Consumer & Sustainability

In September 2022, River Partnership hosted the third virtual roundtable discussion in the ‘Building Brilliant Teams in ESG, Climate & Sustainability’ series. September’s discussion focussed on sustainability teambuilding within the consumer & retail sector at a point when the industry is seeing increased pressure to decarbonise and simultaneously facing a challenging economic outlook.

Attendees came from the Food & Agriculture, Fashion, Beauty and Chemicals industries with diverse team experience across in-house Sustainability, Research & Innovation, Marketing, HR and C-suite functions.

The discussion focused on the following key questions

What has increased the importance of sustainability in your industry?
How can businesses improve their sustainability outcomes?
What are the links between sustainability and profitability?
What are the key challenges to building sustainability capabilities?
How can companies improve sustainability hiring and teambuilding?

This event was held under Chatham House Rule [1] and thus we cannot provide an exact extract, but we have summarised the key findings in this paper. Thank you to all participants for the valuable insights.

To watch our roundtable please click this link: https://www.riverpartnership.com/about/insights/sustainabilityteambuildingfullvideo/

What has increased the importance of sustainability in your industry?

Brand reputation:
Corporations have often been seen as the ‘bad guy’ and attendees noted the increasing pressure within their organisations to build greener reputations and subsequently improve the views of external parties on their businesses and brands, both in a B2C and B2B context. Businesses have a unique opportunity to inform their customers about key sustainability issues and in doing so enhance their own reputation.

Consumer demand:
There is no doubt that sustainability has entered mainstream discourse and there is far more awareness amongst consumers.
Research now shows that sustainability is a key driver of consumer action. As consumers become more informed about what goes into products, they are subsequently making new considerations and demands when making purchases.
Consumer demand can also lead to unintended consequences – consumers primarily define a sustainable product as being either biodegradable or recyclable. This can lead businesses to focus too much on the consumer definition rather than the full product lifecycle and impact (i.e., water use, carbon emissions from production), etc.

Changing regulations:

Changing regulation has significantly influenced businesses to pay more attention to sustainability topics. Earlier this year the US Federal Trade Commission (FTC ) announced an upcoming review [2] and update to its Green Guides (last reviewed in 2012) following several complaint filings against retailers for making deceptive product claims.
The European Commission is also imminently set to publish the Substantiating Green Claim directive to tackle greenwashing by consumer businesses.

How can businesses improve their sustainability outcomes?

Collaboration:
Brands are more successful when they work collaboratively to reach common solutions that work for consumers & solve systemic issues e.g., recycling failures. A good example was Honeywell and Dupont’s joint venture in 2010 to improve the environmental footprint of air conditioning systems used in cars

Long-term focus:

Companies sometimes go wrong when they race to the apparent best sustainability solution from a marketing/ brand positioning perspective but fail to adequately consider longer-term impact of their policies. A good example is with packaging, sometimes there will be a label stating, “plastic free” or “re-cyclable”, but to produce such packaging there will be an even higher level of CO2 emissions in the production process. The business obligation needs to go beyond marketing and labelling to be effective in the longer term and create meaningful outcomes.

De-globalisation:

Companies that can source materials locally can reduce their relative Co2 footprint. In doing so they can improve the reliability and efficiency of their supply chain, which also helps to reduce costs

What are the links between sustainability and profitability?

Long-term strategy:
More and more companies are investing in sustainability to ensure actionable and profitable change. Sustainable business models and strategies are more achievable than ever before – there are more options to switch to eco-friendly suppliers, materials, methodologies on a cost-efficient basis.
Successful sustainability initiatives should be seen as long-term strategic investments rather than short-term costs.

Consumer & investor benefits:

Consumer sentiment means that businesses implementing sustainability practices will see direct benefits to the bottom line. Investors are directing funds into organisations that have incorporated sustainability and ESG metrics because they are seeing a significant pipeline of consumer demand for these products and organisations.

Hiring & retention:
Sustainable companies and brands are becoming increasingly attractive to top talent and companies with a sustainability culture have better retention rates. Hiring and retaining the best talent enables companies to reduce costs, plan in the long term, and provides a better platform for innovation and long term growth.

What are the key challenges to building sustainability capabilities?

Defining “sustainability”:

One of the key challenges is defining what “sustainability” is. There are many definitions and understandings of sustainability and ESG. Organisations need to define the critical metrics to measure sustainability. If companies are using different criteria to measure progress, it becomes more difficult to compare success between firms or industries.

Cultural challenges:
Some business decision makers are from an older generation and can be slower to adapt and drive forward what is needed to improve sustainability performance. In addition, brands often view sustainability from a project perspective rather than a wider transformation perspective. This creates silos and an innovation vacuum. Companies need to work in a joined-up way across all levels and departments to create a meaningful sustainability culture and deliver outcomes in the long term.

Dedicated roles:
There should be dedicated Sustainability Leadership roles. Often stakeholders will have a lens on sustainability e.g., if they work in manufacturing or R&D. However, to build successful capabilities, firms need to make sure sustainability is an agenda itself and not an afterthought.

How can companies improve sustainability hiring and teambuilding?

There is more demand for sustainability hiring now. These types of roles have shifted from a “want” to a “need”. However, there is a shortage of sustainability professionals with meaningful experience, in the 10+ years bracket. To successfully hire and build sustainability teams, there are proactive initiatives companies can implement:

Clear career path:
Whilst sustainability has been on the agenda for some time, the career path for professionals is less defined compared to other disciplines. Often Company Presidents come from a background in Sales, Marketing or Finance. The question remains as to whether a background in sustainability carries the same weight if people want to progress to the top tier of business leadership. Companies that can offer more defined career paths for sustainability professionals will be better placed to attract the best talent.

Defined strategy:

Companies with a clearly defined sustainability strategy are more desirable than those without one. Sustainability professionals can be cautious about working for firms that would not reflect well on their own “personal brand” and reputation. Ultimately, if firms are not serious and intentional about sustainability, people will vote with their feet.

Education:

There is work to be done in terms of making sustainability an attractive subject of study for younger people. Firms that can offer funding and sponsorship to study will attract the next generation of talent. There are skill gaps in areas such as Sustainability Commercialisation, Communications, and Data. Firms need to invest in current and future employees to grow sustainability teams

To view the full whitepaper please click the following link: Consumer and Sustainability.pdf

Brands are more successful when they work collaboratively to reach common solutions that work for consumers & solve systemic issues e.g., recycling failures. A good example was Honeywell and Dupont’s joint venture in 2010 to improve the environmental footprint of air conditioning systems used in cars

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