Recent Study Identifies Sustainability as a Key Competitive Differentiator

It’s one thing to embrace sustainability because it’s “the right thing to do.” It’s quite another to be able to show that sustainability programs can truly help companies achieve a competitive advantage in the marketplace. Yet that's exactly what's happening at some of the world's leading chemical companies today, according to a recent survey of over 200 chemical manufacturers, conducted by consulting firm CSC in partnership with Chemical Week magazine.

As Chuck Deise, vice president and chemical sector lead, CSC explains, “We are seeing a significant shift in the industry to reinvent the corporate sustainability agenda as a major driver of innovation. Leading companies are doing this by developing more eco-friendly products to differentiate the brand which improves top line, and reducing carbon emissions and energy to enhance the bottom line. Sustainability practices not only positively impact the environment and an organization’s public perception; they can create quantifiable competitive advantages.”

The message is clear – these companies are finding that it pays to embrace sustainability. While regulatory compliance has been the primary focus in previous years, the ability to support a much broader sustainability agenda has become a top priority because of the benefits that it can deliver – from sustainability-driven innovation to energy efficiency, cost-savings, and ultimately, revenue-growth.

Moreover, in addition to supporting sustainability initiatives at the enterprise level, many of these companies are also setting aggressive targets to reduce carbon and water in the product development cycle and throughout the supply chain to achieve even greater gains, according to the research.

The question is - how do they do it? In terms of addressing the issue of sustainability at the product-level, the research reveals that a number of key business practices have been adopted by top performers:

1. Utilize LCA (Lifecycle Analysis) to Evaluate Products, assessing their total impact on the environment through customer and consumers, and applying this knowledge to design new products and supply chains to deliver them. “Borealis at this time is assessing its impact along the supply chain via a series of life cycle assessments (LCA) of its products. It will enable us to better manage risk,” says Sylvain Lhôte, EU and Sustainability Affairs/ Strategy and Group Development.

2. Promote Growth in Eco-Premium Branding and Sustainable Products to drive additional revenue and improve the environmental footprint. AkzoNobel has built on its approach (begun about five years ago) of treating sustainability from a position only of risk management, to one of building its future business around sustainable or “ecopremium” products. The company’s risk management activities, include global product stewardship and standards for its suppliers verified by environment, health and safety audits.

3. Measure Supply Chain Sustainability Contribution by establishing criteria for suppliers and holding them accountable for materials and energy performance and specific distribution methods. DuPont has embarked on a program to assess the environmental footprint of its supply chain activities, including its raw materials and the footprint of its customers. Their initial phase involves pilot assessments of certain supply chains and will include water consumption and scarcity in certain areas as well as energy use and GHG emissions. 

4. Incorporate Environmental Conditions in Emerging Markets into Product Design associated with both climate change and the ability to increase food supply globally with minimum impact to the environment. “Dow historically had wanted to be a leader in environmental performance so as to ensure its right to operate. We had always looked at safety of our employees as a priority. Now we have discussions into the business strategy for megatrends such as sustainable energy supply, human health, housing, and water in the emerging world.” David Kepler, II, chief sustainability officer/Dow Chemical.

5. Achieve Carbon and Environmental Footprint Reductions in conjunction with energy savings and incorporate improvements into your products environmental performance and positive carbon financial benefits. Energy management and carbon emissions reduction are the most important factors financially for Borealis when it comes to environmental sustainability by virtue of the energy intensity of the company, the cost of energy, as well as the impending cost of the European Union’s (EU) emissions trading scheme (ETS). The ETS, scheduled for 2013, will oblige major chemical firms in Europe to purchase emissions allowances via public auctions. 

 So what can we learn from these chemical manufacturers? A lot. After all, much of what plagues manufacturers of consumer products, automobiles or high tech electronics when it comes to sustainability is the potential risk posed by the chemicals or substances contained within their products. Indeed, the need for "green chemistry" is at the very heart of the sustainability issue. So, it’s worth paying attention to the sustainability-related “Lessons Learned” by chemical manufacturers in this critical area.

It’s all part of next-generation product design, a topic that is explored in greater detail in the related research study, “Sustainability and the Product Lifecycle: A Report on the Opportunities, Challenges and Best Practices for Sustainable Product Design and Manufacturing.” So, stay tuned. We’ll be providing updates and an opportunity to participate in the research in the weeks and months ahead.

