the sustainable edge · seen $2 in operating cost savings, resulting in net savings of $25 million...

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Your corporate commitment – communicated e�ectively – brings bottom-line results

THE SUSTAINABLE™EDGE

FROM HARVARD BUSINESS REVIEW:Executives behave as though they have to choose between the largely social bene�ts of developing sustainable products or processes and the �nancial costs of doing so.

But that’s simply not true.

We’ve been studying the sustainability initiatives of 30 large corporations for some time. Our research shows that sustainability is a mother lode of organizational and technological innovations that yield both bottom-line and top-line returns.

Becoming environment-friendly lowers costs because companies end up reducing the inputs they use. In addition, the process generates additional revenues from better products or enables companies to create new businesses.

In fact, because those are the goals of corporate innovation, we �nd that smart companies now treat sustainability as innovation’s new frontier.

Ram Nidumolu, C.K. Prahalad, and M.R. Rangaswami “Why Sustainability Is Now the Key Driver of Innovation”Harvard Business Review, Sept. 2009

RISE TO THE CHALLENGEPage 4 SUSTAINABILITY –

THE NEW BUSINESS IMPERATIVE Page 5 SUSTAINABILITY’S ROI

Your corporate commitment – communicated e�ectively – brings bottom-line results

Page 8 FOR SUSTAINABLE RESULTS – COMMUNICATE

Your sustainability story matters – in fact, it’s critical

It’s time to get – and leverage – your sustainability edge

Transparency and certi�cations reduce �nancial and reputational risk

Sustainability drives innovation and new market opportunities

Sustainability reduces operating costs

Sustainability drives pro�tability

TABLE OF CONTENTS

THE SUSTAINABLE ™EDGE

In the next ten years, sustainability strategy and

growth strategy will become one and the same.

SUSTAINABILITY –THE NEW BUSINESS IMPERATIVE Leading companies pursue sustainability strategies because they produce real results: decreased costs, product innovations that open new markets, brand loyalty, rising stock values and risk mitigation.

The market has already shifted.

Concerns about the impact of products and manufacturing processes on the health of people and the environment are now a driving factor in purchasing decisions. Today, issues like chemical exposure, air quality, waste management, water quality, natural resource use and responsible sourcing are not just broad environmental issues – they are day-to-day business challenges.

Consumers, investors and governments demand that companies show engagement and deliver solutions via products, services and thought leadership – and require the same of their suppliers. That means “business as usual” simply doesn’t get the job done anymore.1 To survive the coming decade and beyond, every company needs a sustainability strategy.

Most important of all, once you adopt your sustainability strategy, you have to communicate it e�ectively to build brand loyalty and mitigate risk. Otherwise, you won’t realize all the �nancial bene�ts you stand to gain.

of global consumers consider a company’s social and environmental commitment before making important decisions, such as purchase choices.2

87%

of CEOs see sustainability as critical to the success of their businesses.3

93%of CEOs say their companies have fully integrated sustainability into their company-wide strategies (up from 50% in 2007).4

81%

4

of companies that have become involved in product sustainability have achieved savings in their manufacturing costs.6

Improving resource e�ciency is a powerful opportunity to demonstrate e�ective changes in business practices – and turn global sustainability pressures into a direct bottom-line advantage.

SUSTAINABILITY’S ROISUSTAINABILITY REDUCES OPERATING COSTS

Tightening environmental regulations, energy market volatility and increased competition for raw materials are all creating new risks and cost challenges across the supply chain.

Stakeholder pressure on companies to respond to critical sustainability issues is also increasing. One recent study shows that not only do global consumers expect engagement in broader sustainability concerns like disease control, climate change and natural resource depletion, but more than 30% want companies to change the way they operate as the �rst step in their approach to the most critical issues.5

When Bank of America reduced the basis weight of its ATM receipts by �ve pounds, it saw savings of about $500,000 per year in transportation, storage and handling costs.8

Nearly 90% of retailers report that their sustainability e�orts are lowering their costs.9

For every $1 spent on sustainability, Bloomberg has seen $2 in operating cost savings, resulting in net savings of $25 million since 2008.7

$1 $2 $25m

$500,000

Adapting business operations to reduce dependence on virgin raw materials, decrease energy and water use, minimize waste and expand material recycling/reuse practices can provide cost savings across the supply chain. Even investing in basic energy and water e�ciency can lead to signi�cant savings.10

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79% 90%

of companies that have changed their business model to include sustainability as a “permanent �xture” on their management agenda say sustainability has added pro�t.11

of business leaders cite improved �nancial returns as a bene�t of their company’s investment in socially responsible business practices.12

of consumers across 60 countries say they are willing to pay more for products and services provided by companies committed to positive social and environmental impact:

• 64% in Asia-Paci�c

• 63% in Latin America

• 63% in Middle East/Africa

• 42% in North America

• 40% in Europe13

68%

55%

SUSTAINABILITY’S ROISUSTAINABILITY DRIVES PROFITABILITY

Companies that demonstrate clear engagement in environmental and social responsibility don’t just cut operational costs – they boost their �nancial value too, starting with increased pro�ts.

