Are Companies Really Becoming Greener?

Two-thirds of respondents to the Acceleration of ECO-Operation survey said their companies do not have scorecards to measure supplier sustainability, and do not have goals of supplier carbon neutrality. However, the respondents know there is “tremendous value” in using a scoring system. Seventy-one percent plan to achieve carbon neutrality in four years or less, despite not having it as a goal.

The Business Performance Management (BPM) Forum created the Acceleration of ECO-Operation program with E2open and the Global Renewable Energy and Environmental Network (GREEN). The program’s website defines Acceleration of ECO-Operation as a “new management mantra aimed at bringing business gain to the value chain through enhanced trading partner visibility, flexibility and new levels of verifiable sustainability across the entire demand and supply ecosystem of global corporations.”

“The Acceleration of ECO-Operation initiatives provide comprehensive confirmation supporting our observation that companies with hundreds or thousands of global suppliers need to do a much better job at seeing and measuring the levels of environmental compliance and efficiencies down to the second and third-tier level of supplier,” said Rich Becks, senior vice president at E2open. “Supply chain executives understand the benefits of better managing collaboration and sustainability in the value chain – now they just have to make it happen.”

The majority of respondents (90 percent) to the survey claimed their company’s management follows the principles of ECO-Operation which are enhanced trading partner visibility, flexibility, and new levels of verifiable sustainability across the entire demand and supply ecosystem.

Almost two-thirds of the respondents said their company does not have adequate visibility across their supply and value chain, and 20 percent use a single hosted platform to improve their visibility. Only 38 percent link eco initiatives with operational efficiency to a high degree, and about half to some extent. Forty-two percent do not think their company’s carbon and energy footprint includes their entire extended supply chain, and 55 percent think their customers would agree.

Although 76 percent said their customers have not asked them to measure or reveal their carbon footprint, two-thirds expect them to demand it in the coming year. The majority (85 percent) are involved in new programs that will increase operational efficiency, CSR, and cost-savings throughout their supply and demand chains.

The top initiatives to achieve better ECO-Operation practices, according to the survey, are environmental responsibility, better sustainability compliance, more efficient product manufacturing, and better customer responsiveness.

The biggest drivers for change in supply and demand chain operations this year are:

• Pressure to be more environmentally responsible and sustainable
• Troubled economy creating need to “tighten the belt”
• More competitive, price-sensitive market for goods

The most frequent challenges in synchronizing supply chain operations are:

• No single, universally accessible solution for visibility across the value chain
• Partners unwilling or unable to provide necessary information
• Don’t have access and visibility into second or third tier trading partners

The top three areas of the value chain process most valuable to measure in terms of environmental sustainability and responsibility are:

• Transportation and fuel consumption
• Product and waste recycling
• Packaging materials and processes

“Today’s economic, social and regulatory dynamics are putting real pressures on global companies to be both lean and green in their product sourcing, logistics, distribution and operational practices,” said Donovan Neale-May, executive director of the BPM Forum. “Unifying and controlling complex, globally-distributed value networks in turbulent, unpredictable times requires real-time operational insights down to the product level, accurate sourcing and sell-through intelligence, and relentless dedication to eliminating waste in all areas of the go-to-market process.”

Consumers Think Green Products Cost More

The 2009 Green Brands Survey involved consumers in seven countries: the U.S. U.K., China, Brazil, India, Germany, and France). The survey, released in July, revealed that consumers from all seven countries think green products are costlier than non-green ones, but they plan to spend more on green products in the next year. The research, conducted by Penn, Schoen & Berland Associates (PSB) with Landor Associates and Cohn & Wolfe, plus Esty Environmental Partners, showed that consumers in the U.K., France, and Brazil think their country is “on the wrong track” concerning the environment. However, consumers in the U.S., Germany, China, and India think their country is “going in the right direction.”

The survey highlighted the differences between consumers in developed and developing countries, as the following two examples show:

• Consumers in the U.S. U.K., Germany, and France share similar environmental beliefs and behaviors, while consumers in Brazil, India, and China have different views from the consumers in Western countries.
• The majority of consumers in India and Brazil are more concerned about the environment than the economy, but the majority of consumers in the U.S. are more concerned about the economy.

“With the global climate change discussion focused on what the major new economic powerhouses like China, India, and Brazil are willing to do to control their emissions, those three countries stood out in our polling as more interested in buying from environmentally friendly companies and more willing to spend more on green products,” said Scott Siff, executive vice president of PSB. “From a political perspective, this turns the assumptions about those countries on their heads, and from a business perspective it says the market for green branding and green products may be even bigger than generally thought.”

Over two-thirds of consumers in all countries (77 percent) think it is important that companies be "green." India and China have the highest percentage of consumers who value a companies "green-ness" with 87 percent in India and 98 percent in China. Consumers from all countries think reducing the amount of toxic or dangerous substances in its products and business processes is the most important step a company can take to demonstrate it is green.

“While reducing toxics heads the list of consumer priorities the data also show that the public holds companies accountable for good environmental behavior across the board,” said Dan Esty, chairman of Esty Environmental Partners. “Consumers expect companies to recycle, use energy efficiently, reduce packaging, and pursue green innovation. So to gain loyalty, a company’s environmental strategy must be comprehensive.”

The television and internet are the main sources of information about environmental issues in all countries. Past experiences with products influence consumers the most in France, Germany, and India. Recommendations from friends are most influential for consumers in the U.S. and China. Consumers in the U.K. and Brazil are influenced the most by editorial. Consumers in all countries think intellectuals or activists are the most credible spokespeople for environmental change.

The survey asked participants to rate a number of brands, and the results produced the top ten greenest companies list for each country. The top ten greenest companies list for the U.S. is as follows:

1. Clorox Clean Works
2. Burt’s Bees
3. Tom’s of Maine
4. S.C. Johnson & Son
5. Toyota
6. P&G
7. Wal-Mart
8. Ikea
9. Disney
10. Dove