See also:

Sustainability Identified by Chemical Industry as Key Competitive Differentiator

Sustainable R&D (Warner Babcock Institute for Green Chemistry)

Sustainability Reporting at the Product-level Allows Companies to Substantiate ‘Green’ Product Claims

If your organization hasn’t already begun efforts to support sustainability reporting, it might want to start. Especially if it is looking to substantiate ‘green’ product claims – an increasingly important area for manufacturers of products or services that promise eco-friendly or ‘green’ benefits.

As noted in a related article on the subject, Ernst & Young says reporting on “green” product development will provide companies with the opportunity to document the basis for any claims they make. It also will help them collect environmental information about their products as their customers develop supplier sustainability initiatives.

The problem is that the use of terms like ‘green’, 'eco-friendly', or ‘made of 100% recycled materials” can be misleading. To address this growing challenge, the Federal Trade Commission (FTC) recently proposed revisions to its “Green Guides”, including new guidance on marketers’ use of product certifications and seals of approval, “renewable energy” claims, “renewable materials” claims, and “carbon offset” claims.

As noted in the FTC announcement:

The revised Guides caution marketers not to make blanket, general claims that a product is “environmentally friendly” or “eco-friendly” because the FTC’s consumer perception study confirms that such claims are likely to suggest that the product has specific and far-reaching environmental benefits. Very few products, if any, have all the attributes consumers seem to perceive from such claims, making these claims nearly impossible to substantiate.

The proposed Guides also caution marketers not to use unqualified certifications or seals of approval – those that do not specify the basis for the certification. The Guides more prominently state that unqualified product certifications and seals of approval likely constitute general environmental benefit claims, and they advise marketers that the qualifications they apply to certifications or seals should be clear, prominent, and specific.

Next, the proposed revised Guides advise marketers how consumers are likely to understand certain environmental claims, including that a product is degradable, compostable, or “free of” a particular substance. For example, if a marketer claims that a product that is thrown in the trash is “degradable,” it should decompose in a “reasonably short period of time” – no more than one year.

The bottom line? If a product claims to be ‘green’ or ‘eco-friendly’, it better be clear on just exactly what that means, and have the documentation to prove it.

It’s all part of next-generation product design, a topic that is explored in greater detail in the related research study, “Sustainability and the Product Lifecycle: A Report on the Opportunities, Challenges and Best Practices for Sustainable Product Design and Manufacturing.” So, stay tuned. We’ll be providing updates and an opportunity to participate in the research in the weeks and months ahead.

See also:

Federal Trade Commission Proposes Revised “Green Guides”

FTC Green Guides’ Proposed Revisions Unveiled

Seven Questions to Ask about Sustainability Reports

Eco-design Gets a Boost from Autodesk, Granta Partnership

“Better, faster, cheaper…” Sound familiar? For decades now, and even – perhaps centuries – these words have guided product designers and engineers in their quest to deliver the right products to market, gain market share and drive revenue growth.

But, increasingly manufactureres are getting the message -- it's what's inside that counts.

Today, it’s simply not enough to optimize designs in terms of price/performance alone. Instead, such criteria as materials toxicity, energy efficiency, carbon footprint, and water footprint must figure into the equation as well. That’s where sustainable product design – which takes a more holistic approach to product development - can help.

Sustainable product design, however, requires new approaches to educating and equipping the next generation of engineers and designers. Fortunately, we’ve begun to see a rise in both technology to support this effort, and sustainable engineering programs and curriculums in universities and training programs to bridge this gap in understanding.

For example, as part of an effort to help engineers and designers more effectively incorporate sustainable materials during product development, Autodesk recently announced an important new partnership with leading materials information technology provider, Granta Design, Ltd. The goal? To simplify the process for specifying suitable, safe and eco-friendly materials during the product design phase – making it easier for industrial designers, mechanical engineers and others to create products through sustainable design.

According to the announcement, the companies will be working together to integrate Granta’s eco design methods into Autodesk software, helping designers to estimate the environmental impact of a product and make more sustainable design decisions. Ultimately, such technology could prove to be of great value in helping companies to both anticipate and avoid the risks and penalties associated with the use of materials that might later be identified as hazardous or restricted, as well.

