SB Webinar | The Path to Generating Business Value from Product Sustainability


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Companies committed to product sustainability are generating business value such as manufacturing cost savings, trust and brand enhancement, and employee engagement. A study released by Pure Strategies, the Path to Product Sustainability, discovered that companies achieving widespread benefits from their product sustainability programs share a common set of tactics that set them apart from other companies.

This presentation will review the results from the new global market study including the three key approaches that help organizations generate value from product sustainability efforts. Insight from leading companies will provide actionable details about how to leverage the top practices, including two case studies. Global home, health, and personal care products manufacturer RB will highlight their approach to product sustainability goal development and R&D integration. Timberland will outline how their approach to sustainability assessment and supplier engagement contributes to advancing their product sustainability leadership. Attendees will learn about the path to progress efforts and generate value to the business, society, and environment through product sustainability.

What You Will Learn:
-Top benefits businesses are generating from product sustainability
-Leading approaches to generate value from product sustainability
-Trends in product sustainability program development

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SB Webinar | The Path to Generating Business Value from Product Sustainability

  1. 1. Sustainable Brands Webinar June 18, 2014
  2. 2. 2 Agenda • Tim Greiner, Managing Director, Pure Strategies – Business benefits – Top practices • Jennifer Duran, Global Head of Sustainable Innovation, RB – Product sustainability goals – Integrating sustainability into product development • Colleen VonHaden, Sustainability Director, Timberland – Supplier engagement to integrate sustainability across the supply chain • Q&A
  3. 3. 3
  4. 4. 4 Product sustainability measures, improves, and discloses environmental and social impacts of products across the life cycle
  5. 5. 5 What are the top benefits companies are already achieving from their product sustainability efforts?
  6. 6. 32% 41% 50% 50% 62% 62% 64% 69% 71% 74% 79% Increased sales Supply chain risk reduction Product material cost savings Future regulatory risk mitigation Packaging cost savings Meeting consumer demands Logistics and supply chain cost savings Meeting retailer requirements Trust and brand enhancement Employee engagement and productivity Manufacturing cost savings 6 Which business benefits have you achieved and are important to achieve from your company’s product sustainability program?
  7. 7. 7 No single company in the survey expected a decrease in funding this year for product sustainability
  8. 8. 8 There are best practices that performing companies use to plan, execute, and advance product sustainability that help them achieve widespread benefits
  9. 9. 9 Product Sustainability Top Practices
  10. 10. 10 Product Sustainability Top Practices
  11. 11. 11 97% of performing companies have product sustainability goals
  12. 12. 12 Re. Think Products Re. Focus Operations Re.Commit People Increase Product Sustainability Minimize Impacts Mobilize Employees 10% Sustainable Product Families 10% Resource Reduction (GHGs, Water, Waste) 3 New Awareness Programs 1. Increase revenue by $ from more sustainable products 2. Increase sustainability of % of products 3. % of products in (sustainability/innovation) pipeline
  13. 13. 13 Product Sustainability Top Practices
  14. 14. 14 What were the most highly valued approaches to product sustainability assessment?
  15. 15. 15 26% 27% 32% 33% 40% 68% 72% Industry scorecards, criteria, standards Life cycle assessment Custom-designed scorecards, guidelines, software Non-profit scorecards, criteria, standards Chemicals of concern or harmful material assessment Customer scorecards, criteria, standards Supplier engagement How valuable are the following approaches to product sustainability assessment? Percent of all respondents rating high or very high.
  16. 16. 16 Education & Training Supplier Summits Index (Surveying) Initiatives
  17. 17. 17 Product Sustainability Top Practices
  18. 18. 18 Where are performing companies currently concentrating product sustainability integration? Commercial Phase | Bench-top Phase | Concept Phase
  19. 19. 19 54% 23% 23% 72% 67% 51% Commercial Phase Bench-top/Pilot phase Concept phase At Present In Two Years In the product development process, where do you/will you concentrate product sustainability efforts? High concentration as reported by performing companies Performing companies are bringing sustainability into the product development process
  20. 20. 20 Identify project priorities Semi- quantitative assessment of priorities Standardized assessment Final assessment
  21. 21. 21
  22. 22. Find the report at: Tim Greiner
  23. 23. Security Level: Public Sustainability at RB Jennifer Duran 18 June 2014
  24. 24. Our Vision and Purpose Our vision is a world where people are healthier and live better Our purpose is to make a difference by giving people innovative solutions for healthier lives and happier homes
  25. 25. Our approach responds to the global megatrends affecting the world In particular those we can influence Growing need for better health & hygiene Increasing water scarcity Rising energy costs and emission constraints Pressures on natural resources and waste Growth of emerging markets Consumers demand greater transparency
  26. 26. We set a new sustainability strategy in 2012 With four big goals for 2020
  27. 27. Our strategy is organised into three key pillars These will help us meet our four big goals Healthier Communities Better Design Better Production Creating products that use less water, energy and packaging, and more sustainable ingredients. Improving health and hygiene behaviour through our brands and partnerships. Reducing our environmental impacts in production, meeting our social standards and keeping our people safe.
