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$8 Billion Gained from Resource Efficiency, Circular Economy Efforts

Lakeshore Recycling SystemsTop-performing companies generate twice as much value from resource efficiency, circular economy initiatives and other sustainability efforts compared to their peers, according to a Pure Strategies survey that found companies earned more than $8 billion in 2015 as a result of these efforts.

“Our research demonstrates that sustainability brings strong dividends of brand enhancement, increased sales, motivated employees and reduced risks and costs,” said Tim Greiner, managing director at the sustainability consulting firm, in a statement. “We also found that leading companies that are earning more, plan to further invest in their sustainability programs, signaling a strong business case for sustainability.”

Cheryl Baldwin, Pure Strategies VP of consulting, told Environmental Leader that the survey defined “sustainability efforts” as corporate programs that address issues such as climate change, resource efficiency and circular economy, sustainable agriculture, and chemicals management.

For the survey, the consulting firm interviewed 153 sustainability leads in global companies with revenue of at least $250 million in these industries: food and beverage, apparel and footwear, life sciences and medical products, electronics and appliances, home care and cleaning, personal care and cosmetics, and general merchandise.

It found that while 43 percent reported at least $1 million in increased sales from sustainability efforts, 45 percent reported manufacturing cost savings, typically through resource efficiency and productivity projects. Clorox, for example, found that cost savings from sustainability improvements delivered an average of $15 million annually since 2008.

“Firms that are measuring this benefit show the potential for notable value. Hewlett-Packard Company engaged with customers whose combined green procurement requirements totaled $15 billion of existing and potential business revenue in 2015,” Baldwin said.

Respondents identified product innovation, design and development, activating a sustainability purpose in the business, and sustainable sourcing as the most valuable program approaches.

Unilever reported 30 percent faster growth for its brands with a sustainability purpose, compared to the rest of its business, with these more sustainable products contributing nearly half of the firm’s total growth in 2015.

Baldwin pointed to Smithfield Foods as another example of companies saving money from their sustainability efforts. “Smithfield Foods started tracking cost savings in operations in 2004 and found gains of $18 million in the first year,” she said. “Since then, the company saved more than $581 million.”

A slew of recent “sustainable brand” acquisitions by multinationals also points to the profitability of these brands and their ability to help the purchasing companies meet their own internal environmental goals.

In September, Unilever bought sustainable household products manufacturer Seventh Generation. It already owns Ben & Jerry’s, another socially conscious B-corporation well known for its environmental efforts, and is rumored to be in acquisition talks with Jessica Alba’s Honest Company.

In July, SC Johnson purchased the plant-based home and personal care products brand Babyganics.

“This trend will only continue as multinational corporations look to organic or bio-based products as key enablers for fulfilling internal sustainability road maps,” Lux Research analyst Victor Oh said in an earlier interview. “Multinationals are also preparing for a future generation of consumers that are starting to select brands based on how the products were made and where the material were sourced from.”

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