Can sustainable and responsible growth drive benefits to both business and society? Skepticism exists among executives and investors alike as to how competitive advantage and growth are actually to be driven from sustainability. This skepticism is largely a matter of measurement and valuation.
Creating competitive advantage
Leading companies in the area of sustainability focus on creating upside value for society and shareholders. They look to innovate based on sustainability trends, changing business requirements and new customer demands.
The Nestlé Nutritional Profiling System, was developed to evaluate the nutritional value of food and beverage products. The company consistently optimizes the nutritional composition of products through product development with this system, and progressively applies it across the company’s worldwide product portfolio.
Unilever has found that its sustainable living brands have grown at twice the rate of the rest of the business. In addition, the Unilever Sustainable Living Plan achieved over €200 million of savings through manufacturing, logistics, material efficiencies and research and development.
Companies must establish stronger metrics for sustainability success—not just backward looking measurements, but also forward looking indicators to drive decisions on strategy, portfolio mix and innovation. Management should track how their portfolio of sustainable products and services is driving differential growth and enhancing margins.
Here’s how to get started:
Identifying sustainability drivers: Map value drivers and set targets that link to commercial value.
Driving the product portfolio: With clear targets and metrics in place, steer and innovate the portfolio to increase profitability and sustainability of products or services.
Embedding metrics across the organization: An essential aspect of sustainability value management is institutionalizing it: embedding it into areas such as governance, workforce and executive behaviors, IT systems and business processes.