Companies with strong sustainability policies not only show a demonstrably lower cost of capital, but they also tend to outperform companies that do not include sustainability as part of their short- or long-term strategies.

Dow Jones Groups Sustainability Indices performed at an average of 36.1% better than the traditional Dow Jones index.15

Companies included on the Global 100 Most Sustainable Corporations list achieved a total return of 54.95%, outperforming the benchmark MSCI All Country World Index by more than 16%.16

The market for investments with a positive social, environmental or human impact in 2013 alone was more than $3 trillion in the U.S. and nearly $5.3 trillion in Europe – experts predict a $25 trillion investor market by 2015.17

$3t

$5.3t

$25tAs investor demand for companies ranking high in sustainability metrics continues to increase, so do the valuations of their pro�ts.14

61%

36.1

%

55%almost

THE MARKET SPEAKS

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44%of business executives agree sustainability is a source of

innovation, and see it as a source of new business opportunities.19 39%

Sustainability solutions will become the primary driver of economic and industrial development in the coming decade and beyond.27

Leading companies are already using environmental lifecycle assessments to power product innovation and di�erentiate their products in a crowded marketplace.28

The buying power of consumers focused on lifestyles of health and sustainability is rising – and has already topped $300 billion.21

Today, the growth rates of sustainability- based market segments are outpacing conventional segments in every industry,20 from food and personal care products to construction.

SUSTAINABILITY’S ROISUSTAINABILITY DRIVES INNOVATION AND NEW MARKET OPPORTUNITIESConsumers, businesses and governments are becoming more discerning about the products and services they choose. As perceptions of environmental and social responsibility become increasingly more important in product purchase and speci�cation decisions, addressing sustainability can be linked to new markets, increased market share and innovation.18

$300b

70%ALMOSTALMOST

• Electronics: 75.2% are searching for greener electronics and appliances.22

• Cleaning: 65% are seriously looking for greener home cleaning products.23

• Personal Care: 47% seek greener personal care products.24

• Automotive: 28% are searching for a hybrid, electric or other greener vehicle.25

• Construction: The worldwide market for greener building products is expected to more than double by 2020 – from $116 billion in 2013 to $254 billion.26

of consumers are searching for greener products these days. Breaking them down by industry segment:

THE SEARCH FORSUSTAINABLE PRODUCTS IS ON

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78% of consumers say they buy green products and services.29

42% of architects say clients ask for green building elements on a majority of their projects, and 47% of their clients actually implement green building elements.30

75% of professional purchasers have a responsible purchasing policy, and 75% of the rest expect to adopt one.31

67% of state procurement o�cials have either a formal (54%) or informal (13%) responsible purchasing policy.32

71% of retailers report using sustainability activities to enhance brands and mitigate risk.33

Over 40% of business decision makers and almost half of consumers say a manufacturer’s environmental performance or sustainability record is important or very important when considering a product purchase decision.35

78%

42%47%

67%

71%

50%

OVEROVER

ALMOSTALMOST

THE GROWINGGREEN OPPORTUNITY

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FOR SUSTAINABLE RESULTS – COMMUNICATEYOUR SUSTAINABILITY STORY MATTERS – IN FACT, IT’S CRITICALCommitting to sustainability and pursuing sustainability initiatives are not enough to achieve all their bene�ts. You must also proactively and e�ectively communicate your company’s sustainability story.

Your sustainability story creates brand value and preference.

Product purchasers and investors are paying more attention than ever to the sustainability of the products, brands and companies they choose. In fact, nine out of ten consumers now want companies to go beyond minimum standards required by law to operate responsibly and address social and environmental issues.34

Credible communication of your sustainability e�orts to both B2B and B2C audiences drives product preference, strengthens brand con�dence and helps demonstrate the thought leadership that ultimately leads to a competitive advantage.

40%75%75%

of global respondents say their purchase decisions depend partly on packaging – they check labels before buying to make sure the brand is committed to positive social and environmental impact:

BONUS: THE HALO EFFECTPromoting sustainable products creates a sustainability halo around the parent company or corporate brand. Likewise, a corporate reputation for environmental and social responsibility increases purchaser con�dence in its products and drives an even bigger competitive edge.

With information about products, brands and companies faster and easier to access than ever before, taking ownership of your sustainability story is no longer optional: it’s imperative.

