Sustainability is becoming increasingly important to businesses of all sizes. Consumers are demanding more sustainable products and services, and businesses are responding by developing new ways to reduce their environmental impact. Proliferation of ESG reporting and publicly stated goals are creating points of accountability in sustainability as well.
Corporate responses to sustainability challenges exist on many levels:
- internal
- external
- customer-driven
Internal sustainability goals involve improving the sustainability of their own operations. Key examples include:
- using renewable energy sources, such as power from solar or wind farms, solar roof installations, or buying power from clean energy generating utilities
- energy efficiency measures, such as LED lighting and improving insulation
- addressing supply chains, from using cleaner transport options to sourcing more locally or even calling for suppliers to improve the sustainability of their own operations
- improving the efficiency of their own production operations through reducing power needs, reducing water used, reducing waste via recycling, or even closing the loop on their production process by reusing what was once considered waste
External sustainability goals include addressing the products or services the company offers. Key examples include:
- Packaging – using recyclable packaging, increasing recycled content, or reducing total packaging used
- Materials in the Product – from sustainable sourcing to materials with less off-gassing to materials with more sustainable end-of-life solutions
Responses to customer demands are another key area for sustainability innovation and reporting. More companies are finding that they have to make changes to their own products and offerings to support their clients in their own ESG reporting. Companies need to think of not only their own operations, but how changes and innovations in their offerings can assist clients in their sustainability goals.
For instance, a public company with ESG reporting that decides to expand production operations may be only interested in low-VOC paints, sustainable flooring, low-waste siding, high-efficiency lighting, industry-leading insulation, and water efficient plumbing. A company with ESG reporting updating their distribution operations may no longer find diesel-powered trucks appropriate in the age of electric vehicles, choosing to put their money into charging stations and updating the technology of their fleet,
as Sysco has committed to do. Packaging goods companies need packaging with greater recycled content or just enough packaging to keep the product safe and for better collection and processing infrastructure for recycling and composting to make their goals achievable.
Sustainability trends are not happening in isolation. They are intersecting and reinforcing each other in ways that are creating new opportunities for businesses all along supply chains.
Freedonia analysts will continue to examine supply chains in their entirety -- from materials suppliers to production to distribution to end users – to see opportunities in the industries we cover.