More and more companies see the development of sustainable solutions as both a challenge and an opportunity. This is confirmed by a survey conducted by Longitude, a company that is part of the Financial Times: 83 percent of the companies surveyed see sustainability as a business opportunity, 72 percent see sustainability as a lasting trend and 74 percent do not want their competitors to develop a lead in this area.
The survey questioned 200 executives from the FMCG, retail, e-commerce and consumer goods sectors. In addition, 1,500 consumers were interviewed to find out their attitudes and beliefs about sustainability, their impact on consumer behaviour and expectations of sustainability implemented by companies.
The study also shows that business is increasingly responding to sustainability pressures. It focuses on environmental, social and governance (ESG) measures that transform companies from within. For example, they are rethinking their products and packaging solutions because they want to do something about pollution. This gives innovations a different focus. "Sustainability is the source of all disruption," says Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship at London Business School. Businesses play a crucial role in harnessing this disruption and bringing about change.
Challenge: Sustainability is not always measurable
If companies integrate sustainability into their daily operations, they must be able to quantify its impact. The study concludes that less than one-fifth of companies (18 percent) measure their sustainability performance. Less than half say they can link sustainability to financial performance. A large proportion of companies do not have the tools to first measure progress on sustainability and then link it to profitability metrics. These companies, however, have an obligation to their shareholders and are thus caught between sustainability goals and economic profit thinking.
Determining sustainability in the supply chain
Many companies are focusing their innovations on reducing packaging and waste, with 68 per cent of companies citing packaging materials as their biggest sustainability challenge. This is followed by the collection of valuable waste and recycling (59 percent). Almost half (46 per cent) say that the most expected benefit of sustainability practices will be cost savings through waste reduction.
One company that specialises in optimising all its customers' packaging related processes and making sustainability measurable through powerful systems is Smurfit Kappa. It is one of the world's leading producers of paper-based packaging and has already analysed and optimised 80,000 supply chains. With the new Supply Smart Analyzer tool, Smurfit Kappa can calculate how much CO2 is reduced and explicitly show how much money is saved when converting packaging concepts. With the Analyzer the company closes the gap between sustainability and shareholder/profitability pressures.
Almost 80,000 EUR savings thanks to Supply Smart Analyzer
An example from the retail sector: Smurfit Kappa agrees clear KPIs with the retailer. While these were previously defined as 67 percent target achievement for shelf-ready packaging for retail, such as Edeka or Rewe, in the food sector, they were increased to 90 percent in this product segment.
How can this improvement be achieved? It results from the sum of the optimisation of individual items, such as reducing the stacking area of the packaging, increasing truck loading efficiency, reducing damage along the packing lines while at the same time increasing the packing speed, and making optimum use of shelf depth in the supermarket, including uncomplicated shelf filling. The overall costs are compared in different scenarios according to measurable criteria and alternative packaging designs are tested digitally against each other.
This consideration refers to the entire value chain - from the field through production and logistics to retail. In this specific example, the result is a reduction in packaging-related costs from EUR 707,879 to EUR 629,556 with a simultaneous reduction in CO2.
Smurfit Kappa has developed the Supply Smart Analyzer, a tool that enables companies to accurately measure their sustainability efforts.
www.smurfitkappa.com
