company’s sustainable business model. The blueprint
was easy to communicate internally and externally
and audacious enough for stakeholders to notice.
2. LOOK AT THE ENTIRE VALUE CHAIN. To
identify the best leverage points for value creation
via a sustainable business model, it is important to
do a thorough analysis of the company’s performance with regard to both the planet (carbon,
water, and waste footprints) and people (taking
stock of working conditions). Some companies
miss the fact that such analysis needs to be conducted across the entire value chain, not confined to
the company’s operations alone.
Why does this oversight occur? First, implementing a sustainable business model is often
classified as a change-management initiative (as discussed above), and those initiatives typically don’t
go beyond the confines of the organization. Second,
focusing on the organization rather than the value
chain is easier in terms of resources. Third, in global
supply chains, different management concepts and
cultures often clash, making analysis difficult. 3 As a
result, companies expand their sustainability programs to include suppliers but often struggle in
implementing their initiatives. 4
However, looking at the entire value chain is critical, as the opportunity to reduce one’s footprint is
often bigger outside organizational boundaries.
Total value-chain assessment also allows a company
to identify “material issues” and thus focus its efforts.
Results indicate that companies with strong performance on such material issues outperform those
with poor performance on them — a finding consistent with material investments being value-enhancing for shareholders. 5 The value chain
describes the full range of activities that are required
to bring a product or service from conception
through the intermediary phases of production (
involving a combination of physical transformation
and the input of various producer services), delivery
to final consumers, and final disposal after use.
Embedding a sustainable business model thus requires an integrated perspective, incorporating both
marketing and supply-chain considerations. From a
marketing perspective, sustainability goals strongly
influence product design, communication, and channel selection. From a supply-chain perspective,
sustainability goals strongly influence component selection, materials sourcing, production, packaging,
distribution, and recycling decisions. For a company
to promote a sustainability agenda to its markets, it is
critical that the enterprise consider the entirety of
Tools such as carbon- and energy-footprint
analysis and life-cycle assessment help companies
identify the sources of waste in supply chains. Life-cycle assessment is particularly useful: It captures
environment-related inputs and outputs of entire
value chains, from raw-materials supply through
product use to returns. This has helped companies
identify the parts of their supply chains that use the
At Unilever, armed with the realization that the
company would have to fundamentally change the
way it did business, the first step was to perform an
internal measurement across the value chain of the
environmental impact of the company’s products —
in terms of waste, carbon dioxide emissions, water,
and packaging. The key point is that this assessment
was done across all brands, all countries, and total
value chains — to see, for example, what the carbon
impact was in cooking, taking showers, deforestation, or food waste. Notably, Unilever’s analysis of
its entire value chain revealed that much of its footprint was at the consumer end, involving issues
such as using more product than necessary or improper end-of-life disposal. This analysis revealed
a tremendous opportunity to reduce Unilever’s
environmental footprint, as well as to focus the organization and to align resources.
Other companies also do footprint analyses
across the value chain. For example, Coca-Cola
Companies expand their sustainability programs to include
suppliers but often struggle in implementing their initiatives.
However, looking at the entire value chain is critical.