Sustainability and innovation, how far have we come?

Coke's innovation conference, opening session
I've been pondering this question since yesterday when I attended the Coca-Cola Enterprises / Economist Intelligence Unit conference on sustainable innovation in London.

From the presentations, and in general, there seems to be innovation, depending on how you define it, in the following areas:

- Recycling (Coca-Cola, Umicore)
- Services (Zipcar)
- Product design for closed loops (PET plant plastics, electronics)
- Energy efficiency (lights)
- Transport ((hybrid/electric cars, integrated urban mobility schemes) 
- Power generation (solar and wind mainly, some nuclear)
- Agricultural technologies (Urban food growth, drip irrigation etc)
- Materials (new lightweight and more efficient, recylable
- Consumer behaviours (for Coke, this is around selling more varied and lower calorie products and encouraging recycling)

(One other point of note is that the Goldman Sachs speaker (GS Sustain) suggested that increasingly asset owners are asking fund managers to be UN Principles for Responsible Investment initiative signatories. He didn't elaborate and the evidence appeared to be rather anecdotal, as it often is on this question. Even if that is the case, it's not clear that PRI signatories are changing much in their mainstream portfolios, from what I have heard from responsible investment experts)

I left the conference in two minds. On the one hand it was good to hear CEOs, MDs and board members of large companies discussing real business models based on sustainability thinking.

On the other hand, all the examples were fairly well known and established. I had hoped to hear about some new examples. But as someone who has organised and run more than 100 conferences, I know how hard that can be, so don't wish to appear overly critical.

I taped a podcast interview for Ethical Corporation with Coke's European president, Hubert Patricot, and will post a link to it soon. His speech from the conference is here.

Coke and the Economist Intelligence Unit have also put out a short report some current thinking on sustainability strategy (a broad church, that term). Take a look at it here.

Some of its key findings include: 

Sustainability remains a strong focus for companies despite financial obstacles: A majority of companies (52%) display a surprising ability to maintain commitment to sustainability objectives despite the financial crisis. Although business executives most frequently identify financial challenges (44%) as the leading obstacle to the implementation of their company’s sustainability strategy, nearly half (49%) recognise sustainability as a source of competitive advantage. The gradually improving macroeconomic environment may further ease financial constraints. 

Top executive involvement is key to implementing a sustainability strategy: Senior leadership engagement is identified as the leading success factor in implementation of sustainability initiatives (44%). There are concrete steps to make this happen. Some companies are linking management compensation to meeting their sustainability targets. Others are reshaping their functional structure to align their sustainability initiatives with their business development. This makes sense as sustainability is shifting from a single department to one that spans several functions. Indeed, successful businesses are often building linkages outside of the company’s bounds: this requires the guidance and buy-in of senior executives. 

Better reporting is a crucial starting point. At present under a third (31%) of respondents include environmental metrics in their financial reporting and still fewer (26%) have all departments report on their sustainability endeavours. For companies to identify the most relevant issues for their businesses and plan how best to direct their investments, senior executives need access to meaningful data. Thorough reporting can be useful externally to engage stakeholders and internally when building a solid business case. 

Some leading companies have managed to link sustainability, innovation and competitive advantage. Although, cutting costs while delivering sustainability objectives are the most popular sustainability initiatives. Two-thirds of companies are engaged in waste reduction and recycling, while more than half (54%) have embarked on energy efficiency and carbon reduction initiatives. These initiatives do not change the underlying business model but they do realise operational greater efficiencies. While some companies have managed to link sustainability, innovation and competitive advantage, others remain focussed on the brand implications of their sustainability strategy. 

Businesses successfully engaging with NGOs or universities are more likely to embark on ambitious sustainability endeavours. These include investing in renewable energy (47%) and pursuing sustainable sourcing (49%) while the average is only 33% in each of these areas for companies less effectively connected to these sorts of civil society organisations. Drawing in a wider network of stakeholders tends to go hand-in-hand with successfully implementing a sustainability strategy. Almost a third (27%) of respondents are seeking to innovate through partnerships with NGOs. 

New technology platforms are playing an important role in developing more sustainable business models. More than four in ten respondents (41%) are harnessing technology to generate new ideas and platforms as part of their sustainability objectives. This can mean tapping into industry insights and customer feedback or tracking resources through the product lifecycle. Indeed, over three-fifths (61%) of respondents say technology is contributing to their sustainability innovations with more than four in ten (41%) using data analytics to design more sustainable products. Crucially technology is opening up opportunities to collaborate more closely with suppliers and engage customers with a company’s sustainability goals. 
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