  28. 28. Key strategic drivers of product-level metrics Better Production
  29. 29. What is a ‘more sustainable innovation’ and how do we measure this? Sustainable Innovation Calculator is a streamlined Life Cycle Analysis (LCA) tool that models product interactions from cradle to grave across relevant environmental impact categories To qualify, a product must score better (green) in at least one of the following categories without scoring worse (red) in any others:
  30. 30. R&D can now assess the impact of choices in real time Innovating more sustainable products Via our new online sustainability calculator
  31. 31. Embedding into product development process To consider sustainability earlier LAUNCH PHASE DEVELOPMENT 1 & 2 PRE LAUNCH SCOPING & CONCEPT DVLT FEASIBILITY Brief signed Marketing and R&D to consider impacts via sustainability guidance On pack claims Key milestone 1 Complete calculator and report status Net Revenu e Key milestone 2 Refresh calculator and report status
  32. 32. In 2013, we measured Net Revenue from more sustainable products for the first time… • £230 million NR from more sustainable products (Q1-Q3 2013) • Measured with the help of: – Sustainable Innovation Calculator – Global network of Sustainability Champions • This process is helping to create a culture of sustainable innovation • RB is committed to product stewardship, product safety and transparency* What we mean by * For more information on our product safety and stewardship programmes, see our 2013 Sustainability Report.
  33. 33. Find out more External recognition RB was included in both the Dow Jones Sustainability Index and the CDP’s Carbon Disclosure Leadership Index in 2013
  34. 34.
  35. 35. Timberland Supplier Sustainability Program Colleen Von Haden Sustainability Director June 2014
  36. 36. SHARED RESPONSIBILITY with INCREASED FOCUS Compliance Audit Team • Terms of Engagement & Global Compliance Principles • Compliance Audits •Social/Labor Compliance •Health and Safety •Environmental Licenses •Facility Security Supplier Sustainability Team • Corrective Action Plan Development • CAP Development • Root Cause Analysis • Capacity Building • Management Systems • SAI Social Fingerprint Framework • GSCP Environmental Framework • Sustainable Living Environments • Improving workers happiness & retention • Beyond compliance; beyond factory walls • Reducing absenteeism, improving retention • Improving productivity and quality RISK MITIGATION + VALUE CREATION
  37. 37. OUR GOAL Look beyond compliance and beyond factory walls to create a safe and healthy work environment and community for 280,000 workers at 350 factories. OUR RESULT Happier, healthier, more productive workforce . . . stronger communities and a more resilient supply chain.
  38. 38. SUPPLIER SUSTAINABILITY STRATEGY • Social Fingerprint (S/L Management System) • SLE: Sustainable Living Environments • SA8000 / WRAP Worker Retention Absenteeism Productivity Quality Risk Costs • GSCP Environmental Management System • Resource Efficiency • ISO 14001 Social / Labor Environment Business Impact  Improved social & environmental performance enables improved business performance OPERATIONAL SUSTAINABILITY 2
  39. 39. Worker Well Being Description Business Impact Social Fingerprint (S/L Management System) Improve compliance performance and improve social/labor conditions with a Social/Labor Management system that drives consistent compliance and measurement of continuous improvement • Reduced Risk • Reduced Cost (associated to risk) SLE: Sustainable Living Environments Addressing worker health & well-being inside and outside factory walls to improve retention and reduce absenteeism. • Decreased Absenteeism • Improved Retention, Productivity, Quality • Decreased Costs Env Protection Description Business Impact GSCP Environmental Management System Improve compliance performance and improve environmental impacts with an Env Management system that drives consistent compliance and measurement of continuous improvement • Reduced Risk • Reduced Costs (associated to risk) Resource Efficiency More efficient operations with reduced waste and consumption of utilities • Reduced Costs • Improved Image HIGH LEVEL LINKS TO BUSINESS VALUE 10 * See Appendix for detail of social and environmental links to business impacts.
