Many will argue that a company needs to do more than just being a do-gooder to affect a stock price and profitability—and they’re 100% right. In today’s market, it is the shrewd business that understands the fundamental value of corporate responsibility and how to turn that into a business and value driver.
During her presentation at GreenBlue’s SPC Advance conference in September 2014, Avery Dennison’s senior sustainability manager, Rosalyn Bandy, said that collecting sustainability data is a key component to ensuring reliable and long-term sustainability of the products they provide. While measurement tools and scorecards have come a long way, what Bandy’s comments illustrate is the importance of how we ultimately decide to use this data. In the brave new world of “big data,” savvy companies seek out material sustainability data not for its own sake, but to develop strategies that leverage this data for long-term business benefits.
One of the more fortunate developments in the corporate responsibility sector in recent years is the number of credible reports that make the direct connection between corporate responsibility and profitability. For example, collecting data on water use is a useful strategy for companies interested in lowering environmental impacts while also reducing overall costs. And while tracking progress on social and environmental metrics has traditionally taken a distant back seat to traditional measures of profitability, leading CEOs and business executives now see that there is a clear, competitive advantage to incorporating corporate responsibility into their business strategies.
In the packaging world, those familiar with Avery Dennison are likely familiar with the paper products, adhesives and yarns they incorporate into an array of product types. With 49 Avery Dennison facilities in Asia Pacific, Europe, Latin America and North America, Avery Dennison provides its customers with the assurance that its products are not only sourced from responsibly-managed forests but also designed to minimize waste of that fiber. It is a corporate responsibility strategy that not only makes sense for its sustainability goals, but is also tightly integrated into its business strategy as a way to drive long-term shareholder value creation. Avery Dennison’s successful ThinStream liner is one of the labeling industry’s thinnest and reduces waste, while providing 17% more labels per roll: a clear example of how Avery Dennison is using sustainability data to create a competitive advantage.
Looking outside sourcing and directly at the health of its customers, CVS is another example of a company that has used corporate responsibility as a successful business driver. In February 2014, CVS announced it would stop selling cigarettes, a decision that cost the company $2 billion in direct losses. This decision was based on extensive research CVS conducted that showed it a path to profitability through a strong commitment to corporate responsibility by focusing on the health of its customers. CVS even expected a short-term loss in stock price after the announcement (and got it). However, by taking the long view, CVS revenue is up less than a year later, and its stock price to the tune of 26%, since making the “no cigarette sales” announcement.
You don’t have to take my word for it. A 2013 report by MIT Sloan Management Review andThe Boston Consulting Group is an excellent resource that puts sustainability and profitability into plain business terms. The report is based on results from a global survey of business executives and managers, as well as individual interviews with people who understand the sustainability issues facing organizations today.
What might be the most interesting finding is that executives agree and understand that sustainability creates business value, yet many are not taking action to leverage that value. Why is that? I think it brings us back to the original point that data is only as good as what you do with it. Maybe the next move is from “big data” to “material data.” We need to focus on collecting the data that matters and use it to make sound strategic decisions like Avery Dennison and CVS. Sure, there might be short-term losses, but leveraging data for the long view is what makes a savvy business: shifting from what MIT describes as a “walker” to a “talker.”
Author Tom Pollock is a senior manager for GreenBlue’s Forest Products Working Group and Sustainable Packaging Coalition. For more information about the Sustainable Packaging Coalition, visit www.sustainablepackaging.org.