Indeed, managing restricted substances during product design has become increasingly important for manufacturers. As noted by Grant Design’s Kim Marshall and David Cebon in a presentation made earlier this year:

Restricted substances legislation, such as the European Union's REACH regulation, create major challenges for engineering enterprises.  They impose stringent compliance and reporting requirements on companies.  They also introduce significant risk of withdrawal of substances and consequent obsolescence of mission-critical materials, ‘preparations’ (coatings, cleaning agents, working fluids, etc) and manufacturing processes that use them.  This can affect current products: where it can necessitate expensive materials substitution and re-qualification of components.  It can also affect the design of future products: where it is essential to avoid using substances that may become obsolete in future.  Shipping products containing banned substances – knowingly or not – can have severe legal and financial consequences for companies and responsible individuals, and can present substantial risk to business continuity.

Earlier this month, Autodesk also introduced the Autodesk Sustainability Workshop , a new online portal that offers free sustainability resources and educational content. Aimed at mechanical engineers and educators, the Autodesk Sustainability Workshop features lessons that illustrate the principles and practice of sustainable design, such as Whole Systems Design and Lightweighting.

As Jeremy Faludi, a lecturer for the Joint Program in Design at Stanford University and collaborator on the Autodesk Sustainability Workshop puts it, “Thinking back five years ago, or even one year ago, mechanical engineering students didn’t have good resources available to think about sustainable design practices.  This Workshop provides students with inspiration, technical depth on implementation, and innovative sustainable design strategies.”

It’s all part of next-generation product design, a topic that is explored in greater detail in the related research study, “Sustainability and the Product Lifecycle: A Report on the Opportunities, Challenges and Best Practices for Sustainable Product Design and Manufacturing.” So, stay tuned. We’ll be providing updates and an opportunity to participate in the research in the weeks and months ahead.

To learn more, see:

Autodesk and Granta Partner to Help Enable Sustainable Product Design

Autodesk Introduces Free Sustainability Resources for Engineering Students, Educators

Sustainability Consortium Adopts PE International’s GaBi Tool to Perform LCA

PE Americas recently announced that it has joined The Sustainability Consortium, an independent group of research scientists and engineers dedicated to examining the issues and challenges surrounding sustainable product design and development. Spearheaded by retail giant Walmart in July 2009, one of the early charters identified for the consortium was to define standards and metrics for measuring and reporting on sustainability at the product level – in particular, for manufacturers and suppliers serving the retail market.

“One of the reasons we exist is because existing efforts to measure and report product sustainability have been fragmented and partial, in terms of their scope, the impacts of concern, or the life cycle stage being addressed,” says Dr. Kevin J. Dooley, Co-Director of the Sustainability Consortium. “Our approach seeks to capture all environmental and social impacts across the whole life cycle of a product,” he explains.

The real challenge is that the terms sustainable, environmentally-friendly, eco-friendly and green are often used interchangeably, resulting in a great deal of confusion in the marketplace as to precisely what sustainability means – both for manufacturers and for the consumer community. Ultimately, if the consortium is successful in its mission, it stands to have a significant impact on how consumer products are designed and developed if they are going to be labeled, ‘sustainable.’

One of the key questions? How such an organization might leverage existing commercial tools and methodologies to assist in this effort. With the addition of PE Americas, at least part of the answer is evident.  As Dooley puts it, "PE Americas will help us build a scientifically rigorous system to measure and report the sustainability of consumer products in a standardized manner. Together we will spur a new generation of products and supply networks that address environmental, social, and economic imperatives."

More specifically, the organization states that, “To quantify product impacts, the Sustainability Consortium will be using PE International's GaBi LCA program, a powerful, fully‐featured software platform that supports the collection, organization, analysis, and monitoring of the environmental performance of products and processes.”
 

What this means with respect to the use of other commercially available LCA tools or methodologies is unclear, since the Sustainability Consortium specifically states that it ‘advocates for a scientifically grounded process and transparent system, not for individuals or organizations.’ But it certainly serves as a tribute to both the sustainability consulting expertise of the PE Americas organization, and to the capabilities of PE International’s GaBi product lifecycle assessment tool for measuring product impacts.

See also:

PE Americas Is Now a Member of the Sustainability Consortium

Sustainability will 'Define the Next Wave of Prosperity'

“Sustainable business is not only here to stay, it will ‘define the next wave of prosperity,’ says BSR president and CEO, Aron Cramer.

Author of the new book, Sustainable Excellence: The Future of Business in a Fast-Changing World (Rodale Books, October 2010) Cramer believes that, “the businesses that build social and environmental considerations into the DNA of their companies will survive and thrive in the years to come." Examining this issue in more depth, the book describes how companies are adapting their strategies to meet the challenges of a world characterized by depleting natural resources, climate change, rising consumer expectations, and “radical transparency” and makes the case for embracing sustainability  to drive business success.

