Sustainability has always been one of the topics I hold dear. One of the things that really makes me proud to work at FourKites is the fact that we’re making it both easier and more profitable for some of the world’s biggest companies to be more environmentally friendly.
Yesterday, I was honored to join Meghan Stasz, VP of Packaging and Sustainability for the Consumer Brands Association (CBA), as well as Dr. Dirk Holbach, Corporate SVP and CSCO at Henkel, to kick off Day One of FourKites’ first-ever supply chain virtual sustainability summit. Through the many topics we discussed during our 45-minute-long webinar, the most prominent idea that came out was this: Over the past several years, consumers have made it abundantly clear that they are looking for a greener, more sustainable future. At this point, companies themselves need to be the ones leading the way. Those companies that do so will find ample opportunity to not only build a better planet, but strengthen their bottom line at the same time.
In 2017, transportation surpassed electricity emissions as the largest source of carbon dioxide emissions in the United States for the first time since 1978. As we’ve written in the past, deadhead and dwell time are a major common denominator for addressing high freight costs, driver shortages and emissions alike, and we’ve been strong advocates that by improving performance in these and other wasteful transportation categories, companies can simultaneously slash their operating costs and reduce their environmental footprint. But as became abundantly clear in yesterday’s webinar, the opportunity to achieve a win-win for both the environment and the bottom line – and the initiatives that some of the world’s most innovative companies are currently undertaking – doesn’t stop with transportation alone.
The Changing Consumer Landscape
One of the primary themes from yesterday’s webinar was the major changes we’ve been seeing in consumer behavior, preferences and demands. Research shows that 73% of consumers are willing to change their consumption habits to reduce their environmental impact. Meghan pointed toward the eroding levels of trust in government at a national level, and growing consumer demands that companies take a more active role in shaping the future when it comes to sustainable practices.
Case in point: The overwhelmingly confusing recycling program in the US. There are roughly 10,000 different recycling systems in the United States alone, according to research compiled by the CBA. As a result, Meghan noted that Americans are more confident in their ability to do their own taxes or successfully assemble a piece of IKEA furniture than they are to figure out their local recycling system! If that doesn’t alert us to how broken the system is, then nothing can.
The world’s largest companies are in the fortunate position of being able to give consumers what they want. And more and more, consumers are demanding products, packaging, processes, support and information in order to be more environmentally friendly.
Sustainability as a Catalyst for Change
It’s not just downstream, at the consumer level, where we can find cues for better sustainability practices. Investments in better sustainability practices can drive innovation and product development at all levels of the company, as well.
As Dirk pointed out in the webinar, it’s not just in the transportation or packaging of their products where companies can look to improve sustainability, but also in the use of products. In the case of the detergents that Henkel produces, Dirk said his company found that washing at lower temperatures can significantly lower environmental impacts by reducing the amount of detergent used per wash by a factor of three or more (which then, of course, also reduces the amount of packing and materials). Investing in consumer education was a logical step in the company’s pursuit to cut down on its environmental footprint. In doing so, both consumers and the company are saving money with every wash – and it’s better for the planet! This is the kind of win-win thinking and innovation that we need to prioritize in the coming years if we hope to secure a safe and sustainable world for future generations.
Of course, for the world’s largest companies, economies of scale can easily work in your favor as well. As Meghan pointed out during the webinar, one of the top ways to reduce food waste is to not make as much of it in the first place. One of CBA’s client companies in the food and beverage industry achieved this by empowering its employees to think of new ways to improve sustainability within the organization. The company, which manufactures frozen pot pies, was able to save hundreds of tons of pie dough per year, thanks to a suggestion by one of its plant engineers to reconfigure the placement of the pie dough in the shell, which reduced the amount of dough that was trimmed away in later stages of production.
Sustainability and Profitability Go Hand in Hand
As we’ve written before, investors understand that companies that consider their long-term environmental risks will ultimately outperform those who don’t. This has been made clear by the roughly 85% of companies in the S&P 500 that now publish sustainability or corporate responsibility reports – up from just 20% in 2011. Throughout the webinar, this idea of greater profitability through enhanced sustainability was perhaps the single most prominent theme.
Meghan put it best when she said that the most successful environmental initiatives are the ones that address cost savings. Dirk echoed that sentiment, pointing out that the ability to save energy and create less waste doesn’t offer just a nice feeling – but many financial benefits, as well, as investments made into newer, more sustainable technology open the door to operational improvements, reduced overhead and greater efficiencies. He also noted that in Europe, governments are already beginning to raise taxes on virgin raw materials, CO2 emissions and other unsustainable manufacturing practices.
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If you missed yesterday’s session, you can catch the entire session here. Please don’t hesitate to reach out to our team with any sustainability-related questions!