Have you known anyone to get super-excited about being told they need to go on a diet or spend less money? Yeah, me neither. Even those who are open to the idea often find that the initial thrill of the challenge fades, leaving them frustrated or resentful.
I thought about this aspect of human nature after a recent chat with a group of supply chain executives. One told me that he was tired of sustainability initiatives. Another said she thought corporate social responsibility and sustainability were “outdated.” “Whoa!” I thought. But the social and environmental problems that these programs are designed to solve are so far from over.
By asking questions, I learned that this group perceived the term sustainability as tightly linked to corrective action. In the name of sustainability, they’ve been asked to cut energy consumption, conduct more factory audits, lighten their packaging and curb carbon emissions. One executive said that it feels like it’s never enough — there’s always more to fix. You can see how it feels not so different than the imposed diet or budget.
Circular economy? Sure, let’s talk
On the flip side, this group was really excited about the promise of the circular economy. When I asked why, they said they saw it as a chance to get involved in innovation and make exciting impacts on the world. They thought supply chain had something unique to offer, that our expertise was central to making the circular economy work.
Now, here’s the lesson for supply chain leaders who want to rejuvenate their sustainability programs. The words we choose to describe our initiatives matter. Words affect mindsets. Mindsets make or break our opportunities to innovate.
In reality, the circular economy doesn’t replace sustainability. It’s just a new way of thinking and talking about how to achieve our sustainability goals. It’s a model that asks us to adapt our products and operations so we can grow our businesses while also protecting the world’s natural resource supplies.
If we want to lead our companies to run sustainably, we should choose our words carefully. We should talk less about compliance and cutting and correction, and more about unleashing innovation and business growth by doing what’s right for people and planet. Recent research shows that we’re not there yet.
Reframe the conversation and the mindset to focus on innovation and growth
Now is the time for supply chain leaders to reframe the sustainability conversation. In research we conducted last September, Kamala Raman and I learned that most business leaders have not yet hitched their circular economy strategies to growth goals. When asked about the leading three drivers of their circular economy strategies and initiatives, only 51% of respondents cited growth opportunities as one of their top three drivers, and just 13% made it their first choice. Compare that with the 60% that ranked cost optimization as the leading driver, with 28% making it their first choice.
I suspect that we’d hear similar drivers when asking companies about general sustainability programs: cut, curb, cost control. But what we know from our interactions with supply chain leaders is that we can look to many examples of companies using circular economy as a platform for innovation that drives business growth.
- HP’s InstantInk program ships replacement ink cartridges directly to consumers, building customer loyalty while cutting “material consumption by … 57% per printed page.”
- Brightstar, traditionally a logistics and fourth-party logistics supply chain services provider, leveraged its expertise to become an enabler of the $17 billion market for used mobile phones. By doing so, it is extending product life cycles and reducing electronic waste.
- Schneider Electric offers “energy as a service” that extends materials life cycles and reduces its carbon and resource intensity. At the same time, it reaches customers who prefer opex over capex spends and by doing so, it expects positive results for turnover and EBITA.
Supply chain’s voice can change our thinking about sustainable business
Another exciting takeaway from our study was that 85% of our respondents expect supply chain to have full or shared responsibility over circular economy strategies and initiatives. As your company develops strategies for a more sustainable, circular future, your peers will be looking for your leadership and listening to your voice. How will you shape the conversation about the growth potential of sustainable business? How will you rally your company’s capacity to innovate? We’re excited to hear what you have to say.
Pam Fitzpatrick, Senior Director, Analyst, Gartner Supply Chain