Why doing good has become a key factor for doing good business
So you think big investments in climate sustainability is incompatible with good profits? Think again. In a panel discussion on circular economy during the Earth Day Week conference, a global appliance company, an innovative clothes maker and a world leading in lighting all demonstrated that doing good is also good for business.
Signify is a world leading lighting company with 38 000 employees in 70 countries and a revenue of 6,2 billion euros in 2019. It has ranked as number one in the Dow Jones sustainability index for three years in a row, and is dedicated to becoming carbon neutral by the end of this year.
”It’s good for business, it’s good for our customers and it’s good for society”, said Harry Verhaar, head of Global Public and Government Affairs at Signify, during the online panel discussion.
He believes nothing can stop sustainable development in technology, energy efficiency and in lighting, but is concerned that the rate of change is far too slow.
He says the key to success is to focus on how sustainability actually benefits the customer.
”If people can see that in the end this creates clean air and lower energy bills, a more comfortable home or a more productive work space, it will increase the speed of change.”
Which is more or less how Daniel Wentz, vice president of software products at Electrolux, reasoned when the company released PURE i9, a circular economy robotic vacuum cleaner.
Instead of purchasing the vacuum cleaner, the customer subscribes to it on a pay-per-use basis.
”We wanted to understand if we could build our business model on the outcome rather than the physical product. Would we be able to provide a better service for our users, a better price for that unit, use less units and still produce equivalent results for the company?” Daniel Wentz said during the panel discussion.
The business model is currently being tested in Sweden and China. If the customer returns the product and ends the subscription, the vacuum cleaner is refurbished and made available for the next customer.
”Basically what we’re trying to do is shift the unit of consumption away from the physical box to the outcome of what the product is doing, in this case delivering clean floor space”, said Daniel Wentz.
As part of a global business pledge to limit temperature rise to 1,5 degrees, Electrolux is also stepping up the use of recycled materials in its products.
”Satisfying more users with better products and keeping the resource consumption more or less flat will fundamentally improve the experience the user might have with a product and brand and in the best cases lead to a better financial situation for both consumers and corporates”, said Daniel Wentz.
One of the veterans in circular business is the Swedish outdoor sportswear Houdini. For almost twenty years the company has worked on moving away from the linear system and instead making high quality circular products.
Houdini aims for its products to be 100 per cent circular by the end of this year and to have 100 per cent of the whole value chain circular by 2030.
”I don’t think our international expansion would have been even possible without this quite radical take on circularity, moving from a slightly more sustainable business doing less bad to actually trying to achieve good”, said Eva Karlsson, CEO of Houdini.
”But the way we build our brand and our products is not only for the sustainably conscious, we have to create the best product that everybody wants to use. That means we cater to the needs and desires of people who don’t really yet care about sustainability, and that’s how we can shift even more in terms of culture.”
Houdini uses a planetary boundaries framework to provide the company with a more holistic view of its sustainability efforts.
”We need to understand our impact on the planetary system in order to address it and to evolve to eliminate our negative impact and contribute positively. To only focus on carbon, which has been the case in our industry for quite a few years now, can lead to green washing internally. When you move from one material to another for instance, you might actually just shift the bad to somewhere else without even knowing it. We need to understand the system in its entirety”, said Eva Karlsson.
Written by: Markus Lutteman