix global head of Research, “By strategizing based on life cycle analysis, materiality and market research, and taking appropriate design, supply and communications actions, firms can win big.”
Despite these benefits most firms are not doing this. The reason according to d’Arjuzon, is that most of the benefits of product sustainability investments are hard to anticipate which makes building a business case difficult. “This information barrier holds back hundreds of firms from exploiting opportunities to innovate, reduce costs and mitigate risks.”