This is part 5 of 8 from the 2012 Sustainability & Innovation Global Executive Study and Research Project.
For Sustainability-Driven Innovators, customers are at the center. These companies are 80% more likely to increase collaboration with customers as a result of sustainability than are companies that did not change their business model. They are also much more likely to collaborate with competitors, suppliers and across their own business units.
AT&T, for example, has consumer advisory panels that include both end users and businesses. The panels’ goal is to understand customer decision-making processes and then determine the best way to communicate the company’s sustainability values. Like many other companies, AT&T realizes that customers are moving targets and their competitors are also aiming at them. As Michael Bremans at Ecover puts it: “All your activities need to be centered on customer expectations. Even without legislation and regulation, consumers are looking for sustainable lifestyles and the demand is going to grow faster and faster.”
Governments and political organizations do play a key role, but not as a source of pressure. Sustainability-Driven Innovators pull them into the fold to build expertise and help solve sustainability related issues.5 “NGOs are an important resource,” says Bremans. “They are an excellent source of information about how the market might react to a particular innovation.”
Kimberly-Clark formed an outside advisory board five years ago to bring fresh thinking to its sustainability efforts. “We were really inwardly focused,” said Falk, the CEO. “We had been eating our own cooking for a long time and thought we had all the answers.” Today, the company has ongoing dialogues with Greenpeace, the World Wildlife Foundation and other NGOs. It is also working with suppliers to help them reduce waste and make progress with other sustainability goals.
Nestlé has brought together customers, advisors and competitors to develop what it calls “pre-competitive” practices. Ten years ago, for example, the company reached out to Danone and Unilever to help develop sustainable agriculture approaches. “We were like the oil and gas industry,” says Nestlé’s Johr. “A lot of what we did was having a negative impact. Instead of each of us working on our own, we decided to work together to figure out principles, practices and procedures.”
Timberland’s Green Index spurred the creation of the Higg Index, an industrywide coalition to measure the environmental and social impact of apparel products. According to Blaisdell, suppliers were frequently saying they had “green” products, but there was no way to assess the claims or measure them against other products. The Green Index provides that baseline. To develop it, Timberland worked with academics and retail customers.6
Investors remain a challenging stakeholder group. There are investment firms that focus on sustainability, and a growing campus movement in the United States is urging their colleges to divest investments in companies that don’t meet environmental muster. Nonetheless, sustainability does not necessarily appeal to short-term investors. “They can have a big effect on share prices, because they trade regularly,” says Sprint CEO Dan Hesse. “Their time horizon is shorter than the payback period of most green investments.”