Executive Briefings

Top 10 Sustainability Comments From Manufacturers

It's our predictions planning time again, and instead of developing "Top 10 2011 Sustainability Predictions", I thought it would be more interesting to let you know the 10 things I hear most often from manufacturers, and in effect, give you a "State of Sustainability" perspective.

1 - We have to build a business case for sustainability.

This sounds obvious to me, but it's true - manufacturers are still talking about the need for a business case.  I think the reason this comment keeps coming up is that many people believe we should be more environmentally sustainable for the good of our grandchildren.  You can replace grandchildren with any number of words, but the basic problem is that not everyone agrees with an emotional (or  moral or ethical) argument.

I find that within organizations and out to stakeholders there's a tremendous amount of inconsistency in how these groups perceive the need for sustainability.  A business case helps overcome reluctance and enables the company to justify resource investments - time and money - in sustainability.   Ultimately, sustainability is about change, and people need convincing that change is worth doing.

2 - More and more customers are asking me about my sustainability programs and my footprint.

I've written quite a bit about some of the more visible "sustainability requests", including those from Walmart and P&G, but behind every one of those publicly available supplier surveys is a multitude of not-so-visible requests in the form of RFPs and RFIs.

3 - I need a corporate view of my sustainability data.

Centralizing sustainability data or at minimum rolling up the data (including regulatory data) is an important step toward calculating a corporate footprint and exposing that information internally and externally in the form of annual reports, Carbon Disclosure Reports, RFPs, and more.  Of course, once the data is available, manufacturers also are trying to use it to track progress and decide where (which types of projects or in which facilities) to invest more resources.   The companies that are having the greatest challenge with this task are those that have many different kinds of products and businesses.

4 - I have to find an easier (i.e., cheaper and faster) way to demonstrate my environmental footprint.

We can talk all we want about wanting the data, but the reality is that this is a resource-constrained task, and any way to make it more efficient is critical, especially as expectations escalate in terms of the frequency and scope of sustainability-related analysis.

5 - The process of collecting sustainability data is not very automated or integrated.

Manufacturers don't necessarily perceive lack of automation or integration as a bad thing, at least not yet.   I think this is an attitude that will change over time, especially as the frequency of collecting sustainability data (and analysis) increases.  To support a much needed pace of tactical and strategic decision making related to sustainability, to achieve any level of scaleability, and to maintain higher degrees of accuracy, the goal is automation at minimum and integration at best.   At some point, the frequency of external requests and a desire for greater responsiveness and faster decision making will force manufacturers to change position.

6 - I don't have a sustainability budget.

I consider this to be good and bad.  On the good side, I interpret this to mean that sustainability projects can't be done without gathering support from those that hold the budget(s).  To become an integral component of the business, sustainability requires buy-in from internal stakeholders; sustainability can't be imposed upon an organization.  Convincing those budget-holders that sustainability makes sense is part of the transition.   On the bad side, it means that sustainability initiatives have to compete with short term projects even though it's also about long-term viability.  I'm afraid this isn't an issue that is going to fade away.

7 - I'm not sure that sustainability is helping me attract a better pool of new candidates, but my sustainability progress has a positive impact on my existing employees.

This comment could be a reflection of the current job market as hiring remains at relatively low levels, and newer generations of workers that prioritize sustainability are still searching for their first "real" job.

8 - I need to customize my approach to sustainability to my industry, to my products, and to my processes.

I was speaking to a representative from an IT vendor about this comment, and his first response was that this is just a delay tactic, with manufacturers using this an excuse for not moving ahead at all or not moving quickly, because they couldn't buy a customized approach (though many IT firms I speak to are happy to help manufacturers with that customization).   But I also think that manufacturing is complex, and it will be difficult for many to do certain types of sustainability analytics without some customization.  I think this topic is worth exploring more, and I'll follow up with more research in the coming year.

9 - My sustainability initiatives are strengthening my relationships with my suppliers.

I have a few reactions to this statement, with the first being "do the suppliers agree?"  And in some cases, the answer is probably yes.  I think manufacturers are taking a closer look at their suppliers because of sustainability, and for suppliers, this means another opportunity to make it more difficult to switch suppliers.   While I'd like to believe this is about sustainability, I think it may be more often about regulatory compliance.

10 - Sustainability relates to my brand and reputation in the marketplace.

I struggled with the right wording for this last statement.  For sustainability leaders, I think this is absolutely true.  But for many companies, I think they are trying to convince themselves when they say it, and they aren't quite sure.  Plus there are nuances that I haven't flushed out.  Do they mean internal or external reputation?  How do they know?  Are they measuring and incorporating some measurement into how they evaluate projects?  I know it's difficult to calculate the impact on brand and reputation, but I'd like to remind you that in our data analysis, we have seen stronger financial results for those manufacturers that are in the Dow Jones Sustainability Index.  We're due to run that analysis again, and I'll let you know what we find.

I also think the connection to brand and reputation is closely linked to higher expectations for the data (and information and analysis) behind sustainability initiatives.  Manufacturers want to know where their data is coming from, that it's accurate, reliable, and credible, especially when it's going to be exposed in a sustainability report.  I think that desire for credibility is going to be a big factor in why manufacturers increasingly look to third-party sustainability audits and create some sort of verification process, perhaps an IT-based audit trail, to make sure sustainability enhances their brand and reputation.

Let me know what you think by emailing me at kknickle@idc.com or leaving a comment on our community site.

