Gabriel Tan

Today, we are living in a peculiar time with growing uncertainties such as high inflation and high interest rates. As a result, many global brands have scaled back their operations and reduced headcounts to brace themselves for further shocks down the road.While all seems doom and gloom, sustainability remains a bright spot on the horizon. More businesses are looking to drive growth through sustainability. This means not only focusing on top-line growth but also bottom-line growth, while also augmenting social capital by driving positive impact that benefits communities and the environment.Over the course of my company's work with several of the world’s largest hospitality chains, airlines and cruise liners in the area of sustainable guest amenities, we help brands reach new consumers in the hospitality and travel industry. As recipient of the United Nations Sustainable Development Goals Pioneer for Circular Economy, I know first-hand the impact sustainability can have on business.Below are three practical ways brands can aim to improve their overall business value, performance and positive impact.Drive Brand Value With Sustainable ImpactThe global intangible asset value grew from $61 trillion in 2019 to $74 trillion in 2021. According to research from McKinsey & Co, businesses in the top quartile for growth invest 2.6 times more into intangible assets than "low-growers."With more and more companies realizing that a portion of their value can be derived from intangibles, many are pouring in resources to strategically grow their intangibles—with sustainability being an area of focus. According to a 2022 study by NielsenIQ, 78% of consumers say "a sustainable lifestyle is important to them." Brands that invest in sustainability can attract more customers and, in my experience, typically charge a higher price for their products.In October 2022, LVMH announced an energy efficiency framework in partnership with shopping mall owner, Hang Lung Properties, which is expected to reduce the retailer's energy footprint. From my perspective, I expect more value would eventually be derived from growth in their intangible value rather than actual energy cost savings.Brands interested in positioning themselves as sustainable need to come out with more interesting stories in today’s competitive market. Simply changing your packaging and reducing energy costs is no longer sufficient to convince consumers of your sustainability edge. Impact has become a more objective yardstick to evaluate whether or not your brand is truly sustainable, and this is closely intertwined with scale to derive the actual impact of a brand in the world.Create A Superior Business Model With Circular DesignAccording to the United Nations, the circular economy is a "new and inclusive economic paradigm that aims to minimize pollution and waste, extend product lifecycles and enable broad sharing of physical and natural assets."Given the increasing cost pressures experienced by businesses today, this new paradigm allows brands to generate value with minimal resources and correspondingly lesser impact on the environment. Recently, H&M, a large fashion retailer, pledged to be climate positive by 2040 through a textile reuse model, promoting circular design.Circular design can be a profitable venture when brands are able and willing to make the adjustments necessary to change the status quo. Embracing a new circularity paradigm requires a holistic end-to-end understanding from the get-go. This includes product design, which minimizes the use of materials and takes into consideration the advantages of the different types of materials, a packaging approach that delivers the appropriate outcome without over-packaging, as well as a supply chain strategy that balances business performance and environmental impact.Reach New Consumers With Sustainable Business ModelsThirdly, sustainability can also open up new business opportunities for consumer brands. Sustainability is not just about reducing carbon emissions and waste; it also involves creating innovative solutions to environmental challenges. Sustainable practices can lead to the development of new products, services and markets.To reach new consumers with sustainable business models, brands can aim to position sustainability at their core. Consumer brands not only have the power to uniquely differentiate themselves in today's crowded marketplace but also create an enduring competitive advantage that could lead to even greater possibilities and enhanced brand value.If needed, consider looking for credible partners as a way to leverage each others' strengths to drive sustainability initiatives. Ideally, a partnership should only require minimal investment, without the need for brands to reinvent the wheel. Look for a complementary partner with a successful track record; repeat customers, deep capabilities and a rich ecosystem can each be powerful multipliers for creating exponential outcomes.By embracing sustainability, consumer brands can increase their brand's intangible value, create superior circular design and open up new opportunities with new business models. With intangible value becoming a differentiator, your biggest gain could be from your sustainability initiatives—provided they are done authentically and with the right priorities. This article was first published on Forbes (16 May 2023).

One of the most common myths about sustainability is its association with higher costs. Many businesses tend to assume that what is sustainable would cost more. It's led to the misconception of viewing sustainability as a luxury that only a select few could afford. Even during talks and webinars that are supposed to encourage participants to adopt and embrace sustainability, I have seen panellists unknowingly reinforce this false narrative.In fact, I'd argue that the opposite is true.As the recipient of the United Nations SDG Pioneer for Circular Economy, I pioneered an ecosystem business model that helps global hospitality chains, airlines, cruise liners and major corporations improve profits by embracing sustainability.Sustainability is essential for business continuity, and when a business embraces sustainability correctly, it not only lowers the costs of doing business but it creates a powerful avenue to grow revenue and attract like-minded partners who could open doors to new possibilities.Before going deeper into each of these benefits, it's important to first define what sustainability is. According to the United Nations, sustainability means “meeting the needs of the present without compromising the ability of future generations to meet their own needs."This means sustainability shouldn't be limited to environmental factors. It's holistic. It should encompass financial and social considerations, ensuring affordability and driving a positive, long-term impact on local communities.Here's how sustainability can improve profitability for your business. 1. It can actually lower costs.Part of assessing how your business can become more sustainable includes conducting a materiality analysis. This means assessing what factors are important to your business and identifying the avenues in which you can lower costs. Common considerations are lowering material use without sacrificing functionality, lowering distance between manufacturing sites and customers, as well as lowering unnecessary costs due to excessive packaging. These translate to more efficient use of resources and lower costs. 2. It's important to younger generations.There's a strong affinity between millennials and Gen-Z and sustainability, and that's another strong benefit, given that these generations are now the largest group of consumers. Unlike previous generations who are focused solely on physical goods, millennials and Gen-Z value the meaning and purpose beyond the physical. This means patronizing a business or buying their product becomes a personal expression of their support towards certain causes they value. 3. It helps create collaborations and partnerships.Last but not least, advancing sustainability can lead to collaborations and partnerships with other stakeholders to achieve more than a single company could on its own. Leadership in sustainability sends a strong signal to the market, which attracts like-minded partners and opens new doors and opportunities.For example, in the course of my work, beyond our close partnerships with some of the world's largest brands, we also actively engage governments and intragovernmental organizations to ensure that the solutions we develop are in line with government agendas. This subsequently leads to strategic collaborations with global financial and educational institutions as well as professional bodies in advocating for sustainability—which leads to more partnerships with even more global brands.See how opening one door can lead to even more and larger, strategic opportunities for your company? This is a key strategy that helps you become more agile in overcoming ever-increasing challenges and ever-changing market dynamics. As Darwin said, “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change."Sustainability is a business advantage. It helps to lower costs of doing business, increase revenue and create opportunities from collaborations and partnerships. There is no better time to embrace sustainability than now, especially when the market, regulators and consumers are demanding it. This article was first published on Forbes (27 Jul 2022).

Create a Post

Create a Learning course

No result

No result

Start searching

Gabriel Tan

Follower

Driving growth through sustainability: 3 solutions for brands

How sustainability can actually improve profitability