#107 – GREEN GIANTS MAKE OVER $100 BILLION WITH SUSTAINABILITY – KELLY EISENHARDT

Kelly EisenhardtThere are nine corporations that make over $1 billion in annual revenues from products or services with sustainability or social good at their core. These companies are known as the Green Giants.

Freya Williams is North America CEO of Futerra, a global sustainability communications and consulting firm whose clients include Danone, SAB Miller, Estee Lauder, AXA Insurance and Unilever.  Her long standing career as advisor to such companies, in addition to her work with the United Nations, has helped provide insights for her new book, “GREEN GIANTS: How Smart Companies Turn Sustainability into Billion-Dollar Businesses.” With a primary focus on teaching companies how to incorporate sustainability, responsibility and social good into their businesses and brands, and make money at the same time, she has many successes to share.

You have a new book coming out called “GREEN GIANTS: How Smart Companies Turn Sustainability into Billion-Dollar Businesses.” What is a Green Giant and how are Green Giants defining business history?

The Green Giants are nine companies each generating over a billion dollars in annual revenue from products or services with sustainability or social good at their core. Selling everything from burritos to airplane engines, they realized the potential to not just conserve, but make, money from sustainability-inspired innovations. Collectively, these more sustainable business lines generate over $100 billion annually.

How do these companies impact the lives of global consumers and can you share a few examples?

Their impact is broad and large but perhaps their biggest impact is that they’ve made products not just greener, but better, so consumers no longer have to choose between performance and sustainability..

Tesla is one of the Green Giants. They saw that the majority of environmentally friendly vehicles traded off performance for sustainability and as a result, only appealed to a niche “green” customer. Tesla wanted wider appeal. They wanted to build an environmentally sound product that appealed to consumers focused on performance. Tesla is not just an environmentally superior product, it’s the highest performing car Consumer Reports has ever tested. Its competition is not the Toyota Prius, it’s the traditional luxury automakers.

Chipotle has done something similar. They source their meat from humane, ethical sources, partly because it’s the right thing to do but also because they believe this is tastier food that will make for a better burrito. So consumers are drawn to the food for the superior taste, and love the added benefit of choosing a more environmentally and ethically sound product. Chipotle’s performance shows this is a winning combination for consumers. Their revenues have increased four-fold in the last years as their focus on better ingredients has increased. Their competitors have been forced to follow suit because consumers now demand these better ingredients.

All of this disruptive innovation creates a pathway for others to succeed. These companies have created a hybrid model where transparency and responsibility has taken over from the last century’s focus on functionality only.

Because Green Giants tend to lead the way within their industry, are brands more at risk for criticism due to over exposure?

It takes a lot of courage to be disruptive and then stick to it.

Courage, leadership, and passion all play a part in the success of the Green Giants. At each company, the strategy is led by an Iconoclastic Leader who has gone out on a limb to drive change. And sure, they do face criticism. Some people are waiting for them to fail. Others say they’re not doing enough.  But there is also great upside to risk. These companies have finally cracked the code on sustainable, profitable business and the results are paying off for their companies and all of their stakeholders.

Don’t forget that businesses also face criticism for not engaging in sustainability programs. There is a risk to leading and a risk to lagging. In my view, it’s better to get caught doing the right thing. Plus, as the Green Giants prove, if you do nothing, you’re leaving this billion-dollar opportunity on the table.

In your book, you describe six traits Green Giants have in common. How do these traits affect the way products are designed, manufactured, and brought to consumers?

My journey in writing this book was to research companies who have been successful building billion-dollar, sustainable business lines and then find out what these companies have in common.

There were six factors that I discovered.. In each case, the strategy is led by an iconoclastic leader. They practice disruptive innovation, have a purpose beyond profit,  sustainability is built in to their business, rather than bolted on, they have achieved mainstream appeal, and have established a new behavioral contract with their employees, suppliers, and management.

To expand on each quality a little further, if there isn’t an iconoclast driving the commitment in the top levels of the organization, then the company won’t have the commitment needed to build the billion dollar business, let alone implement sustainability in its core.

Incremental improvement won’t cut it. The company needs to believe in and employ a plan for disruptive innovation.  Green Giants invest in bringing successful, sustainable products to market.. For example, GE has demonstrated their commitment with the $25 billion they have invested in Ecomagination since 2005.

Green Giants are all guided by a purpose not only to be financially successful, but also to positively impact the world. It may seem counter-intuitive, but having a purpose beyond profit makes you more profitable than pursuing profit alone.

To fully realize the opportunity, sustainability efforts must be integrated with the overall strategy and operations of the company – or “Built In, not bolted on”. Many companies have departments that manage sustainability efforts. They are tasked with pruning for efficiencies and managing impacts. This is crucially important but it doesn’t drive billion-dollar growth. Green Giants don’t put sustainability into a side box. They embed sustainability into their corporate strategy, their cost and incentive structures, their organization and their operations. Nike has done a great job with this. They have integrated their sustainability teams with other teams like design and finance. They create a cross-pollination across the groups so that they can share knowledge and ideas.

The way companies succeed in a consumer base beyond the super-green niche comes down to their mainstream appeal. In the early days of green marketing, by relying on green cliches like tree frogs and green leaves, many companies inadvertently made their message only relevant to the 20% of consumers who care about sustainability. The green giants have figured out how to sell sustainability to demographics that might not put the same emphasis on sustainability. For example, 82% of consumers think that being green or sustainable is for women not men. As we talked about Tesla earlier, Tesla made sustainability “manly” with sleek lines and performance.  Tesla created mainstream appeal with people who love to drive and they made sure men knew it was not a punishment to drive their car but that it’s the best car ever.

When people think about businesses behaving badly, they think about things like the financial crisis. Green Giants take a different approach by implementing a new behavioral contract with employees and stakeholders. This can be seen in their approach to “pre-“responsibility, transparency, and experimental collaboration. “Pre-“responsibility is taking responsibility for the value chain before being pressured by outside sources, it requires being proactive. Being proactive leads to identifying risks and vulnerabilities and communicating concerns, which is transparency, and experimental collaboration is the willingness to be open with competitors to solve common problems.

If sustainability is not a fleeting fad but instead is an escalating business priority, why aren’t more companies embracing sustainability as mandatory business process?

We are seeing positive momentum. Ninety-five percent of the world’s two hundred and fifty largest companies now produce sustainability reports.

But the myth that sustainability and profit are at odds is persistent. The question I’m continually asked is, “What is the business case for sustainability?”

Profiling the Green Giants has enabled me to make the business case much more strongly because these companies are successful right here and now. The opportunity is in the present tense. And it’s billion with a B. Whether or not you believe in climate change or the social responsibility of business, this is an opportunity you’d be crazy not to seize.

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