The topic is not a new one for Cramer. As noted in an excerpt from a blog post that he shared with Fast Company readers earlier this year:

…many have wondered whether the "green bubble" would burst the same way the tech bubble and the housing bubble did. Would sustainability follow Lehman Brothers into the pages of history, a relic of the good times? As we go into 2010, it's clear that sustainable business is not only here to stay, it will define the next wave of prosperity.

Consider the evidence: The number of sustainability reports--where companies report their performance against social and environmental criteria--continues to increase, according to the Global Reporting Initiative. Sustainability is everywhere on the agenda of the World Economic Forum meeting in Davos, January 27-31, 2010. And nearly nine out of ten business leaders surveyed at our recent BSR Conference said their companies' sustainability budgets would stay the same or increase this year. Suffice to say, the predictions that companies would abandon their commitments to corporate responsibility have not come true, and sustainability is as critical a business imperative as ever.

It's turned out this way for three main reasons.

There's money to be made. Recessions, even "Great" ones, come and go. When historians look back on the annus horribilis of 2009, they will likely conclude that the sharp increase in commodity prices was more a sign of the future than the sharp fall in share prices and employment. The prices of core materials like oil, wheat, and iron shot through the roof during the first part of the year. Conflict erupted as supplies of food, water, and energy dramatically dropped, and businesses battled over the competing uses of commodities such as biofuels and food. All this convinced the C-suite that resource inefficiencies are a material risk to their businesses today, and will be even more so tomorrow. To outlast the Great Recessions, companies have to improve resource efficiency to position themselves for success.

Despite (warranted) concerns about short-term thinking, business actually does look to the future. Look no further than the strong and growing business constituency for action on climate change. While governments move slowly on Capitol Hill and in Copenhagen, business leaders (and NGOs) are making the case for action. Executives responded to the tepid outcome in Copenhagen with a cry for governments to do better. Deutsche Bank Vice Chairman Caio Koch-Weser put it this way: "A strong deal is essential to create the rules, price signals, and risk-return incentives that business needs." Shell CEO Peter Voser called for "much more" to happen to build a strong deal on climate. They are doing this because they know that a price on carbon is coming, and they need to start planning their future today.

Society's expectations have changed--forever. There's just no turning back. Can you imagine the response if companies pulled back from their efforts to protect labor practices in their supply chains? If companies stopped providing information about energy and water use, or workplace diversity? Consumers--and the media--now view such activities as another dimension of product quality, and they're not considered optional.

Critics of sustainability have been planning its funeral several times in recent years. They have missed what most business leaders now know: Over the next half century, winning companies will be those that roll up their sleeves and build solutions to our most pressing global challenges. We need businesses that devote themselves to delivering a climate-friendly energy system, making efficient use of scarce natural resources, and creating efficient transportation for mega-cities. And because companies are waking up to the fact that this is where tomorrow's markets will be made, more and more are on that journey.

Wow. If you’re still not convinced that sustainability has become an important driver in today’s global business environment, think again. Cramer isn’t the only one who believes that sustainability’s time has come.

It’s all part of next-generation product design, a topic that is explored in greater detail in the related research study, “Sustainability and the Product Lifecycle: A Report on the Opportunities, Challenges and Best Practices for Sustainable Product Design and Manufacturing.” So, stay tuned. We’ll be providing updates and an opportunity to participate in the research in the weeks and months ahead.

See also:

New Book by BSR’s Aaron Cramer: Sustainable Excellence is Key to Business Success in a Fast-Changing World

How Sustainability Survived the Great Recession

It's Getting Easier to Design with 'Sustainability in Mind'

What if an engineer or designer could identify a whole assortment of safer, greener, more eco-friendly, cost-effective, energy-efficient design alternatives, materials, or sourcing options at the conceptual design stage? What if a simplified product life cycle assessment (LCA) that takes into account such aspects of product development as the cost, availability, and environmental impacts of raw materials, transportation, recycling and disposal options - could be performed at the front-end of the design process, instead of at the end of the process – after the fact? What if product design software was capable of capturing the data from such preliminary LCA assessments, allowing engineers and designers to make more informed decisions about potential environmental, social and economic impacts early in the design cycle when such decisions matter most?

