Sustainability strategy
For us at the FMCG Sustainability Institute, Strategic Sustainability – your differentiated Sustainability market position and strategy – is not the same as your everyday tactics to reduce impact and increase productivity. Understanding the difference helps you leverage Sustainability for competitive advantage.
Strategic Sustainability is:
- integral to the business model and fundamental to the business;
- a source of differentiation, builds organisational reputation with key stakeholders and helps branding;
- gives a leading edge through innovation, patents, licences, low cost, speed to market and first mover advantage;
- hard to copy;
- builds margin and returns via increased prices, lower costs, lower assets; and importantly;
- it is likely to be specific to the firm, in the organisation’s upstream business processes and is often externally focused.
Tactical Sustainability, on the other hand, is an ‘add on’ and does not impact core business – every firm can do it. It is not a source of differentiation; it offers no real leading edge (and in the case of carbon will become purely a compliance issue), and is easy to copy by competitors. It does not build margin because all firms use it and customers can compare and bargain. Tactical Sustainability is likely to be generic to the industry, in the organisation’s downstream processes and often internally focused.
Linking Strategic and Tactical Sustainability is Process Sustainability which focuses on improving key cross-functional and organisation-wide processes in order to make the organisation more sustainable. Some of the processes may be strategic in nature (such as new product design), whereas others may be more tactical (e.g. green procurement of ingredients and downstream supply chain). When considering Strategic Sustainability we look for process improvements that give strategic advantage.
These three levels of Sustainability: Strategic, Process and Tactical are linked together as illustrated in the diagram below:
This distinction is helpful for senior FMCG executives to see why Sustainability can be important for their organisation. Sustainability is much more than carbon offsetting, green procurement and charitable donations. Implementing Sustainability to significantly help organisational performance requires assessment and innovation in relation to the strategic aspects of Sustainability.
How do we formulate our Sustainability Strategy? A snapshot:
Rather than creating a separate Sustainability Strategy process, the FMCG Sustainability Institute works with the company’s current strategy process, but stretches the boundaries to the broader perspective of Sustainability. Doing this leads to many different questions at each step of the process, as illustrated below:
To find out more about how the FMCG Sustainability Institute can help you with your Sustainability Strategy, please contact us
