Below, explore five ways consumer companies can broaden partnerships to unlock value from sustainability initiatives.
EY-Parthenon global consumer and retail sector leader Jim Doucette describes how one leading brand innovated the bathroom staple to not only lean into consumer demand but get ahead of future regulations.
Toothpaste containers are complex mixes of metal and plastic that have been challenging to replace with recyclable materials while offering the same level of product protection. So, the brand worked with suppliers to identify the right sustainable raw materials and began experimenting, with the goal of creating a tube that could authentically promote its recyclability on its box.
Once they found the perfect formulation, they didn’t keep it a secret. Instead, the brand shared it with competitors to establish an industry standard for what constituted “recyclable” that regulatory bodies could easily review and adopt. As a result, the brand aligned its existing production processes with increasingly sustainable public policy—as opposed to having to scramble to comply with future mandates.
“To be bold in your sustainability approach, you need to get rid of long-held beliefs and tackle what’s in the ‘too difficult’ box, collaborate to find solutions and share with your competitors,” Doucette says.
The humble toothpaste tube offers a solid example of the benefits of collaborating with competitors.
Become The Benchmark
Shape Priorities Around Stakeholders
Yet fewer than 6% are prioritizing collaboration with policymakers in their sustainability strategy.
Similarly, executives overwhelmingly believe consumer trends are driving their sustainability initiatives, but less than 1 in 10 plan to shape those trends by proactively educating consumers.
These disconnects in strategy and action indicate a lack of close collaboration with two key stakeholders. Recalibrating strategies to more closely align with their needs can help strike that critical balance that decides what to do today to be in the best position tomorrow.
“If you want to lead in sustainability, you need to take a forward-thinking, holistic approach,” Doucette says.
Nearly 8 out of 10 executives agree that a closer public-private partnership will be important to achieving their company’s sustainability goals.
A misaligned ecosystem =
a mismatched strategy
Consider The Bigger Picture
“It’s like with digital: you had hardware companies and you had software companies—why should they work together and help each other? They each brought their own separate value,” explains EY EMEIA sustainability leader Reto Isenegger. “But, at the end of the day, they’re selling a system and the impact needs to be calculated right across their combined value chain to the end user, which in this case is the consumer.”
Similarly, a retailer that incentivizes its suppliers to source more sustainable materials ultimately helps achieve its own sustainability goals—which consumers and investors reward.
Both consumers and regulators provide signals for new revenue streams and profit pools, on which companies attuned to their ecosystem can take action. That could be a new sustainable food line, repair and rental model or premium shoes sourced from a manufacturer that abides by human rights requirements.
Working with a broader group of stakeholders also means benefits ripple across a wider ecosystem, and the entire length of the value chain can be brought into consideration.
Pool Resources And Risk
The research EY commissioned with Economist Impact finds that 83% of respondents rated the efficiency and resilience of supply chains as a driver of their company’s sustainability initiatives. Key to resilience, Doucette explains, is sharing risk and reward.
“There are win-wins all the time in sustainability for companies, consumers and regulators,” he says. “You just need to get your solution to scale so that it’s cheaper for the consumer and better for the planet.”
Embracing a stakeholder ecosystem means companies open up their supply chains for participation by competitors and outside businesses so more parties have a stake in reducing costs, avoiding the same risks and proactively establishing mutually beneficial standards that avoid future regulatory headaches. It also means the negative impacts of volatility are shared, as are the positive impacts on society.
Recent global volatility has highlighted weaknesses in an “every man for himself” approach to manufacturing.
You’re not on your own anymore as a company. By taking a stakeholder ecosystem view, we can make business work for sustainability and sustainability work for business.”
Reto Isenegger
Europe, Middle East And Africa Sustainability Leader, EY
Don’t Just Sell To Customers
Retailers and consumer goods producers listening to signals like this can leverage their ecosystems to introduce or adapt business models, serving the consumer in a way that appeals. But they can also educate consumers and shape their habits in the future.
For example, a company that innovates a recyclable material can then inform consumers how choosing products with that material helps them become more sustainable shoppers—proactively shaping consumer behavior. Doucette explains that like the toothpaste tube, any brand can rethink its manufacturing process as part of a narrative that connects with customer values.
“The reality is that if your material doesn't have recovery value, it's eventually going to be valueless and will go away,” he says. “Whoever can bring the story of the first renewable [form]…of that material to their customer will be at an advantage, as will the rest of their ecosystem.”
Sustainability-centered consumer behavior change has nearly tripled the global apparel, footwear and accessories resale market since 2020.
On Regulators
On Consumers
68
%
Of executives say a lack of regulatory indicators or targets makes sustainability challenging
Regard collaborating with policymakers as critical to scaling sustainability
%
6
Source: Economist Impact research commissioned by EY, October 2022
Say educating consumers on sustainability is critical in next 3-5 years
%
9
%
88
Agree consumer trends drive sustainability initiatives in their firm
Source: EY Future Consumer Index
%
72
say companies should drive sustainability outcomes
Consumers want businesses to help them live more sustainably
%
69
would rather repair products than replace them
%
61
want to learn more about shopping more sustainably
%
55
say purchasing and behaving sustainably is a guiding principle in their everyday life
