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Catching Up in Sustainability

These days, virtually every company is being impacted by consumer, stakeholder and regulatory demands for green strategies and programs.  For a variety of reasons, most firms have adopted a “follower” sustainability strategy as opposed to that of a pacesetter.  A poignant article from the Harvard Business Review highlights the challenges of being a sustainability follower and suggests some strategies to catch up.

Enterprises face considerable financial, marketing and operational dangers when competition or external advocacy groups have defined what sustainability means for their products, company and industry.  Although green product definitions and standards will vary across industry, companies not engaged in shaping the rules risk being assessed against standards that they can’t easily satisfy. Worse, the firm may be out-flanked by a shrewd competitor that has strategically positioned itself as the sustainability gold standard.

Shaping the sustainability landscape is no mean feat.  There are a plethora of advocacy groups, regulations & standards (current and under debate) and consumer needs that need to be understood and evaluated.  For example, the coffee industry features more than a dozen standards and hundreds of individual criteria, affecting everything from pesticide use to workers’ housing to bird friendliness.  Each of the various standards has a constituency working to define the benchmarks for “sustainable coffee.”  Some are backed by nonprofits such as the Audubon Society and TransFair, others by companies such as Starbucks and Nestlé.

Fortunately, firms that lag in sustainability progress can still leapfrog competition by repositioning themselves as influential or even leading players in the green-standards battle.  There are 4 possible strategies to do this:

1.Adopt existing standards

Companies should pursue this strategy if their industry or major customers have well-established standards and their sustainability capabilities are modest.  Importantly, a determined catch-up effort can still enable firms to best competition and become a credible participant in future sustainability debates. As an example,  The Fishin’ Company became the largest sustainable seafood supplier to Wal Mart by outperforming its competition in meeting Wal Mart’s strict product sustainability standards.

2.Influence existing standards

Green advocacy groups often compete to see their own standards widely adopted.  To do this, they need to find corporate partners to champion and commercialize their standards.  This fact gives companies an important but limited window in which to influence the standards to their commercial benefit without compromising sustainability considerations. For example, Chiquita Banana was successful in helping define new standards that not only satisfied the Rainforest Alliance’s goals but also led to a 27% increase in farm productivity and a 12% reduction in costs.

3. Define new standards

Some industries do not yet have established standards or a green consensus.  Ambitious firms may be able to impose their sustainability standards – which happen to be a strong fit with their business model – on the sector in conjunction with external stakeholders.  To pull this off, these companies should possess significant industry clout, a credible brand image and strong internal capabilities.  Starbucks and Nestlé have successfully pursued this strategy in the coffee business. 

4. Break away from existing standards 

A few firms may consider going alone to create new sustainability standards when the existing standards do not play to its strengths, are inconsistent with its strategy, or actively undermine its competitiveness.  Apple is a case in point.  With its revolutionary iPad, Apple out-greened the greens by emphasizing a new and relevant sustainability dimension — power conservation — on which it can excel. The market-beating iPad is considered so energy-efficient that one T. Rowe Price analyst compared its battery life to “black magic.” A strategy like Apple’s will work only if the proposed new standards are measurable, relevant to customers, and demonstrably superior to the existing criteria.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

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