Sustainability as a key business driver is quickly moving into maturity. According to MIT’s Sloan Management Review published in 2009 , there are now a number of firm’s whose strategies and tactics could now be considered best practice. Two of them are summarized below.
General Electric
Background
Early on, GE figured out that there was a compelling business and sustainability case for companies who could reduce their energy and water use, waste, and carbon emissions. Instead of seeing sustainability only as an internal cost, GE saw a large and profitable business opportunity in helping companies move along the sustainability path.
However, GE’s vision was not only externally-focused. They also wanted to make their operations, culture and practices more sustainable. The question was: how do you align the entire company around a sustainability vision and then create a new business in an early-stage sustainability market?
Some Key Moves
In 2005, GE set up Ecomagination as a separate business unit to identify and deliver market-leading environmental solutions which would drive market leadership. Ecomagination was given aggressive top and bottom line goals and was prioritized and resourced accordingly.
GE also saw this initiative as a means to catalyze internal sustainability programs and to ensure management buy-in and compliance. For example, managers began to be measured on how much energy savings they had achieved. As well, GE began engaging employees to see where energy savings could be found. Ecoimagination sold and validated these solutions within the GE universe; later these ideas were turned into products and solutions that were marketed to customers.
GE also proactively sought to influence environmental policies and regulations around climate change through its involvement with nongovernmental organizations and government bodies. For example, GE pressed for a cap-and-trade carbon emissions system to in order to help clarify policies and regulations around climate change measures.
Results
In 2008, GE generated sustainability sales of $17 billion, up 21 percent from a year earlier. The Company is aiming for $25 billion in sustainability revenues by 2010. According to GE’s 2009 sustainability report, the Company has saved $100 million from their energy management measures and cut its greenhouse-gas intensity—a measure of emissions against output—by 41 percent.
Nike
Background
Nike was stung in the 1990s by a public campaign against its Asian labor practices. To improve its image, the firm embarked on a long process of reinventing its operations around socially responsible production and to meet broad sustainability metrics by 2020. A key question was: how could Nike move beyond “compliance” and maximize sustainability by integrating new goals and principles into its business model?
Some Key Moves
Nike formed a senior, multi-functional team who was tasked with driving compliance around stringent social responsibility and environmental standards. The team’s mission was to review and overhaul its entire design process, product line-up and supply chain.
To galvanize attention, management set aggressive 2020 goals around zero waste, zero toxic materials, closed loop systems as well as sustainable growth and profitability. To monitor progress, Nike created an in-house index to measure product design against these goals.
New, sustainability-inspired design and production strategies were implemented. For example, Nike reinvented its design process to cut waste and material usage while substituting more sustainable materials and processes. Furthermore, the Company brought its supply chain partners into its effort because it knew it could not achieve its goals without their counsel and involvement.
Results
Under the new design and production methods, Nike’s lead product line – the Considered line of footwear and apparel – delivered: a 67 percent reduction in waste, a 37 percent cut in energy use, and a dramatic 80 percent drop in solvent use as compared to other Nike products. Nike aims to convert all athletic shoes to Considered line standards by 2011, all clothing by 2015, and all equipment like balls, gloves, and backpacks by 2020.
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