When Sustainability Becomes a Challenge, Opportunities for Innovation Abound
In my last article, I discussed the importance of integrating sustainability into your organizational culture. This ensures that companies reap all of the financial and reputational benefits sustainability offers. Yet, so many companies still view sustainability very narrowly and think of it as simply a corporate social responsibility, or CSR, initiative. Some companies even believe that sustainability hurts their business as they associate sustainability solely with cost. In reality, companies that have started on a sustainability journey understand that sustainability is not just a CSR initiative but a business strategy, a driver for innovation and a competitive advantage.
Regulation Spurs Opportunities
Government regulation can often be a driver of sustainability. Certainly, regulation can create challenges for businesses and their customers by mandating certain standards that must be achieved, such as lower emissions, fuel consumption or improved safety. But these challenges can be leveraged as opportunities for companies to rethink their standard operating procedure. For example, a supplier may see that their customers are encountering a tough regulatory challenge and if the supplier can come up with a solution to that challenge both companies can realize revenue growth and other benefits. In this example, regulation can drive sustainable economic growth, which is vital to the long term success of a business. Regulation can also create a more level playing field within a specific industry, empowering businesses to understand how they compare to their peers and enabling consumers to compare apples to apples when making purchasing decisions. This ability to benchmark one company against another can be a powerful motivating factor when developing business strategy and making decisions.
Companies focusing on sustainability are also creating and/or leveraging more advanced technology as a means of driving business results. New technology may allow for greener processes or new processes that require or create opportunities for greener technology. For example, DuPont is currently developing technologies to produce cellulosic ethanol, a product which reduces greenhouse gas emissions more than 60% compared to gasoline. While the product itself is notable in its ability to reduce dependence on fossil fuels, significant efforts were made to integrate sustainability into the production process through water recycling, pollution controls and energy co-product capture. Ultimately, this innovative product and process will significant advance the cellulosic ethanol industry toward commercialization – sustainably – while concurrently generating business value for the company.
The World is Changing, You Must Too
Further, market demand and customer expectations provide impetus for businesses to integrate sustainability. Consumers are demanding higher-quality products and services and increasingly expect companies to behave more responsibly. Companies are also demanding more sustainable partners and suppliers. The mining industry exemplifies how market forces have driven sustainability. For decades, the mining industry was focused largely on how to extract the most products possible – with few demands from customers that it be sustainable and responsible in its practices. This has all changed. As businesses, consumers and governments have demanded that companies, and whole industries, become more environmentally friendly, mining companies were compelled to adopt more sustainable and responsible practices in order to maintain their right to operate.
Market demand does not just drive sustainability in the “green” sense. It also drives companies to optimize their processes to be leaner, safer and more productive. Companies that are pursuing more sustainable practice in all facets – better environmental practices, use of more advanced technologies and more productive, engaged employees, among others – achieve a better risk profile and reputation. This reputation for sustainability becomes its own competitive advantage as sustainability is becoming a qualifier for intent to purchase. For example, consumers love Patagonia because it is a company known for innovation and a strong commitment to corporate stewardship. Employees are fully engaged in donating time and services to support environmentalism, and promoting initiatives to encourage consumers to use less. The company has a dedicated customer base that believes in the company, and its ability to have a positive impact on society. Ultimately, such efforts not only encourage sustainable growth, but provide a competitive advantage.
The Challenge and Opportunities of Sustainability Lead to Innovation
As discussed, the desire and/or need to be a more sustainable business creates challenges, and these challenges are what links sustainability and innovation. Within these challenges companies have the opportunity to innovate new solutions, processes and products. A clear understanding of these challenges – for your business and your customers – is absolutely essential to capitalizing on these opportunities. In our previous post, “Where Even the Mighty Falter: Integrating Sustainability,” we mentioned polymer development, and its role in the lightweighting of vehicles. This serves as a perfect example of how a company’s desire to be more sustainable and customer demand for more sustainable materials drives innovation.
As the world’s population grows so do the number of vehicles on the road, creating more CO2 emissions and using additional fuel made from fossil fuels. Government is trying to stave off this potential environmental damage by creating and revising regulations governing fuel efficiency and emissions. Realizing that lowering the weight of vehicles is one of the biggest opportunities to lower environmental impacts, DuPont scientists have developed solutions utilizing elastomers, fibers and plastics that can be deployed in engines – even those that are turbocharged – to significantly reduce weight. We have found that by eliminating just 11 kg on the 70 million light-vehicle engines currently on the market could save 240 million gallons of fuel – or 9 million barrels of crude oil used for transportation. These products not only allow for improved environmental performance, but also generate revenue and help our company to realize our sustainable growth goals.
Understanding and Collaboration Ensure Lucrative and Sustainable Innovation
Becoming a sustainable company is not a matter of implementing discrete, one-off projects. Instead, sustainability needs to be fully integrated into the company’s culture. As discussed in our previous post, this means viewing sustainability as a strategic issue that measures in importance the same as operations, safety, workplace culture, etc. DuPont initiated a new strategic sustainability initiative in 2009 when our Building Innovations business set out to achieve achieved zero landfill status through its Drive to Zero Waste project. This project focused on reducing, reusing and recycling manufacturing byproducts and waste at manufacturing sites globally become completely landfill free. After three years of focused effort, DuPont Building Innovations has succeeded, reducing its environmental footprint from 81million pounds of landfill waste annually to zero while at the same time earning a $4.5 million profit.
As shown in the example above, business leaders must understand the benefits to implementing sustainable practices for their company, both internally and externally. This is the basis for understanding the larger needs of customers, partners and consumers at large. Without this understanding, successful innovation will be hard to achieve.
Further, the increased complexity caused by current global economic and demographic challenges has made collaboration increasingly important. Whether in a specific industry, among stakeholders, or even within a value chain, collaboration is an important means of fostering innovation by breaking the boundaries of individual thinking.
Business success today is increasingly measured on performance beyond the traditional financial bottom line. At DuPont, we feel as though our ability to innovate is a result of our unwavering commitment to our core values. By upholding the highest standards of safety and health, environmental stewardship, ethical behavior and respect for people, we have been able to leverage our strongest asset – our people – to deliver innovative products, materials and services to the global marketplace.
In the next installment of this column, we will discuss how innovation can be applied to a specific topic – energy management – and thereby realize a significant reduction in risk and significant cost savings.
Davide Vassallo is global practice leader, Sustainability & Capital Growth for DuPont Sustainable Solutions. His areas of expertise include sustainability strategy, climate change, energy and eco-efficiency, local content development, and capability building. Since joining DuPont Sustainable Solutions in 2010, Mr. Vassallo has focused on helping corporations improve efficiency and business performance while also reducing their environmental footprints.
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