Opportunities for Sustainability

Much of the research within Insights, shows that consumers are increasingly concerned with climate change and the environment, and not only with regard to their own lives, but for their children and future generations. Until now, sustainable products and services that play to these concerns have come at a premium, but as the recession reduces spending power, individuals are unwilling, if not unable, to pay more for sustainability.

With this in mind, sustainability practices provide fantastic business opportunities in the current environment, especially when aligned with traditional differentiators like price, quality and availability. As Peter Lacy, Sustainability Practice Lead, Europe, Africa and Latin America for Accenture explains, "Consumers may have lost some spending power but, as our research clearly shows, they haven't lost their interest in sustainability issues. In this environment we see the rise of the 'frustrated consumer', one that has to cut back on premium priced sustainable products despite a desire to continue purchasing them. This tension has opened up a huge opportunity for savvy companies. In a market that is fiercely competing for more limited consumer spend, the reinforcing 'sustainability' message is a differentiator and a positive response to the 'frustrated consumer' phenomenon."

Organisations also have to realise that the desire for sustainability, in general, is now more fundamental to a wider demographic. Bill Eyres, Head of Corporate Responsibility, Environment and Sustainability for O2 explains, "Sustainability, especially with issues surrounding climate change, is no longer seen as a middle-class luxury. People recognise that their own security and the future of their children are at risk. This has changed consumer expectations of companies. The need to incorporate sustainability throughout companies' products and services will increasingly become integral to the way we do business." Richard Gillies, Director of Plan A for Marks & Spencer adds to this, "Unsustainable products and services make no sense going forward. Businesses have a responsibility to make all products sustainable and not charge a premium for doing so."

Above all, there are clear business advantages for companies engaging in sustainability activities. Firstly, their brands become associated with the wider sustainability agenda. As Richard Gillies says, "At the present time, there is a fantastic opportunity for organisations to use sustainability measures as a means of differentiating and diversifying their brand." Bill Eyres reiterates, "In the long-term, brands that champion sustainability will build customer loyalty as well as creating an emotional connection with their customers."

There are also tangible and operational benefits. Sir John Egan, Chairman for Severn Trent plc explains, "Saving carbon emissions and saving money are compatible if you know the science well enough. Severn Trent produces 20 per cent of its electricity profitably, a figure which will rise to 30 per cent within five years. We are also saving electricity at the rate of two per cent per annum over the next five years - all with commercially viable products."

Instating a sustainability strategy also offers organisations the opportunity to focus on and improve a number of key business areas. Richard Gillies explains how this has helped Marks & Spencer. He says, "We have used sustainability to improve a number of key business areas including cost management, employee engagement and motivation, new product differentiation, innovation and risk management. We also have an opportunity, as big procurers, to drive change. That can be about greater sustainability in managing risks going forward and also reducing our costs." 

Overall, experts agree that it is about filtering sustainability through every part of the business. As Peter Lacy explains, "Sustainability can't just be bolted on to an enterprise somewhere downstream of the business model. It must be part of the structure, part of the fabric, part of the furniture - which means, of course, that it must be part of the organisation's strategic intent and business model. Sustainability really must be a 'lived reality' as part of the consumer value proposition."

Opportunities for Sustainability Insights

We have some great insights on the topic of sustainability, consumers and competitive advantage available on Criticaleye: Accenture End-Consumer Observatory on Climate Change, In Green We Trust: Gaining Consumer Trust and Competitive Advantage through Sustainability and Driving Sustainability in A DownturnLook out soon for the film and Write-up of the event which discussed the issues in today's newsletter, Consumers and Sustainability, held on 26 March 2009.  

Matthew Blagg, CEO, Criticaleye