A pragmatic approach to sustainability - call to action: Part 2

Sustainability is a business imperative and a positive opportunity, crucial to driving the resilience and agility needed by enterprises in a changing world.

The most significant challenges faced by us today are achieving decarbonization with meeting increasing energy demand, building sustainable products & value chains and developing infrastructure to support the circular economy. Yet, the most formidable challenge in front of us is to limit global warming to 1.5 degrees Celsius.?

In the?first?of this two-part blog series, I addressed a pragmatic transition to sustainability approach for short-term call to action with a deep dive into the decarbonization of end-to-end supply chain and sustainability in procurement.??

In part two, I will address the transition from short to medium and medium to long-term call to action for a pragmatic move to sustainability.?

Business opportunities and climate-related risks

Impactful climate action is fast-moving to the core of Corporate strategy. The Task Force on Climate-related Financial Disclosures (TCFD) published guidelines for companies to understand the financial impacts of potential climate-related risks and opportunities by doing scenario analysis for long-term sustainability strategy and targets.

New?business opportunities?are arising from the reduction of operating costs through increased efficiency in resource use and the adoption of energy efficiency measures, to name a few.

For short to medium term actions, TCFD can be followed to avoid?transition and physical risks?due to enhanced climate reporting obligations, changes in tax regulations, rising or volatile commodity costs, energy taxation, and increased stakeholder concern.

Eaton?formalized TCFD as a new key element of its strategic planning process. Sharing experiences and planning approaches to scenario analysis across organizations as?a knowledge hub?will be crucial to climate-related scenario analysis.?

Short to Medium term approach

A Short to medium term approach would enable enterprise-wide sustainability readiness by making decisions and preparing for a long-term?sustainable strategy.?

I have covered some of the short to medium term call to action below:

• Mandate recyclability assessments of products/services?to test the ability for end-of-life sorting, processing, and recovery
• Add product design criteria?that require the use of recyclable and renewable materials. Re-design packaging for higher recyclability, rPET contents?
• Waste stream mapping,?analyzing material flows and destinations to identify hot spots of waste leakage
• Carbon?web assessment of suppliers?and initiate carbon reduction program for scope 3 emissions
• Enable the organization to deliver sustainable products and services
• Develop a mechanism for?the Digital passport?of the product for an end to end tracking
• Identify Cross-industry collaboration?opportunities with a global network of startups to create impact at scale
• Enable architecture?to add ecosystem players and add sustainability data sets from a smart meter, IoT sensors, and Ecosystem platforms
• Life cycle assessment?(LCA) for products and publish?product labeling information?to consumers
• Prepare for?EU Taxonomy?business activities to calculate companies’ green revenue
• Embed sustainability by design as a new dimension into business processes & build sustainability into?business and technology strategies
• Extended producer responsibility?to manage packaging waste and design out waste early in the product life cycle
• Identify sustainability driven Business model innovation opportunities and mechanism to transform value chain
• Identify and engage with the interconnected global ecosystem to collaborate

Medium to Long term approach

Creating long-term value requires a strategic term perspective that identifies the competitiveness of the company and a clear long-term vision to reshape the business today to master these future disruptions.

A “transition pathway” is the company's strategic blueprint applied to transform today’s business and operating model to mitigate the risks posed by tomorrow’s trends.

I have covered some of the medium to long term call to action below:

Sustainable product as a service and take-back Business Model

This is a new business model where the responsibility for the actual asset remains with the provider and extends the producer’s responsibility. The value proposition is based on the delivery of the service rather than ownership of the product.

At the end of the product’s life cycle, the provider knows the product better than the end-user since they design, produce, and maintain it. The returned product can be recycled because it’s in the company’s interest to make the best of that asset to justify a resource-efficient system of closed loops in which raw materials, components, and products retain their value as much as possible.

Closed Loop recycling

It requires building recycling infrastructure and systems to underpin sophisticated networks of partners to collect products at the end of their life and returned to facilities for resource recovery. This can be facilitated by leveraging big data and mapping technology to enable the return of materials.

Digital twins

Digital twins are virtual, mirrored worlds of factories, machines, processes, products, and more, built on real-time, historical, and sometimes simulated data. It provides companies with the opportunity to run massive and limitless simulations for embedding responsible supply chains, component/product design, and circular economy into the core of their business.?

There are many use cases of a digital twin to support sustainability example, new product trials and ramp-up, visibility of product lifecycle impact, improving resource efficiency by decoupling natural resources through the increased purchase of secondary materials for metals and resins.

Conclusion

Companies will be combining short-term and medium-term next-horizon solutions, striking an intelligent balance between immediate cost benefits and longer-term value opportunities.?

To pursue Long term value creation, companies need to transform their business and operating models. Companies recognize their relevance, competitiveness, and earning power in the longer term, which is dependent on their ability to reduce the carbon of the existing portfolio and maintaining all sustainability initiatives while simultaneously upscaling their investments in more sustainable technologies.?

These are my personal opinions and thoughts – I would love to hear your views on the transition to an enterprise-wide?sustainability approach and invite you to connect with?me?to discuss and support your journey to sustainability-driven business transformation.