The new normal – why all businesses need to commit to sustainability

In an increasingly climate-impacted economy, companies around the world are waking up to the need to place sustainability at the heart of their business strategy.

What was once considered an extreme liberal discussion is now becoming mainstream practice, with a steep rise in sustainable business models and practices over the last decade.

Today, 90 percent of Australians are concerned about the environment; more than 90 percent of CEOs believe that sustainability is key for success; and 66 percent of consumers are prepared to spend more on a brand that is environmentally-conscious and sustainable.

This is not surprising when you consider the impact sustainability has, not only on the environment, but on the broader economy.

In a climate context, Australian industry is heavily dependent on weather stability. The agricultural sector accounts for 3 percent of GDP, and tourism an even weightier 7.1 percent. Additionally, environmental setbacks are making a large economic dent, with Australia’s recent bushfire crisis costing the economy $100 billion in disaster relief.

In a waste context, the benefits of a circular – as opposed to linear (make-use-dispose) – economy are also well-documented. By eliminating waste and conserving resources, circular economies are linked to greater net material savings, employment benefits and greater long-term resilience of the national economy.

Companies, industries and nations which go against the grain of society’s collective conscience will increasingly find themselves struggling to compete in the global marketplace, argues Dr. James Chin Moody, Chief Executive of Sendle.

“Ten years ago, resource consumption used to be linked to economic growth: the more you consumed, the better you did,” Moody told Informa Connect ahead of the SMH Sustainability Summit.

“However, this central thesis is beginning to change and will ultimately reverse. As the narrative shift continues, companies, sectors and economies that expend fewer resources, emit fewer emissions and prioritise sustainability will gain a competitive advantage. Eventually they may obsolete those which do the opposite,” he said.

Beyond the buzzwords

Recognising the need to act sustainably is an important step, but it represents just the first of what is essentially quite a lengthy and challenging journey, says Dr. Chin Moody.

“A lot of companies are unclear about what exactly sustainability means in the context of their business,” he said.

“For some firms – like manufacturers which rely on plastics in their packaging – it is more obvious what needs to be done. For others, it is less so.

“I think the key here is to realise that sustainability is about aligning incentives (employee and environmental) and improving the efficiency of the network as a whole.

“This could mean tapping into idle capacity – like making better use of empty returning vehicles, for any business which relies on transport; or finding new and creative uses for “waste” products.

“The technology and infrastructure which enables these practices is improving every day. It isn’t quite where it needs to be, but sometimes we need to get the ball rolling on the demand side to encourage further investment in this space.”

Paving the way

Companies like Nestle Oceania have been sending out a clear message to the supply market and investment community, to kickstart sustainable and circular-economy-related investment.
As part of a longstanding sustainability commitment, Nestle Oceania is striving to reduce its use of plastic by one third and make all of its packaging recyclable or reusable by 2025.
However, as Chief Executive, Sandra Martinez, explains to Informa Connect, a supply demand imbalance is making this a challenge.

“As a food company, we have a bit of difficulty in terms of finding proper food grade plastic packaging suitable for use in our value chain. Companies like us want it, but that doesn’t mean it exists,” said Ms. Martinez ahead of the SMH Sustainability Summit.

“There are systems in place to collect and process recycled soft plastics. However, they currently aren’t generating enough to meet demand.”
To overcome this, Nestle Oceania has set aside a CHF 1.5 billion (AUD 2.5 billion) fund to kickstart the supply market.

“By setting up this fund, we are sending a clear signal to the market that we want food grade recycled plastic and are prepared to pay for it. In other words, companies can and should invest in expanding the existing infrastructure,” she said.

In addition, the firm is partnering with stakeholders in its value chain to make sure its recyclable plastic is actually being recycled.

It is trialling a soft plastic recycling initiative in partnership with a waste management company, expected to reach more than 100,000 households.

Ms. Martinez says this initiative is exciting because it will serve as a proof of concept, enabling other companies and industries to follow suit.

“We will share our learnings with key authorities. Once we have demonstrated how successful it can be, we hope it can be replicated in other states,” she said.

Closing the gap

Brooke Donnelly Chief Executive of the Australian Packaging Covenant Organisation – and a fellow panellist at the SMH Summit – is also taking measures to close the sustainability gap.

She says every organisation throughout Australia needs to make a contribution in our quest to meet national packaging targets.

“Sustainability is an incredibly large, complex and shared problem. Not a single government, individual or organisation can deliver this change alone,” she said.

“Our entire organisational model works around the idea of collective impact. Everybody doing everything a little bit better and recognising they have a role to play. If one of us doesn’t get there, none of us will get there,” she added.

APCO has just launched the collective impact framework – “Our Packaging Future” – a call to action for Australian businesses and governments of all kinds.

“Our Packaging Future’ combines data and insights from more than 200 authors and contributors, to identify the current critical challenges,” said Ms. Donnelly.

“It then maps the strategies required to move away from our current “take, make and waste” approach to managing packaging.

“The strategies address issues of packaging design, improved collection and recycling systems and expanded markets for used packaging, and provides a systemic, whole of environment approach to building Australia’s sustainable packaging future and achieve the national packaging targets by 2025.”

 Zooming out and in

In addition to systemic measures, Nestle Oceania recognises that initiatives which target individual employees can make a big difference.

In a bid to extend its sustainable practices into households and beyond business hours, the firm implemented a company-wide ban on single-use plastics and coffee cups in its premises.

To encourage employee buy-in, the firm also devised a competition, whereby departments which upheld these new rules to the highest degree were rewarded.

“The uptake was really effective and there were positive knock-on effects. It encouraged our employees to rethink their approach to sustainability outside of the office in terms of their everyday lives,” said Ms. Martinez.

“We are proud that we played a part in this influence and hope that other companies will also strive to leave a legacy of sustainable practice beyond their business operations also.”

Dr.  Chin Moody will deliver a presentation at the SMH Sustainability Summit, hosted by Informa Connect. Ms. Martinez and Ms. Donnelly will form an expert panel at the summit, joined on stage by Coca Cola Chief, Alison Watkins and Visy Executive Chair, Anthony Pratt.

The Summit is due to take place 7 September 2020 in Sydney.
 
Learn more and register here.