34% of global consumers say they have researched a company’s business practices or support for social and environmental issues in the past 12 months.37 88% would stop buying a company’s products if they learned of the company’s irresponsible business practices, and 55% have done so in the past year.38

88% 34%

55%

52%

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FOR SUSTAINABLE RESULTS – COMMUNICATEYOUR SUSTAINABILITY STORY MATTERS – IN FACT, IT’S CRITICAL

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• 63% in Asia-Paci�c

• 62% in Latin America

• 62% in Middle East/Africa

• 36% in Europe

• 32% in North America36

Clearly and credibly telling your sustainability story can mean the di�erence between increased sales, greater market share and stronger brand leadership – and very real �nancial and reputational damage.

Growing competition for sustainable product market share means more stringent market leadership standards and escalating scrutiny over sustainability claims from global regulators, investor and watchdog groups, and even consumers. Inaccurate, misleading or unsubstantiated information exposes you to signi�cant reputational risk.

Communicating sustainability opens new opportunities, but with new opportunities come new risks: violating sustainability communications guidelines can lead to substantial legal liability and �nancial cost.

In the U.S., the Federal Trade Commission has assessed millions of dollars in penalties associated with false product labeling charges. One recent analysis of more than 5,296 consumer products found that over 95% of those products made at least one troublesome claim – ranging from an outright lie to, most commonly, a claim that could not be reliably substantiated.39

THE POWER OF A THIRD PARTY46% of consumers agree somewhat or completely with the statement, “I look for proof when a company makes a claim about being socially or environmentally responsible.”40

59% of consumers indicate that “a seal or certi�cation mark indicating a product is environmentally friendly increases the likelihood I'll buy it.”41

51% of consumers like to see someone else endorse what a company says it does for the environment or society.42

59%46%

51%

Certi�cations help limit liability, earn consumer con�dence – and create a competitive edge.

Leading companies are realizing these bene�ts and mitigating �nancial and reputational risk by substantiating their sustainability claims, issuing annual sustainability reports and product environmental lifecycle assessments, and obtaining third-party product certi�cations.

“We see a continuing trend in the way Americans identify green products, relying less on packaging callouts and more on overall corporate reputation and certi�cations. … Getting your products certi�ed is a best practice that will help identify issues you might not be aware of and can help protect against the kinds of lawsuits that we’ve noted are becoming more and more numerous.”

– Eco Pulse 2014, Shelton Group

UL o�ers a number of certi�cation, validation and testing services, including ECOLOGO® and GREENGUARD® product certi�cation and environmental product declaration and claim validation. For more information, visit www.ul.com/environment.

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FOR SUSTAINABLE RESULTS – COMMUNICATETRANSPARENCY AND CERTIFICATIONS REDUCE FINANCIAL AND REPUTATIONAL RISK

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RISE TO THE CHALLENGEIT’S TIME TO GET – AND LEVERAGE – YOUR SUSTAINABILITY EDGE Successfully translating global sustainability pressures into opportunities can result in a real competitive advantage.

By communicating your sustainability story, your company can di�erentiate itself as a leader in its industry and in society, secure competitive and operational advantages, and help ensure its long-term success.

Evolving your business strategy and approach to address critical sustainability challenges can lead to very real and signi�cant bene�ts, including innovation, added pro�ts, risk mitigation, value creation and brand leadership.

The longer you put sustainability on hold, the more of those bene�ts you lose – and the greater your risk of being edged out of the market.

The question isn’t whether you should evolve. It’s how, and how quickly.

Is your company up to the challenge?

For more information on how UL Environment can move your company’s sustainability e�orts forward, visit www.ul.com/environment.

[email protected]

United States and Canada 1.888.485.4733European Union +49.221.931.245.30Greater China +86.20.3213.1044Japan and Korea +81.3.5293.6200

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REFERENCES1 Mo�at, A., Scotnicki, N., Berwick, R., Lang, K., Ramani, V., Casey, R., et al. (2010). The 21st

century corporation: The Ceres roadmap for sustainability. Ceres.org. Retrieved from http://www.ceres.org/resources/reports/ceres-roadmap-to-sustainability-2010

2 Cone Communications/Echo. (2013). Global CSR study 2013. Retrieved from http://www.conecomm.com/2013-global-csr-study-report

3 Lacy, P., Cooper, T., Hayward, R., & Neuberger, L. (2010). A new era of sustainability: UN Global Compact-Accenture CEO Study 2010. Retrieved from http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture_A_New_Era_of_Sustainability_CEO_Study.pdf

4 Ibid.

5 Cone Communications/Echo. (2013). Global CSR study 2013.

6 Pure Strategies. (2014). The path to product sustainability. Retrieved from http://info.purestrategies.com/hs-fs/hub/152913/�le-798268077-pdf

7 Bloomberg. (2012). 2012 sustainability report. Retrieved from http://www.bloomberg.com/bcause/content/themes/sustainability-2014/report/BloombergSustReport2012.pdf

