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2 Value Creation and Life Cycle Management
Value creation and differentiation are keys for companies. Today, the strong
correlation between good fi nancial performance and sustainability is widely
accepted and recognized (DB Climate Change Advisors 2012 ). It is clear that businesses strategy that includes sustainability programs contribute to strong corporate
performances.
A growing number of examples show that sustainability initiatives are a great
catalyst to creating profi t as well as new business opportunities. How to link sustainability to business value is, however, still poorly understood by a large majority of
companies (Accenture and United Nations Global Compact 2013 ).
Companies seeking to pursue the sustainability path need to ensure that they do
so while creating value for the company itself and along its value chain. Sustainability
for the sake of sustainability is well-meaning, but likely to be ineffective. Without
expressing the value creation of sustainability, companies will remain in “pilot projects” or small-scale sustainability projects, only able to engage and motivate those
internal sponsors and team members that “buy-in” to the sustainability mission as a
matter of personal conviction and unable to fi nd the right strategies to leverage to
core power of the business. Identifying the business value created by sustainability
and the way to get there is thus essential. The value has to be perceived along the
whole value chain, i.e. managers and collaborators at different levels of the company as well as external stakeholders whose expectations and potential infl uence
must be identifi ed and accounted for. Finally, this value creation must be measurable and measured in order to be acknowledged and communicated.
A key step each company should consider before embarking on the path of sustainability is answering the question “What is the value this strategy will generate
for our organization?” Recognizing that each company’s path to capturing value
from sustainability will be unique, Bonini and colleagues ( 2011 , 2014 ) proposed a
framework that can serve as a universal starting point to understand the relationship
between sustainable initiatives and value creation. It captures value in three key
areas:
• Risk management linked to sustainability – encompass risks due to operational
disruptions such as, for example, resource scarcity, extreme events from climate
change; risk due to reduced reputation from relationship issues with stakeholders along the value chain; and regulatory risk from current restrictions and regulations to come.
• Return on capital – by onsite operational effi ciency through improved resource
management , e.g. energy effi ciency, water reuse and byproduct valorization; by
developing sustainable value chains expanding improved resource management
effi ciency through the supply chain or downstream extending producer responsibility; by increasing employee motivation through internal involvement and
identifi cation to company and its values; and by green sales and marketing seeking increased revenue from sustainability attributes.
3 Life Cycle Management as a Way to Operationalize Sustainability Within…
2 Value Creation and Life Cycle Management
Value creation and differentiation are keys for companies. Today, the strong
correlation between good fi nancial performance and sustainability is widely
accepted and recognized (DB Climate Change Advisors 2012 ). It is clear that businesses strategy that includes sustainability programs contribute to strong corporate
performances.
A growing number of examples show that sustainability initiatives are a great
catalyst to creating profi t as well as new business opportunities. How to link sustainability to business value is, however, still poorly understood by a large majority of
companies (Accenture and United Nations Global Compact 2013 ).
Companies seeking to pursue the sustainability path need to ensure that they do
so while creating value for the company itself and along its value chain. Sustainability
for the sake of sustainability is well-meaning, but likely to be ineffective. Without
expressing the value creation of sustainability, companies will remain in “pilot projects” or small-scale sustainability projects, only able to engage and motivate those
internal sponsors and team members that “buy-in” to the sustainability mission as a
matter of personal conviction and unable to fi nd the right strategies to leverage to
core power of the business. Identifying the business value created by sustainability
and the way to get there is thus essential. The value has to be perceived along the
whole value chain, i.e. managers and collaborators at different levels of the company as well as external stakeholders whose expectations and potential infl uence
must be identifi ed and accounted for. Finally, this value creation must be measurable and measured in order to be acknowledged and communicated.
A key step each company should consider before embarking on the path of sustainability is answering the question “What is the value this strategy will generate
for our organization?” Recognizing that each company’s path to capturing value
from sustainability will be unique, Bonini and colleagues ( 2011 , 2014 ) proposed a
framework that can serve as a universal starting point to understand the relationship
between sustainable initiatives and value creation. It captures value in three key
areas:
• Risk management linked to sustainability – encompass risks due to operational
disruptions such as, for example, resource scarcity, extreme events from climate
change; risk due to reduced reputation from relationship issues with stakeholders along the value chain; and regulatory risk from current restrictions and regulations to come.
• Return on capital – by onsite operational effi ciency through improved resource
management , e.g. energy effi ciency, water reuse and byproduct valorization; by
developing sustainable value chains expanding improved resource management
effi ciency through the supply chain or downstream extending producer responsibility; by increasing employee motivation through internal involvement and
identifi cation to company and its values; and by green sales and marketing seeking increased revenue from sustainability attributes.
3 Life Cycle Management as a Way to Operationalize Sustainability Within…