One of the most stubborn barriers to embedding sustainability throughout an organization is that the connection to everyone’s job isn’t clear in the way that optimizing profit is. Business-relevant goals tackle this challenge by linking sustainability efforts to the core of the business: revenue, innovation, or product improvements across the product portfolio. This approach engages teams throughout the organization and makes sustainability meaningful for employees from procurement specialists and product developers to sales managers and marketing teams.
Structured Goals Deliver Value
New research by Pure Strategies examined companies with product sustainability efforts to reveal that since 2013 companies have advanced their programs in meaningful ways. Notably, all surveyed businesses have product sustainability goals (up from 81 percent in 2013) that address the improvement of product social and environmental impacts across the lifecycle stages.
However, having goals doesn’t necessarily drive success. Companies that have embraced structured goals that include business-relevant goals are getting farther ahead, including gaining important business benefits from greater employee engagement and productivity to increased sales and risk reduction.
In the past, firms sought progress toward sustainability through issue-focused targets, such as reducing manufacturing greenhouse gas emissions. These serve an important purpose of focusing on key priorities such as ingredients, raw material impacts, packaging attributes, resource efficiency, or other issues. A growing number of companies are also articulating a motivating direction with a high-level aspiration. Neither of these approaches by themselves provides the needed link to the business to drive organizational action.
Top-performing companies have found a solution through business-relevant goals. What they gain is a way to embed product sustainability initiatives into business planning and everyday actions to enhance progress and business benefits.
Using Business-Relevant Goals to Engage the Whole Company
Business-relevant goals don’t stand alone. They are best leveraged within a structure that provides direction (with an aspiration), connection (business-relevant goals), and focus (issue-focused targets). L’Oreal, for example, has a high-level aspiration of “Sharing Beauty with All.” This gives the company an effective overarching purpose for its efforts but requires focus and targets to translate it into action and performance. This is where business-relevant goals can link sustainability to core business strategies and programs, such as innovation. L’Oreal does this with the business-relevant goal that “by 2020, we will innovate so that 100% of products have an environmental or social benefit.”
Additional approaches to business-relevant goals connect sustainability to revenue, growth, the product portfolio, new product launches, or product improvements. Examples include:
- RB aims to have one-third of net revenue come from products that are significantly more sustainable than their predecessors while continuing to deliver excellent product performance.
- The Clorox Company has two 2020 goals:
- Drive 20 percent of sales growth by eco initiatives.
- Achieve sustainability improvements across 50 percent of the product portfolio.
- Marks and Spencer strives to have all M&S products achieve at least one “Plan A” social or environmental quality by 2020.
As companies adopt business-relevant goals, they are connecting product sustainability to business strategy. With this link established, it becomes easier to drive sustainability into key functions and adopt issue-focused targets. L’Oreal includes a target to evaluate each new formula to ensure that at least one of the following is met:
- The new formula reduces the environmental footprint.
- The new formula uses renewable raw materials that are sustainably sourced or raw materials derived from green chemistry.
- The new packaging has an improved environmental profile.
- The new product has a positive social impact.
This business-relevant approach brings a clear call to action and additional accountability to product and packaging development teams and sourcing and procurement staff whose progress can be tracked. This approach also enables measurement of the business value from sustainability such as sales growth, reduced risks, and improved productivity, validating investment in the program. The companies that have embraced this approach are reaping significant benefits, increasing their investments further, and paving the way for even greater future success.