B2B: Ignore Sustainability at Your Own Risk
/
Consumers are already driving major transformations around sustainability, with B2C businesses making changes all the time - think more vegetarian options at fast food restaurants, the disappearing single-use shampoo bottles at your favorite hotels, and the rise of secondhand at some of the country’s top department stores.
Sustainability and social responsibility are no longer niche concerns, they are mainstream. And, the trend isn’t limited to B2C. To get ahead of the curve, B2B businesses need to start making some changes, too.
Is Sustainability Here to Stay or is it Hype?
A study by NYU Stern’s Center for Sustainable Business shows a direct link between sustainable products and companies and growth. They found that “50% of CPG growth from 2013 to 2018 came from sustainability-marketed products.” This is despite the fact that these products represent only 17% of the market.
It's clear that consumer growth is coming from sustainability, and it’s here to stay
B2B and Sustainability
In the past decade, B2B quickly followed a few leads from B2C. The purchasing decision in many businesses now includes user testing.
B2B users expect the same “consumer-like” simple and intuitive user interface from the solutions they use at work. B2B marketers have adopted B2C approaches including social media marketing, visual marketing, and videos. B2B companies are offering the equivalent of the B2C “customers who purchased x also like y” when they recommend cross-sell and up-sell add-ons.
I predict sustainability will be the next frontier where B2B will be a fast follower of B2C. An ever-growing number of companies will be transparent in addressing their positions on, investments in, and commitment to sustainability head on. And I predict the B2B customer will demand this transparency.
In addition to “it’s the right thing to do for our planet,” another major sustainability driving factor is a matter of workforce demographics.
The most prevalent generation of workers as of 2017 are the millennials at over ⅓ of the American workforce according to Pew Research. This group is on track to become half of the workforce in 2020. Consider a few survey results that put the millennial’s climate position into perspective.
While the majority of Americans are concerned about global warming either a great deal or a fair amount, it’s important to note Gallup’s generational gap findings that 70% of 18-34 year olds are worried, as opposed to 56% of those 55 and older.
Another survey cited by Fast Company finds “nearly 40% [of millennials] said that they’ve chosen a job in the past because the company performed better on sustainability than the alternative,” as compared to 17% of baby boomers.
Climate change will impact all industries, however some will experience pressure sooner than others. The Financial, Insurance, and Healthcare industries are already feeling the results of wildfires, hurricanes, and other “once in a lifetime” disasters that are occurring year after year.
Over 930 organizations globally have signified their support for the task force on climate-related financial disclosures (TCFD), from Bank of America to Vanguard. The goal of this task force is to develop climate related financial disclosures so companies and investors can measure, assess, and compare risk. The TCFD also reflects the growing number of investors seeking “responsible investments”.
Whether driven by the workforce or investors, companies must consider how sustainability issues may impact their future.
What will the physical, social, economic, and environment impacts be to employees, customers, and partners? What about supply chain, packaging, or marketing?
The entire end-to-end lifecycle must be evaluated, and mitigation plans put in place to minimize risk and future-proof the business.
What Can Companies Do?
The first step a business needs to take is to commit to transparency. In fact, the tide is already turning, with corporations sharing their Environmental, Social, and Governance (ESG) progress and results in addition to their financial reports.
Staying quiet on sustainability is not an option. Customers and employees want to know where you stand.
Many companies demonstrated their commitment to the Paris Accord by signing a pledge to continue to cut emissions called We Are Still In (WASI). A few standouts are Kaiser Permanente who plans to “be carbon neutral in 2020,” Salesforce who says they will “reach 100% renewable energy by 2022,” and Microsoft, who plans to “meet the Paris targets two decades ahead of schedule.”
I’ve recently heard about a few companies making carbon offsets to offset the impact of attendee travel. Organizations can do this on their own, or they can work with companies like Radisson hotels which offer carbon neutral meetings.
Many companies are being recognized for making positive transformations, including Dell and Samsung for their packaging, IBM, Sprint, and Adobe for their smart buildings, and Google, Cisco, Apple, and Amazon for their renewable energy innovations and investments.
However there are still huge changes that have to occur, and at a faster rate.
Even small businesses can take steps, as can all of us as individuals. We can start by analyzing our usage of resources - from the bigger picture supply chain to the smaller picture how we stay hydrated throughout the day. We can assess the impact and our ability to make a change thereby prioritizing the items to tackle. And we can launch projects that can help us do well while doing good.
Our employees, users, decision makers, purchasers, partners, and investors will demand a focus on sustainability.
The question becomes: how will each of us respond?
Looking for ways to get ahead in 2020?