Innovation in Corporate Sustainability

In our visit to the MIT Sustainability Oriented Innovation Summit, we had the opportunity to sit in on three workshops concentrated on the corporate aspect of Sustainability Oriented Innovation (SOI). The speakers brought together in each workshop provided insight into the world of SOI and how companies are integrating corporate sustainability into various aspects of business. Some of the key points included how corporations are influencing innovation, how to measure the benefit of SOI, and how SOI is being incorporated into new products.

The diversity of these speaker panels gave us a peak behind the curtain of several industries which revealed some amazing progress in the world of sustainability but also uncovered some of the struggles they are having to overcome. It’s encouraging to see large corporations working toward sustainability because their impact is so tremendous, but it’s also evident that we still have many obstacles to overcome.

Sustainability as a Driver for Corporate Innovation

Corporations are influencing SOI on many different levels. Because large corporations have access to so many resources and their actions have such a reaching impact, every aspect of their business poses an opportunity for massive improvements through innovation. Increased efficiency is one of the more well-known aspects of innovation in business and it has a considerable impact on decreasing our environmental footprint. Many corporations are realizing that increased efficiency not only saves money but it also has much larger benefits in terms of social and environmental impact.

In fact, sustainability is quickly becoming a business strategy. One of the road blocks to integrating sustainability measures into a company is the fact that most large companies operate in silos, with each department hyper focused on optimizing and increasing the productivity of their sector. Sustainability, however, has an impact across all silos and can’t operate separately.

The key to successfully integrating sustainability oriented innovation in these types of situations is the ability to speak the language of other sectors of the company. It’s imperative to be able to show the CFO how sustainability measures will also help the budget and demonstrate for the plant manager how it can fold into increased efficiency and higher productivity. Every company entity needs to be able to see the value of innovation as it pertains to them, not just how sustainability is going to help reduce the environmental impact of the company as a whole.

The speakers were proud to be leaders in sustainability minded corporations and they provided eye opening insight into the progress made in this area and what the future holds. As foreshadowed in the opening summit keynote, collaboration was stressed as a critical piece of the sustainability puzzle. We are seeing groups like the sustainable apparel coalition and the international aerospace environmental group come together to “self police”, setting goals, sharing information, and measuring progress.

Overall the panelists speaking about corporate innovation and sustainability remained very positive, predicting that in five to seven years 32 million jobs will open up in the sustainability sector. In fact, they suggested that all jobs will be sustainable because sustainability will be the primary business driver across all industries and positions. Despite the positivity, they did acknowledge that we still have a long way to go and that we need to stress a change in mindset, a fundamental prerequisite to spurring sustainable innovation.

The ROI of SOI – How We Measure Our Impact

The successful implementation of sustainability in business depends on our ability to measure our return on investment. Even companies dedicated to diminishing their environmental and social impact need to make a profit and it’s critical to make the right decisions that make business sense. This is why the metrics of SOI are so valuable.

Metrics are our indicators for what’s working and what isn’t. Businesses can experiment on a small scale, measure their impact without much risk, and then scale their innovation as they see the benefits. Some metrics can be difficult to measure, however, and it’s a problem being addressed through collaboration.

One of the concerns with sustainability metrics is that we are “swimming” in data but our analysis isn’t set because we don’t have industry standardization for our metrics and the context of information changes the perceived value. Most companies now are gauging their own level of return on sustainability investment by seeing how they stack up against their competitors, but there are several movements to create standardization throughout industries. Also, analyzing data in context can be difficult because even across the same industries impact may vary widely based on geographic variables. For example, two manufacturers may have the same water usage, but if one is in an arid region such as Arizona and the other in a wet region such as Massachusetts, the environmental impact will be much different.

Regardless of standardization and context, increases in sustainability investment will continue to improve brand images. Investors can see this opportunity for improvement and increased sales via bolstered brand value, but we are still struggling with putting a dollar amount on these assets. If we can convert social metrics into dollars and cents of added value for a company, that is the “holy grail” of SOI metrics. The ability to quantify the ROI on social and sustainability investment is the biggest barrier to scaling, and standardization plays a critical role in leading the way here.

Integrating SOI into New Product Design

While there is a lot of effort going into measuring and improving the social and environmental impact of existing processes, there is just as much effort put into the development of new products with sustainable innovation in mind. A large portion of SOI in new product design and development is trial and error. The panel speakers for this specific workshop all highlighted areas where their respective companies have made progress, revealing how much of a learning process it was.

The diverse representation of panelists helped us to see how SOI in new product design and development is different across various industries. Representatives from three companies, Biogen (biotech), L’Oreal (cosmetics), and General Electric (appliances) shared their learning experiences, both successful and unsuccessful.

Developing products with a concentration on integrating sustainability measurements and goals is new for most companies and industries. The emphasis during product design is still on product performance, but by including sustainability in the development process innovation is born. As discussed by the panel, in order to integrate sustainability into the product development process a company has to have strong leadership to provide vision and direction, qualification to outline what needs to happen to bring the vision to life, and execution to ensure the plan is fulfilled. At this point in the corporate sustainability movement where SOI isn’t tied exactly to ROI, most innovators are breaking ground because of their leaders who have a progressive vision.

One of the biggest struggles progressive companies are dealing with is the consumer awareness gap. There is a strong educational component tied in with developing sustainable oriented products and companies are having to get better at telling that story. A company may be excelling far beyond their competitors in social and environmental impact, but if they cannot convey that value to consumers it is lost.

Companies will see a return on their SOI when they can successfully implement and convey their success to consumers. One of the best examples comes from GE’s Ecomagination project which is their strategy to “enhance resource productivity and reduce environmental impact at a global scale through commercial solutions”. In this strategy GE invests in greener and more efficient technology to decrease the environmental impact of their operations and the operations of their strategic partners. Ecomagination was launched 10 years ago and has now generated $250 Billion in revenue for the company.

Summary of Corporate Sustainability / SOI

In the world of corporate sustainability we have learned about breakthroughs and setbacks. In order to move the meter forward internally, we need to operate across silos and improve communication to demonstrate the value sustainability offers for each area of business. Standardization of sustainability metrics and the ability to make the connection between ROI and SOI are one of the major challenges holding innovation back. Finally, consumer awareness is an essential piece of realizing the value of social and environmental efforts.

Despite these challenges, corporations are still striving to innovate with sustainability in mind and this particular area of SOI is exciting because of the scale of its impact. The discoveries of the leaders in this space are paving the road for others to follow and increased collaboration will be a catalyst for the journey.

Edited by David Evans