  40. 40. OUR PROCESS In 2008, we began exploring these beliefs more deeply with suppliers to gain a greater understanding of workers’ needs and opportunities for a better life. We have conversations with workers using participatory techniques of dialogue to understand what aspects of basic living needs they might be struggling with, to gain a firsthand understanding of their perspectives. We also look at the factory infrastructure with management, contact community organizations and trade unions, and consult with nonprofit organizations and even other brands to supplement what the workers themselves tell us. Sometimes workers may need more education and information about available services or infrastructure. Other times, it may be that affordable, adequate options and services are not readily available. In either case, action is needed
  41. 41. The Business Value of Workers’ Children’s Wellbeing Studies show that sixty percent of lost workdays each year can be attributed to stress. Occupational stress has causes beyond working conditions, as conflicts between the demands of workplace and home life are increasingly common—which we discovered when interviewing workers at Timberland’s contract factories.
  42. 42. Empowering Workers through Financial Literacy Understanding the causes of worker stress is critical for assessing worker needs and helping our suppliers be more productive and profitable. Financial security is an essential part of anyone’s livelihood. Yet 2.5 billion adults around the world don’t use formal financial services to save or borrow money. Empowering the working poor with proper knowledge and skill—and connecting them to financial products and services—can help them manage money more effectively, invest in economic opportunities, and reduce risks related to illness or loss of employment – for them and their families.
  43. 43. Clean Drinking Water – a priceless commodity If you were to ask an American business owner what single thing was most essential to his or her workforce’s quality of life, the answer might be the electricity to power their equipment or cars for their employees’ commute. But in many rural, developing countries, the answer is often much more basic: clean drinking water.
  44. 44. TBL SUSTAINABILITY – ORG CHART Mark Newton VP CSR Colleen Von Haden Senior Manager Supplier Sustainability Jackson He Regional Manager Asia Supplier Sustainability Vincent He Asia Supplier Sustainability Leeka Li Asia Supplier Sustainability Songpon Pengchassmsri Regional Manager S. Asia Supplier Sustainability Rita Kodkarni S. Asia Supplier Sustainability Ann Caron Analyst Supplier Sustainability Atlanta McIlwraith Senior Manager Community Engagement Brianne Wood Manager Community Engagement Jill Holt Coordinator Community Engagement Betsy Blaisdell Senior Manager Environmental Stewardship Open Senior Manager CSR Europe Zeynep Kayaalp EMEA Supplier Sustainability (Contractor) Carlos Giacomozzi LatAm Supplier Sustainability (Contractor) Patrik Frisk President Supplier Sustainability Team Team Skillset: •Technical knowledge (social, H&S, Env) •Rural Participatory Assessment Methodologies – Worker Engagement •Change Management •Facilitation •Project Management
  45. 45. Success Factors • Positioning is key – “nice to do” v. “need to do”. Demonstrate the business case for going beyond. • Make the workers central to the process. • Utilize rural participatory assessment methodologies to engage in dialogue with the workers about very sensitive subjects • Establish system of peer educators • Establish CAP committees with worker representatives • Have workers part of the solution brainstorming • Hand-holding / Patience / Change agent skills
  46. 46. Topic Proven Value at TBL or VF Value Proven Externally SOCIAL MANAGEMENT SYSTEMS SAI Social Fingerprint The Social Fingerprint framework focuses on 9 elements that SAI deems instrumental in evaluating an effective social/labor management system (rated Level 1 (basic) to Level 5 (best practice): 1.Clear and Complete Policies & Procedures 2.Worker Involvement and Communication 3.Complaint Management and Resolution 4.Worker Training and Development 5.Internal Social Performance Team (ISPT) 6.Oversight of Suppliers and Subcontractors 7.External Verification & Stakeholder Engagement 8.Non-compliance resolution (CAP) process 9.Progress on Corrective Actions RISK MANAGEMENT: Increased level of performance on compliance audits. A) Better Results. When factories meet higher levels on the SAI Social Fingerprint, they are more likely to receive initial acceptance from VF compliance audit. SAI Level 1: 0% Accepted SAI Level 2: 24% Accepted SAI Level 3: 71% Accepted B) Consistent Results. Factories that meet the higher levels on the SAI Social Fingerprint are more likely to maintain the Accepted compliance rating: SAI Level 1: 0% Accepted YOY SAI Level 2: 18% Accepted YOY SAI Level 3: 82% Accepted YOY COST REDUCTION: INFACT metrics studies showed that consistently managed and continuously improved workplace conditions with improved absenteeism, retention, and worker moral translates into reduced costs, improved quality and productivity. COST REDUCTION: SA8000 case studies (2008) showed the following results, which may lead to lower factory operational costs resulting in lower product costs. •Annual worker turnover decreased from 78% to 32% •37% decrease in lost time from accidents and sickness •Avg tenure increased 12 mos to 25 mos. COST REDUCTION: KPMG study (2012) showed the following ROI for improved HR practices and worker/management communications, which may lead to lower factory operational costs resulting in lower product costs: •Decreased Turnover 25-40% •Factories with strong social/labor management systems are more resilient, better positioned for long term business survival APPENDIX A: DETAILED LINKS TO BUSINESS VALUE
