The 5 biggest sustainability challenges
In our daily interactions with large corporates, we discuss their strategic priorities. Sustainability goals and Circular Economy targets are a recurring theme. That’s why we’ve decided to list the most common pain points that our clients are sharing with us. Do you recognize yourself in these?
Translating long-term sustainability goals within each department, brand, and region
Corporates are feeling the pressure from society to mitigate the environmental impacts of doing business. When one business claims it will be carbon-neutral by 2040, a competitor jumps in and claims it will be carbon-negative by 2030, and so on.
But all these ambitious statements need to be translated into practical action plans. Country directors, brand managers, and product leads are scrambling to spot opportunities to make some progress in the next year or two already. Where to start? Energy consumption in production? Waste reduction? Redesigning the product itself?
While many agree that something can already be done in the short term, the current global economic crisis makes it ever clearer to everyone that choices have to be made. Resources and time are limited. Both seeking out opportunities and formulating an action plan are needed.
How to influence consumers? What role do clients play?
Some sustainability challenges can be overcome by focusing on the processes within an organization, with little involvement of external stakeholders (e.g. using less water in a cleaning process). But in order to make significant progress, companies often need to work with their clients.
- Track product usage patterns to understand where to improve the durability of a product.
- Influence behavior to convince consumers to join a recycling scheme.
- Change habits to switch to less wasteful products or services.
To find solutions, businesses need to get very personal with their clients. That level of trust can be hard to achieve. Many brands don’t even have a decent relationship with their customers to begin with (although they claim otherwise). A customer-centric innovation approach with a strong focus on empathy can be a winning strategy.
Battlegrounds: better packaging & less energy consumption
A specific pressure point is single-use packaging. Many regions are forcing companies to shift to more sustainable, eco-friendly alternatives: even if “sustainability” is not a major theme within a corporate strategy, companies have to tackle this specific issue.
But packaging redesigns can also be a significant growth opportunity for a business. Times have changed. When products are shipped and sold via new eCommerce channels, they don’t require the same anti-theft and POS-branded packaging as in the old days. Requirements for these products are shifting, making this is a great moment to take the leap and launch a better solution.
For many businesses, a packaging redesign can even be a cost-saving exercise. The re-use of containers, lighter materials, and fewer steps in production can lead to financial gains. When margins are under pressure, a packaging redesign exercise can help.
Another very specific battleground is rethinking energy consumption across the full value chain and production process. Again, sustainability doesn’t need to be a dominant driver: using less energy often means wasting less money, making it a strong incentive for businesses to improve their energy performance.
Set and measure sustainability KPIs
In order to make progress, it helps to know where you stand and where you’re heading. But setting practical KPIs that are used in daily operations can be hard. For many managers, measuring this type of KPI is rather new. So there is a clear need for guidance and examples from other organizations, to understand what works and what doesn’t.
In a strategic exercise like this, scrapping other KPIs is also essential: business is still driven by people and these people need clear goals to pursue. Just adding more targets is never a solution; you will need to figure out which of the other goals to deprioritize (e.g. less focus on the churn rate? Less focus on the speed of delivery? Etc.) Aligning all stakeholders to turn a strategy into specific tactics is never easy.
Sustainability portfolio evaluation
Several global companies have already taken significant steps towards sustainability over the last decade. A variety of projects have been launched, and not always as consistent as it should be. As a result, certain brands have realized that they need to start aligning their initiatives in order to optimize their sustainability portfolio strategy.
This can in part be a governance strategy exercise (e.g. who’s responsible for what, how to communicate, or how to decide on budgets). Sometimes, however, this is just a matter of alignment, to make all sustainability-related tasks and goals explicit for each project and person. Initiatives that fail to meet these standards will need to evolve or be scrapped.
Fortunately, “portfolio exercises” are a very good sign that certain companies are on the right track: they are trying to do (too) many things at once. It’s a great problem to have!