Sustainability is a buzzword. Sustainability is just about annual reports. Sustainability is a tool to appease investors. We could write a whole blog on the common objections – or dismissals – that are raised when it comes to implementing a more sustainable approach to product design and manufacturing.
There will always be critics. Doubters. People who see sustainability as an obstacle in the way of progress, rather than a catalyst for it. But the numbers don’t lie. Businesses who are embracing sustainability are on the front foot. Those who aren’t are in real danger of being left behind.
Running the numbers
A recent Bain & Company study found that while only 40% of businesses are on track to meet their sustainability goals, companies have an increasingly conscious and proactive base of consumers willing to pay 11% more for sustainable products and employees that will help.
IBM noted in a recent report that organizations that embed sustainability in their product design processes experience a 16% higher rate of revenue growth. They’re 52% more likely to outperform their peers on profitability. And they’re two times more likely to attribute great improvement in operating costs to sustainability efforts.
NYU Stern’s Center for Sustainable Business found in 2022 that the share of CPG products marketed as being sustainable grew twice as fast as conventional products, accounting for one-third of the total revenue growth in the industry. Customers paid 27% more for those products.
There is a need for a more sustainable approach – and there is a willing audience too. But in order to get there, there are still a few hurdles left to overcome.
Internal challenges
An organization with a fully functioning and proactive sustainability function is likely to reap many benefits. But getting that sustainability function set up in the first place is, for many, the more significant battle.
Our recent study with Forrester showed that 27% of respondents placed ‘create a dedicated sustainability function within the organization’ as their top initiative to prioritize over the next 12 months. The need is clear and well understood. However, 18% of respondents to the study saw breaking down data siloes to enable cross-functional collaboration as among their biggest headaches. Such data siloes are the hallmark of organizations not yet ‘mature’ enough to fully realize the benefits of embracing an approach with sustainability front and center.
It’s also clear that, at least in part, there is still some way to go before there is proper acceptance of the role sustainability has to play in a business, particularly when it comes to reporting.
In the study, 66% of respondents showcased an awareness and understanding of the potentially severe impact on product and operations that not toeing the regulatory line would bring about. Furthermore, a full 10% of respondents ranked ‘strengthening regulatory compliance’ as their greatest business priority during the next 12 months, while 35% in total ranked it as being within their top 3 priorities. Out of the 10 options given to those surveyed, ‘strengthening regulatory compliance’ came top of the list.
However, that relatively low number indicates there is some way to go before there is a full understanding of the importance of increasing regulatory sustainability reporting. With only 35% of organizations having the initiative to solve the challenge, the research suggests an element of indecision and uncertainty, exacerbated by competing priorities coming from different angles.
The struggle to gain momentum
Currently, in more ‘immature’ organizations at least, sustainability advocates are struggling to gain momentum at the top table. And it’s not just competing priorities that are causing the problem. Interconnected governance issues continue to dominate top PLM challenges, with maintaining data, securing executive buy in, and breaking siloes causing the biggest headaches.
53% of respondents to the Forrester study struggle with securing executive support for incorporating sustainability in product lifecycle management, while half find it hard to obtain budget to gather material, component, and supplier intelligence integral to optimizing their product’s quality, cost, and sustainability. Over half experience difficulties measuring and quantifying the environmental impact of their products which can be a factor for the lack of leadership alignment. These governance challenges are a manifestation of poor maintenance of availability, cost, sustainability, and performance data in manufacturer’s material and component libraries – an issue for 49% of decision-makers.
Lacking the necessary data means that sustainability advocates are unable to take the necessary measurements, ultimately meaning that the support and budget they need to continue their work is not forthcoming. It’s a cycle many are finding hard to break.
It’s also a problem not limited by borders. Across US and European markets, governance obstacles are widespread. European respondents in particular highlighted their struggles influencing a strategic shift to sustainability, commonly citing a lack of management commitment when it comes to driving substantial changes (46%) and difficulties developing a business strategy for sustainability (44%).
Data management challenges remain fundamental and acute. When asked which three challenges create the most profound impact, leaders hone in on their data shortfalls: one-in-five decision-makers rank maintaining libraries with up-to-date data rises as one of their biggest issues.
Data siloes hinder stakeholders across functions as they balance costs, risks, and sustainability criteria in product design and sourcing. An inability to embed multi-criteria data around sustainability and resilience in their generative design processes handicaps manufacturers with less mature PLM processes. Even more advanced manufacturers are challenged by the ongoing maintenance of aspects of their materials and components libraries.
Remedying the problem
Solving the problem again comes down to one key thing: data. A better and more reliable collation of availability, cost, sustainability and performance data eases the burden of obtaining budget in order to gather material, component and supplier intelligence. Similarly, better data libraries, ensuring up to date data and breaking down data siloes are all key when it comes to enabling cross-functional collaboration and ensuring that sustainability-focused voices are heard.
A business looking to succeed and grow should understand that building high-performance, cost-effective, sustainable products will create a competitive advantage. Sustainability, implemented correctly, can be a significant differentiator when positioning and marketing products.
Manufacturers must become quicker, smarter, and — given the urgency of sustainability — more environmentally conscious to thrive. They need to become more efficient and effective as they design and source products.
Data quality and accessibility form the foundation of efficient product design and sourcing, and both are significantly improved when adopting a product lifecycle intelligence solution. By modernizing product innovation processes and platforms, senior leaders at manufacturers will not only be able to satisfy regulatory mandates for product-level sustainability, but will also be able to empower designers with product lifecycle intelligence in order to modernize product innovation and achieve balanced product cost, performance, and sustainability goals.
Whether it’s people, processes, LCA software data or technology – or a combination of all four – that currently present the biggest obstacles to embedding sustainable practices in an organization, one thing is clear: those who are able to move those obstacles will thrive. Those who don’t – or won’t – will find themselves facing an uphill battle.
