As a relatively newer business function, sustainability is evolving quickly. Often intermingled with corporate social responsibility (CSR), the term has often had a muddied identity. However, this is changing. Where is sustainability going, why should we care, and how do we take advantage of it?
Why it matters
Over the past few decades, sustainability has grown from a niche business pursuit to one that is commonplace or even embraced as a core function in many businesses. In 2019, 86% of S&P 500 companies publish sustainability/responsibility reports compared to less than 20% in 2011 (source). This dramatic shift in just a few years has been spurred by the trends and minds of the average person. Individuals care about environmental impact. As a result, not only do people want and demand more from the businesses they support with their dollars, sustainable and responsible companies are often seen to hold less risk and be more investible. In other words, it makes business sense as evidenced by the swift adoption of programs across an ever-increasing number of participant companies.
Where it’s been
Historically, sustainability is closely associated with CSR, sometimes even used interchangeably. Consequently, its meaning sometimes carries a broad definition, one that encompasses environmental concerns, human rights, health, safety, regulatory compliance, and ethics – all of which are supported by marketing and branding initiatives to bring a return on those investments. Each of these areas of focus are respectfully important, and the progress made in the CSR landscape, as a whole, has been a necessary step in the evolution towards the sustainability of today. However, sustainability today is strongly diverging from the other CSR initiatives with clear, separate ambitions. To elaborate, being regulatory compliant, implementing fair labor practices, providing safe working environments, and limiting office waste are expected in today’s business climate, and in many cases, it’s simply following the law. These are not differentiators, nor do these necessarily make a company sustainable. Therefore, businesses will need to continue to push more robust sustainability objectives to continue to see strong ongoing benefit and accommodate requirements being driven forward in the marketplace.
As sustainability continues to earn it’s own distinct voice, more attention around environmental concerns will continue to gain steam. Company-wide mandates such as reducing carbon emissions by a marked percentage compared to a previous year’s benchmark would be a common example of a straightforward sustainability effort. These initiatives are brand oriented and help support a positive image for the company holistically. A tactic such as this has worked well for companies in the past to improve perceptions which results in various benefits. While respectable efforts, the sustainability market is maturing, becoming more saturated, and strategies like these are becoming expected. Customers now have more information available at their fingertips than ever, allowing more educated and deliberate decisions, and today’s buyer wants to make direct sustainable impacts with their purchases, versus indirectly to a sustainable company. As such, the conversation is changing from supporting sustainable businesses, to selecting specific products that are more sustainable, first-hand. For instance, a sustainably-minded customer would more likely purchase a specific line of sustainable soap knowing the full product story versus a soap company that simply has high-level sustainable objectives. A product story is where it’s sourced, how it’s manufactured, the ingredients, the carbon footprint, end-of-life options, and how it feeds into a circular economy. Think farm-to-table, but with manufactured goods or services. Customers want to make direct impact with their purchases towards sustainability, and this information allows them to make educated buying decisions. Businesses that provide this level of transparency can capitalize on a growing demand. To be clear, company-wide initiatives aren’t going away, nor should they, because those expectations are still there. Customers are simply asking for more, and for companies to continue to reap the financial benefits of being a sustainable business, those organizations will need to support their customer base with a stronger focus on product level sustainability.
How to embrace the change
The shift to product-oriented sustainability will continue to grow stronger as customers want to know exactly what it is they are buying and the respective impacts of that purchase. To move forward, businesses need to look inward at their own products and truly understand them to the deepest level. As mentioned previously, this would be knowing the full product story including where ingredients are sourced, a chemical level breakdown of those ingredients, manufacturing processes, end-of-life options (like recyclability or landfill), and how the product can contribute to a circular economy. To get this information companies will need to leverage connections with suppliers and possibly forge new ones to fulfill the quest of fully understanding the products they sell.
Having this information is incredibly valuable and can be applied in a variety of ways. A short list would be ingredient disclosures, regulatory compliance, product design improvements, pursuit of product labels or certifications, and product promotion. These efforts can be utilized to reduce risk, minimize environmental impact, and allow true differentiation. Businesses can craft a product story that is difficult to replicate, would attract target sustainable buyers, and improve financial outcomes.
How Toxnot can help
Performing the task of full discovery on your product library might seem like a monumental task, but it doesn’t have to be. Toxnot manages enterprise product libraries and makes it easy for companies to engage suppliers and fully understand the supply chain from start to finish. Furthermore, Toxnot makes reporting, disclosures, and pursuing certifications easy and efficient. Using the same data, users can also maintain regulatory compliance, design safer and more sustainable products, and serve their target markets more effectively.
Start your sustainability journey today with Toxnot's Sustainability Plan Template available as a free download on our site here. For more insights on product transparency and sustainability continue to follow us and subscribe to our blog & newsletter.