Walk into Florence’s Piazza della Signoria on a summer day and hundreds of birds instantly fly up and surround you. Take a cyber-walk today and the feeling is the same.
Almost everywhere you turn, the words “green” or “sustainability” seem to be in the air. Companies are “going green,” “investing in clean tech,” “increasing eco-efficiency” and hundreds of other things that make you wonder if you are doing enough both as an individual and as a business person to become “sustainable.”
Where does one draw the line between sufficient versus necessary with sustainability initiatives? How can executives determine and act on the most optimal course of action to becoming sustainable and green?
What we know
Consider the following facts related to sustainability and climate change.
Fact #1: World population is expected to increase to 9 billion by 2050.
World population will be heavily skewed towards a global middle class with high consumption patterns. There will continue to be heavy societal pressure in both developed and developing countries to maintain these consumption patterns. Consumption is increasing and will continue to increase.
Fact #2: Consumers are highly aware of sustainability but haven’t translated that awareness into buying patterns due to various factors.
A recent survey found that consumers in most countries are becoming aware of environmental concerns. The percentage rose from 57 percent in 2007 to 80 percent in 2008. Most of this awareness and willingness to act has so far taken shape within their homes and as relates to saving money. It has not translated overwhelmingly into buying patterns.
Fact #3: There is no common definition of sustainability.
There is any amount of literature that defines sustainability. While everyone talks about a “holistic” approach inclusive of environment, social and profit obligations, in reality, the definition varies widely across companies and consumers. In the chart above, a recent survey reveals the very divergent attitudes consumers have towards sustainability. There are no common definitions for a sustainable lifestyle or consumption.
A Way Forward
Taken all together, these facts and trends underline not only the importance of sustainability action but also the urgency of sustainability action. And given the magnitude of negative trends, sustainability action needs to be the best informed – i.e. rely on the most accurate data available and most likely to produce the best results for long term growth and value.
What makes the most sense is to start with the consumer and use the core strengths of the organization to service that consumer.
Here are three critical actions that a company can take in its journey towards consumer-led sustainability.
1. Focus on your most important consumer segments.
The first order of business for any company is to consider the movement between the two critical segments – green and mainstream. Is the green consumer base widening to include more and more mainstream consumers? Will there be enough green consumers to justify product innovation investments in the future? Any business that wants to be consumer driven should focus on understanding this green consumer base and the growth in green consumers.
2. Focus on defining sustainability within products for these segments.
Consumers everywhere look at performance at a justifiable price. Performance differs widely within green consumer segments and marketers need to identify those sustainability attributes that green consumers are willing to pay for. Companies need to refine understanding and possibilities of sustainability within each of these segments.
3. Focus on matching green production and procurement processes to consumption cycles.
Green production should be matched to consumers’ consumption cycles. By consumption cycles, we refer to the processes that happen when consumers buy, use and ultimately, discard or re-use the product. For instance, not all consumers want or need a “recyclable” pen but they may overwhelmingly buy a pen that has been produced in an “earth-friendly” manner and that is appealing because of its low carbon. Matching production to seasonality of sustainable buying patterns is another critical element of this step.
What is unique about the three steps outlined above is not the sequence of the steps themselves but the rigor with which they should be applied to sustainability. Harnessing the opportunity present in the sustainability space is not a one-time planning exercise or a soft skills based exercise. There needs to be significant analytical rigor in understanding the meaning of sustainability to consumers and innovating to produce products and services to meet that latent demand.
As with all initiatives, a well thought out approach towards sustainability is critical. Companies that are able to move up the maturity curve to take advantage of sustainable business opportunities will be very pleasantly surprised by the results – in any economic climate.
Kady Srinivasan is the practice lead for sustainability at Clarkston Consulting.