Corporate spending on sustainability and circular economy initiatives is on the rise — and yielding increased sales and cost savings, according to consulting firm Pure Strategies, which says its latest survey found more than 80 percent of companies expect a sustainability budget increase from 2016 to 2017 with a third anticipating double-digit growth.
The survey respondents reported gaining about $800 million from increased sales and $800 million in manufacturing cost savings, with additional earnings in risk reduction, productivity gains, and enhanced growth opportunities adding up to billions in value. Companies that report earning the most from sustainability plan to further increase their budgets, pointing to a key link between sustainability program investment and business benefits.
Pure Strategies’ fielded a survey, through research firm Verdantix, with 153 telephone interviews with 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. Pure Strategies conducted similar studies in 2015 and 2013.
The new survey found the number of companies using renewable energy is anticipated to nearly double, from 26 percent in 2016 to 46 percent in 2019. Top performing firms in the survey expect to rely on renewable power purchase agreements during that time period. Ikea, for example, is investing more than €2 billion ($2.1 billion) in renewable energy by 2020, the report says.
The survey respondents are also using safer materials, with this area expected to grow from 64 percent of companies with well-advanced programs in 2016 to 79 percent in 2019. The report highlights Walmart and Target as two companies leading this charge.
In January Target posted its new safer chemical strategy and policy that it says will apply across its operations and to every product it sells. The retailer also set a goal to invest up to $5 million in “green chemistry” by 2022 and challenged the industry to follow its example.
In fact, the no. 1 retailer driving investment in sustainability is Walmart, Pure Strategies says. Survey respondents have consistently identified the world’s largest company as the leading retailer influencing company investment in sustainability.
Walmart, the first retailer to have its emissions-reduction plan certified by the Science Based Targets initiative, is working with suppliers to reduce CO2e emissions from scope 3 sources by 1 billion metric tons between 2015 and 2030. The company has also pledged to invest $250 billion to make domestic manufacturing more cost-effective and sustainable.
These and other environmental management efforts are paying off for the retail giant: Walmart saves $1 billion a year on its improved fleet efficiency alone.
In two previous Pure Strategies’ studies, Walmart was named the top retailer stimulating investment in product sustainability. In the new survey, the company was named the top retailer driving investment in sustainability, receiving twice as many votes as Target, the second most cited retailer.
“This report shows that companies know sustainability is good business,” said Kathleen McLaughlin, senior vice president and chief sustainability officer for Walmart. “Strengthening product supply chains and other systems today will benefit customers, business and society tomorrow.”
Scott O’Connell, director of environmental affairs at Dell, will be offering a four-hour workshop on the circular economy — along with Larry Black of McDonough Innovation Sustainability Collaboration and Tom Carpenter of Waste Management — at the 2017 Environmental Leader Conference in Denver in June.