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For-Profit Sustainability

Friday January 8, 2016

In the articles of Supply Chain Management Now as well as throughout APICS, we’ve been exploring sustainability and corporate social responsibility as they relate to supply chain and operations management. An article by Futerra CEO Freya Williams in The Guardian asks and answers a common question: “What’s the business case for sustainability?” Her reply: “A billion dollars.” 

“There are now at least nine companies globally that generate a billion dollars or more in annual revenue from products or services that have sustainability or social good at their core,” Williams writes. These companies—Tesla, Chipotle, Ikea, Unilever, Nike, Toyota, Whole Foods, GE’s Ecomagination, and Natura—manufacture a variety of products. According to The Guardian, these companies’ stocks also perform 11.7 percent better than their conventional competitors.

Williams reports that this group of “green giants” will this year be joined by Target. The store’s “Made to Matter” collection features brands that, according to Target, foster unique collaborative partnerships, develop exclusive innovations, and are committed to social responsibility.

At these companies, leaders don’t consider sustainability a charitable line item or a detriment to the bottom line. Instead, sustainability is driving profit. Williams identifies six factors the green giants have in common:
  1. An iconoclastic leader. One strong chief can spark the change.
  2. A disruptive innovation. It’s not only about taking something that exists and making it green.
  3. A higher purpose. When company leaders reach beyond profits, their profits improve.
  4. Built in, not bolted on. Sustainability is integrated throughout the organization.
  5. Mainstream appeal. People, whether they are very socially conscious or not, have to want what is being sold.
  6. A new behavior contract. Williams writes this is about “transparency, responsibility, and collaboration.” At the green giants, these are more than buzzwords.
“The green giants are turning a strategy of sustainability or social good into a billion-dollar business proposition, and profiting in the process,” Williams writes. “Their success is profoundly important because it represents a fundamental shift. For the green giants, sustainability is not about how to save money, but about how to make it.”

Essential for success

Skilled supply chain and operations management professionals are critically important to the success of any company, and this is especially true as social responsibility gains momentum in business. Now, consider the six factors outlined in Williams’s article. Professionals in the APICS community must begin to reflect on how they can influence each of these elements, in particular numbers 4 and 6. 

It seems even as I write this that sustainability and corporate social responsibility are evolving, but one fact is clear: They are not going away. They are driving business profit and success, as Williams highlights with examples in The Guardian article. 

The APICS Operations Management Body of Knowledge Framework outlines that the corporate strategy and business plan for an organization encompass the strategic plan, the annual operating plan, and business imperatives for the organization. Are you pushing sustainability through all of these levels in your work? 

APICS has resources that can help you incorporate and manage your sustainability efforts. In addition to our respected roster of certification and education programs, APICS offers members valuable, cutting-edge content in APICS magazine. The November/December issue of the magazine is focused on sustainability, and, thus, is available only online and via the tablet app. The issue features case studies from companies such as Tiffany & Co. and Quality Bicycle Products in addition to regular departments highlighting sustainability’s impact on supply chain and operations management. Visit apics.org/magazine for more information.
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  1. Steve Dunn January 29, 2016, 05:28 PM
    Your comments are dead on the mark. Supply chain professionals can ignore the reality of sustainability risk no longer. We see evidence of this everyday between environmental events such as last weeks snowstorm that crippled the NE US to the ongoing issue of human plight that is deluging the governments in Europe. All of these areas house customers, suppliers and our own facilities and employees. Taking a forward look at how to become more resiliant is in every firm's supply chain arena.
  2. Lisa Montalbano February 11, 2016, 09:42 AM
    I'm so glad to see this piece about incorporating choices toward social responsibility into your supply chains! I happen to work for such a place that gives companies the perfect opportunity to get their packaging, assembly, kitting and even re-work outsourced within the US, while providing work for people with special needs at the same time.

    I'm so passionate about the successes that we've been a part of for major US brands..all efforts performed by teens and adults with special needs. We're proud to remain an intricate and necessary part of our customers supply chains since 1957. [external link removed]