Source: IDC Manufacturing Insights

It's our predictions planning time again, and instead of developing "Top 10 2011 Sustainability Predictions", I thought it would be more interesting to let you know the 10 things I hear most often from manufacturers, and in effect, give you a "State of Sustainability" perspective.

1 - We have to build a business case for sustainability.

This sounds obvious to me, but it's true - manufacturers are still talking about the need for a business case.  I think the reason this comment keeps coming up is that many people believe we should be more environmentally sustainable for the good of our grandchildren.  You can replace grandchildren with any number of words, but the basic problem is that not everyone agrees with an emotional (or  moral or ethical) argument.

I find that within organizations and out to stakeholders there's a tremendous amount of inconsistency in how these groups perceive the need for sustainability.  A business case helps overcome reluctance and enables the company to justify resource investments - time and money - in sustainability.   Ultimately, sustainability is about change, and people need convincing that change is worth doing.

2 - More and more customers are asking me about my sustainability programs and my footprint.

I've written quite a bit about some of the more visible "sustainability requests", including those from Walmart and P&G, but behind every one of those publicly available supplier surveys is a multitude of not-so-visible requests in the form of RFPs and RFIs.

3 - I need a corporate view of my sustainability data.

Centralizing sustainability data or at minimum rolling up the data (including regulatory data) is an important step toward calculating a corporate footprint and exposing that information internally and externally in the form of annual reports, Carbon Disclosure Reports, RFPs, and more.  Of course, once the data is available, manufacturers also are trying to use it to track progress and decide where (which types of projects or in which facilities) to invest more resources.   The companies that are having the greatest challenge with this task are those that have many different kinds of products and businesses.

4 - I have to find an easier (i.e., cheaper and faster) way to demonstrate my environmental footprint.

We can talk all we want about wanting the data, but the reality is that this is a resource-constrained task, and any way to make it more efficient is critical, especially as expectations escalate in terms of the frequency and scope of sustainability-related analysis.

5 - The process of collecting sustainability data is not very automated or integrated.

Manufacturers don't necessarily perceive lack of automation or integration as a bad thing, at least not yet.   I think this is an attitude that will change over time, especially as the frequency of collecting sustainability data (and analysis) increases.  To support a much needed pace of tactical and strategic decision making related to sustainability, to achieve any level of scaleability, and to maintain higher degrees of accuracy, the goal is automation at minimum and integration at best.   At some point, the frequency of external requests and a desire for greater responsiveness and faster decision making will force manufacturers to change position.

6 - I don't have a sustainability budget.

I consider this to be good and bad.  On the good side, I interpret this to mean that sustainability projects can't be done without gathering support from those that hold the budget(s).  To become an integral component of the business, sustainability requires buy-in from internal stakeholders; sustainability can't be imposed upon an organization.  Convincing those budget-holders that sustainability makes sense is part of the transition.   On the bad side, it means that sustainability initiatives have to compete with short term projects even though it's also about long-term viability.  I'm afraid this isn't an issue that is going to fade away.

7 - I'm not sure that sustainability is helping me attract a better pool of new candidates, but my sustainability progress has a positive impact on my existing employees.

This comment could be a reflection of the current job market as hiring remains at relatively low levels, and newer generations of workers that prioritize sustainability are still searching for their first "real" job.

8 - I need to customize my approach to sustainability to my industry, to my products, and to my processes.

I was speaking to a representative from an IT vendor about this comment, and his first response was that this is just a delay tactic, with manufacturers using this an excuse for not moving ahead at all or not moving quickly, because they couldn't buy a customized approach (though many IT firms I speak to are happy to help manufacturers with that customization).   But I also think that manufacturing is complex, and it will be difficult for many to do certain types of sustainability analytics without some customization.  I think this topic is worth exploring more, and I'll follow up with more research in the coming year.

9 - My sustainability initiatives are strengthening my relationships with my suppliers.

I have a few reactions to this statement, with the first being "do the suppliers agree?"  And in some cases, the answer is probably yes.  I think manufacturers are taking a closer look at their suppliers because of sustainability, and for suppliers, this means another opportunity to make it more difficult to switch suppliers.   While I'd like to believe this is about sustainability, I think it may be more often about regulatory compliance.

10 - Sustainability relates to my brand and reputation in the marketplace.

I struggled with the right wording for this last statement.  For sustainability leaders, I think this is absolutely true.  But for many companies, I think they are trying to convince themselves when they say it, and they aren't quite sure.  Plus there are nuances that I haven't flushed out.  Do they mean internal or external reputation?  How do they know?  Are they measuring and incorporating some measurement into how they evaluate projects?  I know it's difficult to calculate the impact on brand and reputation, but I'd like to remind you that in our data analysis, we have seen stronger financial results for those manufacturers that are in the Dow Jones Sustainability Index.  We're due to run that analysis again, and I'll let you know what we find.

I also think the connection to brand and reputation is closely linked to higher expectations for the data (and information and analysis) behind sustainability initiatives.  Manufacturers want to know where their data is coming from, that it's accurate, reliable, and credible, especially when it's going to be exposed in a sustainability report.  I think that desire for credibility is going to be a big factor in why manufacturers increasingly look to third-party sustainability audits and create some sort of verification process, perhaps an IT-based audit trail, to make sure sustainability enhances their brand and reputation.

Let me know what you think by emailing me at kknickle@idc.com or leaving a comment on our community site.

Source: IDC Manufacturing Insights