8 Natural Resources Defense Council. (2006). Success stories: Smart businesses are using smart paper programs. Retrieved from http://www.nrdc.org/cities/living/paper/companies.asp

9 Retail Industry Leadership Association. (2013). RILA 2013 retail sustainability report. Retrieved from http://www.rila.org/sustainability/sustreport2013/sustainability-report-landing-page/Pages/default.aspx

10 International Finance Corporation. (2012). The business case for sustainability. Retrieved from http://www.ifc.org/wps/wcm/connect/9519a5004c1bc60eb534bd79803d5464/Business+Case+for+Sustainability.pdf?MOD=AJPERES

11 Kiron, D., Kruschwitz, N., Haanaes, K., Reeves, M., & Goh, E. (2013). The innovation bottom line. MIT Sloan Management Review in collaboration with Boston Consulting Group. Retrieved from http://csbf.org.nz/wp-content/uploads/the-innovation-bottom-line.pdf

12 Ibid.

13 Nielsen. (2014). Global consumers are willing to put their money where their heart is when it comes to goods and services from companies committed to social responsibility. Retrieved from http://www.nielsen.com/us/en/press-room/2014/global-consumers-are-willing-to-put-their-money-where-their-heart-is.html

14 Herman, R., & Nair, V. Commit! Debate: The shareholder value of sustainability. Corporate Responsibility Magazine. Retrieved from http://www.thecro.com/content/commit-debate-shareholder-value-sustainability

15 International Finance Corporation. (2012). The business case for sustainability.

16 Robins, R. (2011, June 30). Sustainability pro�ts companies. Environmental Leader. Retrieved from http://www.environmentalleader.com/2011/06/30/sustainability-pro�ts-companies/

17 Herman, R., & Nair, V. Commit! Debate: The shareholder value of sustainability.

18 Doughty Centre for Corporate Responsibility & Cran�eld University School of Management. (2011). The business case for being a responsible business. Retrieved from http://www.som.cran�eld.ac.uk/som/dinamic-content/media/documents/Business case �nal.pdf

19 KPMG International. (2011). Corporate sustainability: A progress report. Retrieved from http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/corporate-sustainability-v2.pdf

20 Green America, Association for Enterprise Opportunity, & Ecoventures International. (2013). The big green opportunity for small business in the U.S.: Small business sustainability report 2013. Retrieved from http://biggreenopportunity.org/wp-content/uploads/2013/05/Big-Green-Opportunity-Report-FINAL-WEB.pdf

21 LOHAS Forum. (2013, 16 April). Green consumer market grows up: LOHAS Conference to update U.S. businesses on the in�uential customer that is transforming the marketplace – June 18-20, 2013 [Press release]. Retrieved from http://www.csrwire.com/press_releases/35469-Green-Consumer-Market-Grows-Up-LOHAS-Conference-to-Update-U-S-Businesses-On-the-In�uential-Customer-That-Is-Transforming-the-Marketplace-June-18-20-2013-in-Boulder-CO

22 Shelton Group. (2014). Eco Pulse™ 2014.

23 Ibid.

24 Ibid.

25 Ibid.

26 Hicks, J. (June 2013). Building green increases demand for traditional materials. Forbes.com. Retrieved from http://www.forbes.com/sites/jenniferhicks/2013/07/30/building-green-increases-demand-for-traditional-materials/

27 Mo�at, A., et al. (2010). The 21st century corporation: The Ceres roadmap for sustainability.

28 Phansey, A. (2012, April 11). Revolutionizing sustainable product design. Hu�ngtonPost.com. Retrieved from http://www.hu�ngtonpost.com/asheen-phansey/green-companies_b_1419185.html

29 Tork. (2013, June 5). U.S. consumers increase “green” purchases, but are they willing to pay more? [Press release]. Tork USA. Retrieved from http://www.torkusa.com/Resources/news/News/US-Consumers-Increase-Green-Purchases/

30 Chi�. Green building is growing and cutting greenhouse gases. Retrieved from http://www.chi�.com/articles/architects-green.htm

31 Responsible Purchasing Network. (2010). Responsible purchasing trends 2010. Retrieved from http://www.responsiblepurchasing.org/publications/trends_2010.pdf

32 Ibid.

33 Retail Industry Leadership Association. (2013). RILA 2013 retail sustainability report.


35 Ibid.

36 Nielsen. (2014). Global consumers are willing to put their money where their heart is.


38 Ibid.

39 Terrachoice/UL Global Network. (2010). The sins of greenwashing, home and family edition 2010: A report on the environmental claims made in the North American consumer market. Retrieved from http://sinsofgreenwashing.org/index35c6.pdf

40 NMI. (2013). U.S. consumer perspectives and trends in sustainability, 2013.

41 Ibid.

42 Ibid.

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