The Business Case for Sustainability
Companies like Nespresso are using sustainability in competitive ways. Is yours?
Brian Becker | UPS
Linsey Welton | UPS
Greg Fischer | UPS
Myth: You can’t afford to be sustainable unless you’re a big company.
Fact: It’s good business to be sustainable — for companies big and small.
We’ve made the case for sustainability all week here on Longitudes, sharing stories of how leaders in government and business are finding innovative ways to reduce their carbon footprint. Now we’d like to share our story.
Interview with Brian Becker, Greg Fischer and Linsey Welton
Longitudes interviewed three UPSers, Brian Becker, Greg Fischer and Linsey Welton, to learn how sustainability can be a competitive advantage in today’s marketplace.
Brian Becker is a sustainability solutions manager who works with retail enterprise customers around the world. His job is to detail UPS’s sustainability initiatives, determine which actions can help them grow and explain how to share their sustainability story through co-branding.
Greg Fischer is an enterprise account manager in the retail sector. He talks with customers every day, focusing on their production and finding innovative solutions to help increase efficiency.
Linsey Welton is a solution development manager in the enterprise retail sector. He identifies new sustainability opportunities and starts a conversation with customers about possible environmental solutions.
The world is changing faster than ever. That’s particularly true in the world of sustainability. Here’s why:
Q: Regarding sustainable solutions, what are businesses asking you about that they weren’t four to five years ago?
Brian: Businesses are asking more about how they can understand their scope three emissions. For any organization, a carbon footprint is made up of three different scopes.
Scope one emissions are direct emissions that an organization has direct control over. This includes their own manufacturing facilities, company vehicles and manufacturing processes of products that they make themselves.
Scope two is the electricity and energy that an organization purchases to make scope one happen. Scope three is everything else in a supply chain.
It’s all of their inbound and outbound transportation, employee commuting, purchased assets or goods that they get from another organization.
A decade or so ago, a lot of organizations started measuring their carbon footprint, but what they were mainly looking at was their scope one and scope two emissions.
Customers come to us because often times we’re a big part of their supply chain, and they want to understand what their scope three emissions are with UPS shipping.
We strive to not only measure their emissions, but also hope to explore longer-term solutions with our supply chain optimization group.
How can we help them manage carbon out of their network? How can we help them minimize carbon?
And that’s through things like a more efficient supply chain, optimizing the modes for shipping, advising them on where their distribution centers should be located, what inventories they should have at each distribution center, etc.
And then of course, there’s always going to be something left over, so we can help them mitigate through the carbon-neutral shipping options we have available for customers.
Q: Greg, is it typical for customers to come seeking sustainable solutions, or do you typically reach out to them first about considering sustainable options?
Greg: That’s a good question. I have customers that are on both sides of that fence. I have customers, especially in retail, that really don’t care.
They view sustainability as a cost, and it’s not necessarily important to them.
On the other side, I have people like Nestlé that are driven by it.
From a sales perspective, when we see that we’re on the side of a customer that doesn’t value sustainability, we find a way to position it.
We constantly look to bring those customers quantified value to help them better understand which sustainability initiatives drive additional sales. You have to understand your client base and continuously communicate the message.
Linsey: To add to that, many customers may want a sustainability program or want to socialize something in the industry, but they don’t realize what UPS can do to help them.
Part of being out in front of the customer is to really help them understand what we do from a sustainability aspect and how we can help differentiate them from their competitors.
This takes a lot of research on our part.
The other caveat to that is, as Brian mentioned, managing and marketing these programs so that they can get some benefit in the marketplace from either co-branding or letting it be known that they are looking at scope three emissions.
It’s part of our jobs to uncover that because customers aren’t fully aware of what we do from a sustainability aspect — unless we show them.
Q: What are other drivers behind this shift toward sustainability?
Brian: Emissions are changing some of the requests, but there are a lot of other drivers behind the shift. And overall, I think it is awareness.
The end consumer is driving change — they’re demanding more sustainable product options. Studies out there show that the end customer is willing to pay a little bit more or wait a little bit longer to get their product if they know something is going to be sent in a more sustainable fashion.
Other studies show that shareholders are hesitant to invest in a company if they don’t have any sustainability programs or initiatives in place. It has become an expectation.
Greg: I’m going to talk specifically about a client that I think that we’ve had some great success with, which is Nespresso, a division of Nestlé. Nespresso is a high-end coffee — like a Starbucks.
Something Nespresso did was made their capsules out of recyclable aluminum.
They’re not only spending a tremendous amount on resources getting this recycled, but they’re also paying UPS to bring back these used capsules after you drink your coffee. They see value there.
We’re talking about a whole value chain of showing the customer the entire product life cycle.
I think that this is a driver — these sustainability-focused organizations are bringing innovative ideas to the table and challenging everyone else to look at their products and determine how you can manage them better to reduce carbon emissions.
Linsey: I think part of that shift is largely due to the e-commerce growth that’s happened over the last several years.
For example, many of our customers use a certain size box for everything that they ship, and they’re not thinking about the product size or the filler required for that package.
I think consumers are becoming more aware of what’s happening from a sustainability aspect and they’re voicing that over social media. This is opening the eyes of these organizations that they may have to do something to be more sustainable so that their customers will return in the future.
Q: What results are customers seeing and what do you think the next five to 10 years look like in terms of sustainable solutions for businesses?
Brian: In the next five to 10 years, I think customers are looking to better manage carbon in their supply chain. Managing carbon is imperative, not only for an efficient supply chain, but also for any sustainability-focused organization.
In order to do that, they have to have the measurement component. Because if you’re going to manage something, you have to know what your baseline is. You have to know whether you’re making improvements.
The transparency and the accuracy of the information the customers are getting is an expectation.
Greg: From a results and uptick perspective, Nestlé is seeing what Brian just described.
They’ve incorporated sustainability as one of their main pillars to do business. They are now seeing that it is paying dividends, not only in their market but in all markets.
I’ll just touch on a few of their products. You talked about Nespresso coffee, but they also make Haagen-Dazs ice cream, Breyers ice cream, Nestlé Crunch Bars and Stouffers Lean Cuisines.
They have a gamut of products out there, and seven of them make a billion dollars or more. So when they talk about their particular products, they want to make sure that they’re integrating this pillar of sustainability in all aspects of their business.
I think businesses will add sustainability to their pillars or risk being left behind.
I look at my kids and the next generation coming up — they are already saying, “No, I don’t deal with that company because they don’t care about their water usage.”
And that’s going to be the generation making the decisions on where they’re going to buy products.
Brian: I agree with all that, Greg. You used the word “pillar,” but I think sustainability is becoming and will become a source of competitive advantage.
Businesses like Patagonia and H&M succeed because of their strong sustainability programs and strategic messaging.
For example, H&M gives discounts in exchange for old clothes, which they then recycle or repurpose. They advertise what they’re doing in this space because it provides a competitive advantage.
Linsey: Companies are looking at the entire supply chain.
In the past, UPS was looking only at a small package impact. But obviously there are more modes that are part of the supply chain.
I think companies are looking for a holistic assessment of that as they move into the future and as the Millennials start to become business leaders in the industry.
They’re going to start changing the way people start looking at the environment overall, and what sustainability products are out there to support their business initiatives.
I think it’s something that is going to continue to change as we evolve.
Photo credit: Nespresso