Five Sustainable Strategies Every CEO Should Pursue

Oct 12, 2018 10:10 AM ET
Article

Sustainability is one of the highest priorities on today's CEO agenda. Climate change is dramatically impacting the planet and creating new business risks. So how are companies responding to mitigating environmental damage and ensuring long-term resiliency through increased use of digitization?

With lessons from AEG, Entrade, Walmart and WWF, leaders should consider five key strategies:

Strategy 1: Adopt a One Planet Mentality

Companies leading on sustainability recognize that natural resources are finite — we only have one planet. This mindset drives companies to develop innovative ways to manage resources, including new products and services. Ultimately, this increases business flexibility, allows companies to rapidly adapt, and drives sustainable growth.

Circularity

The adoption of circular business practices is one key way in which companies can harness resiliency. By re-evaluating the way resources are consumed, products are made, services are delivered, and waste is managed, companies can reduce expense, future-proof operations, and reimagine their businesses.

Renewable Energy

Switching to renewable energy can help companies develop sustainable resources. Using renewables reduces expense while achieving environmental goals. IRENA predicts that the cost of clean, carbon-free electricity will be cheaper than fossil fuels, everywhere, by 2020.

Renewables are returning impressive results. Thanks to a wind power purchase agreement (PPA) at its Texas data centre, Hewlett Packard has reached its 2020 operational emissions reduction goal five years early and avoided the annual emission of more than 340,000 tons of carbon dioxide.

Smarter, More E­fficient Operations

Doing more with less is possible through cyber-physical systems, the Internet of Things (IoT), and cloud computing, which create efficiencies and smarter operations.

Entrade is a pioneering company that turns waste into sustainable energy. The firm uses Schneider Electric's EcoStruxure, an IoT solution that allows greater connectivity and automation. Streamlined operations in the firm's 250 Liverpool-based plants are now run remotely, and more efficiently, from the head office in Germany.

"IoT is the foundation of our business model," says Julian Ulhig, CEO Entrade. "Now I'm able to run an entire global utility from my mobile phone, and this would not be possible without EcoStruxure."

Strategy 2: Drive a Sustainable Supply Chain

Working toward greener suppliers is a key target for businesses. According to CDP, eighty percent of a businesses' carbon footprint sits in the supply chain.

Walmart recently announced Project Gigaton, an approved science-based target (SBT) aimed at avoiding a gigaton of emissions from its global value chain by 2030. That's the equivalent of taking more than 211 million passenger vehicles off U.S. roads for an entire year.

Sustainable supply chain initiatives include efficiency measures, greener transportation, renewable and clean technologies, and digital tools that give end-to-end supply chain visibility. Carter Roberts, president and CEO of World Wildlife Fund recently said: "Supply chains are the new frontier of sustainability … as more companies follow in the footsteps of Walmart and their suppliers, we can achieve the critical mass needed to address climate change."

Schneider Electric works with sectors that account for majority of global energy consumption and CO2 emissions. The company has committed to ensure its own products and solutions help reduce both energy use and CO2 emissions — from design to manufacturing to shipping and deployment to product end-of-life.

Strategy 3: Adopt Transparency

Consumers are choosing responsible brands. 66 percent of them will pay a premium for a sustainable product. It's imperative that companies communicate transparently about the footprint of their brands and products to build reputational and competitive benefits.

This transparency includes openly committing to reducing and disclosing a company's environmental impact through indices. Schneider Electric's sustainability commitment, known as Schneider Sustainability Impact, is tracked quarterly and audited by a third party. It provides a holistic view of sustainability and the promises to partners, customers, and the world.

Digitization also supports transparency and disclosure. Solutions like Schneider Electric's EcoStruxure Resource Advisor use multiple data streams to create meaningful, digestible, and reportable dashboards. This data can be shared with stakeholders and inform decisions that are profitable and planet-compatible.

Strategy 4: Forge Innovative Partnerships

The rise of pre-competitive organizations and technology-enabled community platforms demonstrates the need for industry leaders to collaborate to solve today's pressing challenges.

An example is the Sustainable Apparel Coalition (SAC). The SAC brings together brands, manufacturers, retailers, and suppliers in footwear and apparel to develop solutions to common challenges. The SAC was responsible for the creation of the Higg Index, an industry-leading assessment tool to measure the impact of apparel and footwear.

Another example is Schneider Electric's NEO Network™. A growing global community of companies buying and developing cleantech solutions, the NEO Network brings together buyers and solution providers to exchange information and accomplish mutually-beneficial goals. Members obtain exclusive access to market trends, project details and pricing information, and clear research to help accelerate decision-making on renewables.

"Though there's been a dramatic uptake in corporate adoption of renewable energy, the complexity of today's market hinders many organizations," says John Hoekstra, VP of sustainability and cleantech services at Schneider Electric. "The growing NEO Network community confirms the need for simplicity, clarity, and collaboration."

Strategy 5: Use Data and Digitization

"Data is the new oil; it's a new currency, a new way to monetize and create value in our businesses," says Emmanuel Lagarrigue, chief strategy officer at Schneider Electric. Data is changing the way companies think about products, technologies, and systems. The result is more sustainable business models, with predictive capabilities.

87 percent of senior business leaders now cite digitization as a priority for their company, the first step to convert processes from reactive to proactive. Digitization delivers rich data which can return profits, resource reductions, and efficiency.

AEG embraced digitization to achieve emissions reductions and increase waste diversion. Thanks to Schneider Electric's EcoStruxure Resource Advisor, the firm was able to track 53 different data streams across more than 120 venues; reduce emissions by 14 percent and achieve a 63 percent waste diversion rate.

Digitization and sustainability are inextricably linked

As businesses adopt more sustainable models, greener supply chains, and Industry 4.0, the positive impact is clear. Companies that decarbonize and digitize, streamline operations, invest in circularity, and undertake a more transparent, consumer-focused approach will reap long-term productivity and profitability – all while reducing impact on our planet.