  47. 47. Topic Proven Value at TBL or VF Value Proven Externally WORKER WELL-BEING & SLE (Sustainable Living Environments) Addressing workers mental and physical health and well-being inside the factory to ensure motivated, loyal workers (Worker Well-being) and outside the factory to ensure their ability to meet basic needs and better their lives (Sustainable Living Environments). Conduct surveys and focused discussion groups with workers to determine o Causes of absenteeism and turnover o Causes of low moral o Level of poverty o Opportunities to better lives COST REDUCTION: Anecdotal correlations evidenced at key vendors (PY Vietnam, Youngone Bangladesh) and at owned facility (RFC), regarding improved worker moral, absenteeism, retention as a result of SLE type projects which may lead to lower factory operational costs resulting in lower product costs. RISK MANAGEMENT: NGO campaigns for Living Wages remain strong. Feedback received from NGOs confirmed that in lieu of a Living Wage policy, TBL’s SLE initiative is an acceptable alternative approach to addressing poverty in supply chains, thereby reducing the risk of negative campaigns against the brand. SALES GROWTH: Marketing content derived from SLE projects’ stories used in product marketing material. COST REDUCTION: KPMG study (2012) showed ROI for investments in worker comfort, performance-based wage incentives, and improved worker/manager relations resulted in decreased turnover (36%), rework (65%) and absenteeism (53%), which may lead to lower factory operational costs resulting in lower product costs. COST REDUCTION: BSR study (2010) quantified $3-4 return for every $1 spent on worker health program investments by way of improved absenteeism and retention resulting in improved lost time and lower costs associated with recruitment and training, which may lead to lower factory operational costs resulting in lower product costs. APPENDIX B: DETAILED LINKS TO BUSINESS VALUE
  48. 48. Topic Proven Value at TBL or VF Value Proven Externally MANAGEMENT SYSTEMS GSCP Environmental Framework The GSCP framework evaluates and guides factories in 9 environmental impact areas (rated Level 1 (basic) to Level 3 (best practice): 1. Environmental Management System 2. Energy Use 3. Water Use 4. Wastewater Discharge 5. Air Emissions 6. Waste Management 7. Hazardous Substances 8. Emergency Planning and Incident Prevention 9. Nuisances RISK MANAGEMENT: Reduced brand risk from suppliers having improved environmental compliance and reduced environmental impacts.  fight erroneous claims and potentially negative press from NGOs COST REDUCTION: Less energy, water and waste generated by suppliers result in reduced related costs for suppliers. COST AVOIDANCE: Less resource intense factories are better positioned for long term operations, reducing VF costs to change suppliers in the future  Water efficiency and wastewater recycling reduces water dependency in areas where water risk is growing  Energy efficiency and use of renewable energy reduces power and manufacturing disruptions caused by aging and overburdened grids  Tightening environmental regulations have the potential to shut suppliers down that are resource intensive or have a history of non-compliance COST AVOIDANCE: Reduced hazardous chemical use results in lower hazardous waste disposal costs and risk. PRODUCT QUALITY: Quality, Lean and Environmental Management Systems require the same core components and therefore are highly complementary and reinforcing. Commonly you’ll see the two systems implemented together with the same core processes resulting in overall better management of process flow and waste. APPENDIX B: DETAILED LINKS TO BUSINESS VALUE
  49. 49. Topic Proven Value at TBL or VF Value Proven Externally Supplier ENERGY EFFICIENCY engagement, audits and improvements COST REDUCTION: Transparency into reduced operational costs at factory allowing for more informed price negotiations COST AVOIDANCE: Less energy intense factories are better positioned for long-term operations, reducing VF costs to change suppliers in the future. SALES GROWTH: Reduced energy use in supply chain results in improved product sustainability scores, as demanded by retailers and consumers. WASTEWATER effluent discharge treatment requirements RISK MANAGEMENT: Reduced brand risk from discharging polluted water into the local environment and community. COST REDUCTION: Treated wastewater can be recycled, thereby improving water efficiency at factory. APPENDIX B: DETAILED LINKS TO BUSINESS VALUE
  50. 50. Find the report at: Questions & Answers