Businesses aiming to generate sustainable profits need to make sustainable products, says AkzoNobel. If you don't, someone else will
We live in a world where consumers are increasingly concerned about the impact of the products that they use, resources are growing scarcer and where regulators are increasing the requirements for products to be more environmentally friendly.
That means that businesses that wish to generate sustainable profits in the future need to make sustainable products. If you don't, someone else will - look at the success of Tesla in making inroads into the electric car market, for example, or the way that solar technology is disrupting the business model of the traditional utilities.
Many people see sustainability as a drag on companies' ability to create value, and something to be resisted, but it is increasingly clear that it is an enormous opportunity for everyone in the supply chain.
At AkzoNobel, for example, we have a target of earning at least 20 per cent of our revenue from products with a sustainability advantage for our customers - what we call Eco-Premium products - by 2020. These range from paints such as Dulux Weathershield KeepCool, which can reflect infrared radiation to help keep buildings cool in warm climates, to Intersleek, our biocide-free antifouling coating that, by stopping organisms growing on ship hulls, reduces the ships' drag, the amount of fuel used and CO2 emissions.
Sometimes we take our inspiration from nature, as with our additive for road salt, Ecosel Asphalt Protection, which is inspired by the ability of certain animals to withstand extremely low temperatures and stop themselves from freezing.
To produce sustainable products requires a process of sustainable innovation. But what is sustainable innovation and how does it differ from what we did before?
Innovation is about anticipating people's needs and figuring out how to meet them.
Ultimately customers buy products that benefit them - but alongside the more conventional benefits of making life easier or more productive, consumers are also starting to consider wider issues such as how resource-efficient materials are and whether products can help them be more sustainable in their daily lives.
Sustainability is like a lens that allows us to look at the world differently and help us to meet our goal of delivering more value with fewer resources.
"It's tempting to adhere to the lowest environmental standards for as long as possible," says a Harvard Business Review article entitled 'Why Sustainability is Now the Key Driver of Innovation'. "However," the article adds, "it's smarter to comply with the most stringent rules, and to do so before they are enforced. This yields substantial first-mover advantages in terms of fostering innovation."
But it's not just about compliance. Nor is it just about Research, Development and Innovation - the culture of sustainability needs to permeate the whole business, from procurement to sales and marketing. And it's not just about working within the organization. You need to work throughout the value chain, with your suppliers and your customers - but also with their suppliers and customers as well as other stakeholders such as NGOs and academics. That is where you gain access to new ideas about what is possible and what is useful. No one company or individual has all of the best ideas.
That's why we encourage open innovation through our Open Space initiative. Companies need to do things smarter and they need to do them faster. And we are convinced that we can do that best by joining forces with other innovators out there. When everyone pulls together, they can overcome formidable obstacles and reach their goals sooner rather than later.
One way that sustainable innovation works is by helping to make your operations leaner and more efficient. So, for example, in our specialty chemicals unit, we are looking at ways to make our electrolysis processes - the traditional bedrock of the industry - less energy intensive.
Another innovative process is to turn problems into solutions - our industrial chemicals arm has, over the last four years, created a number of projects to make new products and processes that use CO2 as a source material, in collaboration with SINTEF, a Norwegian research institute.
Making changes to innovation processes can be challenging, not least because of the need to manage different time frames. Whether we like it or not, businesses are judged on their performance from quarter to quarter while sustainable innovation requires thinking five to 10 years ahead. It's a challenge that requires strong leadership and big decisions internally that demand significant resources over the long term.
At the same time, this is an area that stimulates an enormous amount of engagement and motivation among our workforce and unleashes a huge amount of innovation as well as helping to attract the right people to our company. We know that sustainability is good for business and that good business is all about being sustainable.
Andrew Whittaker is RD&I Director at AkzoNobel