The ability to perform such “what ifs” is what originally led Sustainable Minds’ CEO and co-founder Terry Swack to begin her pioneering work on integrating LCA into the design process in 2007. Less than a year later - in partnership with Autodesk – the company began working on the development of software to support this effort; and in October 2009, it officially announced the release of its flagship product, Sustainable Minds LCA 1.0, an early-stage LCA calculator and design evaluation tool. Since then, Sustainable Minds has launched several updates to its award-winning LCA software and has specifically targeted such critical disciplines as electro-mechanical design.

Several leading engineering software providers - including Siemens PLM, Dassault Systemes, and PTC have also begun to extend their reach beyond regulatory compliance with either sustainable product development tools of their own, or with offerings created through acquisitions or partnerships with others - from SolidWorks' Sustainability solution developed in partnership with PE International and PTC's acquisition of Planet Metrics to augment its InSight environmental compliance software, to the industry-specific sustainability solutions supported by Siemens PLM and Dassault Systemes’.

The result? Such capabilities promise to put key sustainability information into the hands of those involved in product design and development earlier in the design cycle – empowering them to make more informed decisions, more easily, and ultimately, enabling them to create more sustainable products and services at a competitive price. And that’s not only good for the environment, that’s good for business.

Not to be overlooked, this financial component is an essential element of the sustainability equation. Indeed, it’s worth noting here that fiscal responsibility is as much a part of sustainability as is the ability to measure and minimize negative environmental or social impact. The fact is a company must be able to accurately and effectively estimate the impact of its design decisions across the triple bottom line – taking into account environmental, social and economic concerns – in order to achieve a truly sustainable outcome. That’s why it is so important to be able to perform the kind of “what if” calculations that early stage LCA analysis affords – in order to conduct an effective cost/benefit analysis early in the design cycle and measure the impact of these early design decisions against key sustainability objectives and criteria.

It’s all part of next-generation product design, a topic that is explored in greater detail in the related research study, “Sustainability and the Product Lifecycle: A Report on the Opportunities, Challenges and Best Practices for Sustainable Product Design and Manufacturing.” So, stay tuned. We’ll be providing updates and an opportunity to participate in the research in the weeks and months ahead.

See also:

Sustainable Mind's CEO on Environmental Sustainability as a Product Innovation Driver

The EPA Turns Its Attention to Green Products

Have you heard? The Environmental Protection Agency wants to know how you feel it can best participate in and support green or sustainable product design and development. And now is the time to act – as the deadline for submissions is October 19^th, 2010.

As described in a recent federal notice, the Agency is currently soliciting individual stakeholder input to help define its role and develop a strategy that identifies how the Agency can make a meaningful contribution to the development, manufacture, designation, and use of sustainable products.

In particular, it is looking for stakeholders to respond to the following questions:

1. What do you see as the major policy and research challenges, opportunities, and trends impacting the development, manufacture, designation, and use of sustainable products?

2. What do you see as the EPA's overall role in addressing these challenges and opportunities?

3. In particular, how do you see the EPA's role in:

• Assembling information and databases.
• Identifying sustainability “hotspots” and setting product sustainability priorities.
• Evaluating the multiple impacts of products across their entire life cycle.
• Defining criteria for more sustainable products.
• Generating eco-labels and/or standards.
• Establishing the scientific foundation for these eco-labels and/or standards.
• Verifying that products meet standards.
• Stimulating the market.
• Developing end-of-life management systems (reuse, recycling, etc.).
• Measuring results, evaluating programs.

While critics may argue that the EPA’s involvement in this area may only create further roadblocks for manufacturers seeking to green their product lines, another way to view this move is that a standard means of measuring and verifying sustainability or “green” claims may be in the offing. This could be extremely valuable to organizations – especially suppliers – that are seeking to meet green mandates from manufacturers – and could well serve as a key first step in raising awareness of – and addressing some of the key challenges surrounding the design, development and manufacture of green products.

It’s all part of next-generation product design, a topic that is explored in greater detail in the related research study, “Sustainability and the Product Lifecycle: A Report on the Opportunities, Challenges and Best Practices for Sustainable Product Design and Manufacturing.” So, stay tuned. We’ll be providing updates and an opportunity to participate in the research in the weeks and months ahead.

To learn more, see:

“The EPA’s Role in Advancing Sustainable Products”

‘Sustainable Products’ to Get a Boost from the EPA