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P4.3: Design for Sustainability

CERES ROADMAP EXPECTATION

Companies will approach all product development and product management decisions with full consideration of the social and environmental impacts of the product throughout its life cycle.
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Designing a product or service for sustainability can mean vastly different things from company to company. For some, it means a shift in sourcing practices to more sustainable raw materials or the use of a life cycle assessment to examine the social and environmental impacts of an existing product from cradle to grave. For others, it may translate to the total redesign of a product or the introduction of a service that helps to shift consumer behavior.

HOW ARE COMPANIES PERFORMING?


In the The Road to 2020: Corporate Progress on The Ceres Roadmap For Sustainability, we evaluated 600 of the largest U.S. companies on their progress towards meeting the expectations laid forth in the Ceres Roadmap for Sustainability using data compiled and analyzed by Sustainalytics. For this expectation all 600 U.S. companies were assessed on at least one indicator measuring performance on sustainability design. Some additional sector-specific indicators were used to analyze the 251 companies within the nine priority sectors— Autos & Transportation, Financial Services, Food & Beverage, Footwear & Apparel, Oil & Gas Producers, Retail, Technology Hardware, Technology Software & Services and Utilities.

Tier description - 3Each industry group was evaluated based on a unique set of sector-specific metrics. For example, Food & Beverage companies and some Retail companies were evaluated on programs and targets to increase sustainable food products, while Financial Services companies were evaluated on sustainability-related financial service offerings, such as “green” financing or mortgages. Footwear & Apparel and Technology Hardware firms, which generate significant product end-of-life waste, were evaluated on their sustainable design initiatives and related R&D efforts.

For Food & Beverage companies, product sustainability partly requires an examination of how products are grown. While more than 60 percent of companies (16 of 26) in the Food & Beverage sector are offering customers organic and fair trade products, for most companies these options continue to be a small percentage of product offerings. Companies should disclose the percentage of revenues attributed to sustainable products so that investors and other stakeholders can better understand the contribution these products make to the overall success of the business.

A growing number of Retail companies are taking strides to put sustainable products on their shelves. Whole Foods is leading an increasing number of grocers offering consumers more sustainable food choices. Tier 2 companies, Kroger and Safeway, are strengthening their commitment with targets for increased sourcing of sustainable seafood certified by the Marine Stewardship Council (MSC) and other similar certifications. Safeway is also implementing specialized training for retail employees to help customers identify more sustainable options.

For manufacturing companies across sectors, understanding the full impacts of a product over its life cycle—from extraction of materials to manufacturing to use and disposal—provides an understanding of what design or production changes may render the greatest sustainability improvements. Although there are industry initiatives emerging, such as the Sustainable Apparel Coalition and the Eco Index, among the Footwear & Apparel companies there is significant room for improvement with more than 80 percent of companies (9 out of 11) demonstrating no formal link between sustainability and product design.

By contrast, 74 percent (20 of 27 companies) of the Technology Hardware companies have policies or guidelines to ensure that environmental issues are considered at the R&D stage of product development. This is mainly in response to European chemical legislation and electronic-waste directives, which have made sustainable design the industry norm and continue to drive design standards.

Beyond sustainable design criteria, companies in the Technology Hardware and Software sectors are also increasing efforts to bring innovative product solutions to market. These companies are finding ways to modify existing products or develop new technologies that are helping other businesses and consumers to save energy, water and money. Hewlett-Packard and Cisco’s telepresence technologies are allowing businesses to radically reduce business travel, while maintaining the experience of a face-to-face meeting. This not only offers customers more resource efficient options, but actually changes the way that many companies do business. Cisco has rolled these products out across its own business and in 2011 saw a 40 percent drop in air travel emissions compared to 2007.

Sustainable innovation is not limited to a manufactured product, but can also extend to services that shift the way businesses operate, as well as consumer behavior. Technology Software company CA Technologies provides business customers with solutions to measure, manage and ultimately reduce energy use, water, waste and GHG emissions across the enterprise. The company has employed its own ecoSoftware and has seen a 30 percent reduction in GHG emissions from 2008 to 2010.

Although all companies in the Financial Services sector are included in Tiers 3 or 4 for this expectation, the analysis shows that some are starting to experiment with products that can shift consumer purchasing. Examples include loans for home energy efficiency improvements and carbon offset credit cards. One example is Bank of America’s Energy Credit Mortgage, which offers homebuyers a credit up to $1,000 toward closing costs for newly constructed properties that meet Energy Star® requirements. A significant opportunity exists for companies in this sector to educate consumers and build the market for these types of products and services.

 

INTERACTIVE DATA

All 600 companies have been assessed for this expectation. Go to the Sector Performance section for additional analysis of the nine priority sectors, covering 251 companies: Autos & Transportation, Financial Services, Food & Beverage, Footwear & Apparel, Retail, Technology Hardware, Technology Software & Services, Oil & Gas Producers and Utilities.

Click on a performance tier to view more information on the priority sectors.

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[23] Priority Sector Companies in Mediocre in 2012