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Sustainability: what planet needs, what customers want

There is only upside and opportunity when creating a more sustainable business, writes ELISABETH MORENO, MD of HP Africa

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To run a successful business in today’s changing world, companies – and their leadership – must stand for something bigger than the products they sell. From boardrooms to shopping aisles, the conversation is no longer just about the best products, strategy or even financial metrics; equally important is the impact an organization creates for society through the values they uphold.

While governments, non-profits, and communities have a role to play, South Africa’s private sector has a unique ability to help solve societal challenges and lead the way towards a brighter and more sustainable future. Today’s leaders can intertwine strong business fundamentals and environmentally-friendly practices, enabling both to thrive together.

For companies, sustainability goes well beyond a moral imperative; it’s good for business. It can become a competitive differentiator that fuels innovation and profitability, all while creating a stronger and healthier company – and planet – for the long term.

With our world facing increasingly difficult challenges, the need for businesses to act is urgent.

SUSTAINABILITY DELIVERS MEASURABLE REVENUE GROWTH

I’m fortunate to work for a company whose purpose has been anchored in sustainability long before it was a part of the everyday vernacular. More than 70 years ago, Dave Packard, one of HP’s founders said, “The betterment of our society is not a job to be left to a few. It is a responsibility to be shared by all.” That emphasis continues today. Sustainable impact is a fundamental part of our strategy – and one where we see a direct correlation to revenue.

We just published our annual Sustainability Report detailing how sustainability efforts helped differentiate us from competitors, directly resulting in more than $900 million dollars of new revenue – an increase of 35 percent year over year.

If there is one piece of strategic advice, I can offer to today’s business leaders, it’s that you should incorporate social responsibility into your purchasing decisions. This is your opportunity.

BRANDS AS A FORCE FOR SOCIAL GOOD

Today’s customers care about the environment and social justice. They want to buy from brands they trust, and there is an inherent obligation for corporations to advance larger societal and values-based issues. Purchasing decisions and brand endorsements – or lack thereof – can change a business’ behaviour.

In a recent survey, 83 percent of millennial respondents said it’s important for companies to implement programs to improve the environment, and 75 percent said they’d change their purchasing habits to reduce their own impact. Moreover, 66 percent of customers in general would spend more to purchase a product from a sustainable brand that advocates for social and environmental issues. 60% of millennials want to be employed by companies that contribute to social and ethical causes.

THE PROLIFERATION OF THE CIRCULAR ECONOMY

If customer demand and attracting the best employees wasn’t enough, upcoming regulations will change how corporations operate and produce goods. The circular economy is aimed to reflect the patterns and systems of reuse and recycling of products indefinitely. Each product at end-of-life becoming a new resource rather than merely being discarded. The circular economy recognized the value of ‘waste items’, repurposing them as alternative resources that can be used again and again in a circular goods cycle.

In South Africa, about 90% of carrier bags, agricultural films and other short-term or single-use consumer plastic items are produced from petroleum-based chemical materials and are therefore non-biodegradable when disposed [of] in natural environments. Plastics SA announced their goal of eliminating all plastic waste from South African landfills by 2030 – something which will be easier to achieve once the CSIR researchers take their biodegradable plastic into production. However, there are still challenges that need to be overcome.

Any business that relies on a ‘take, make, dispose’ model will have to adapt or face near-certain decline and eventual demise.

Within the circular economy framework, companies begin to transition from a linear selling model to more engaging and more profitable services-based relationships. Customers feel closer to the brands they use while the brand maintains and manages the products throughout the lifecycle – including disposal, recycling, and replacement sales – thereby increasing trust, loyalty, and ultimately profitability.

RECYCLING AND RECOVERING MATERIALS

As corporations rethink business models, its necessary to rethink materials that go into creating the products. Manufacturers must consider the sustainable potential of a product in the design process – not just when customers are ready to discard the product.

By repurposing materials, there is at least $700 billion in savings already available in the global consumer goods market. One area where manufacturers are converting is in the use of virgin plastic and turning to recycled plastic. The Refillery, Johannesburg’s very first plastic-free grocery store, is helping South Africans fill their pantries, while addressing the plastic pollution crisis.

South Africa recycled 334 727 tons of material into raw material, when compared to the recycling rate of 1 % in Europe, South Africa has an input recycling rate of 43.7 % for all plastics.

It’s important for all companies to use materials as efficiently as possible and increase the use of recycled and renewable materials, but for most manufacturers – including us – this isn’t always easy. Last year, more than 21,000 tonnes of recycled plastic was incorporated into our products, seven percent of the overall content. But that’s not enough. As a widely regarded as a leader in the space, we recently made a bold commitment to increase our use of recycled plastic to 30 percent by 2025.

HOLDING BUSINESSES ACCOUNTABLE

Given the responsibility that corporations have in creating a more sustainable world, customers, governments, investors, employees, partners and communities need to hold corporate leadership accountable for staying true to their word.

As part of this, organizations should detail their policies, progress and goals towards environmental and social responsibility. The only way to measure progress and set bold new commitments is to be honest about the achievements, setbacks, and goals – challenging themselves, their competitors, their industries and the government to do more. A commitment to principles and collaboration can spark a chain reaction.

It’s not to say that the transition into the circular economy won’t be challenging for businesses, but the positive implications and long-term business fundamentals make it hard for any organization to disregard the opportunity. Creating a positive social and environmental impsact is imperative for the survival of brands as they look to win new customers, attract talented employees and increase revenue. We all benefit when the private sector and governments work together to invest in our planet, people, and communities, enabling them to thrive.

As a business leader, it’s not always what you do, but how you do it that counts.

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