In a critical time when corporate environmental responsibility has become imperative, businesses are actively seeking to integrate eco-friendly protocols into their core operations. Leading this pivotal shift is CEO of ‘The Green Link’, Bernard Lebelle, who is leveraging over two decades of innovation and leadership to offer AI-driven strategies aimed at minimizing the environmental impact of businesses.
This comprehensive interview covers Lebelle’s expert insights on the challenges and strategies related to microplastic pollution. It also addressed the nuanced relationship between profit and sustainability, and the need for businesses to move away from outdated models towards more sustainable practices. You can read the full interview here.
The Corporate Challenge of Sustainable Transformation
Businesses tackling microplastic pollution face the challenge of evaluating their environmental impact and supply chain transparency. Identifying the source of pollution and understanding the full lifecycle of their products is a complex task that requires thorough scrutiny and often, a return to the initial stages of product design and development.
The transition to sustainable practices is hindered by existing investments in non-sustainable assets, with companies reluctant to write off these assets for more eco-friendly alternatives. This challenge is compounded by a lack of awareness of sustainable materials within the design community.
To address these issues, companies must integrate sustainability into their strategic decision-making and be willing to invest in sustainable solutions. This includes improving supply chain transparency and committing to environmental accountability in both B2C and B2B operations.
“The first challenge is understanding where the company stands regarding the plastic pollution they are making and then understanding the same from their value chain. There is a financial component to transitioning to more sustainable production, which may require companies to make difficult decisions”.
The Impact of Microplastics on B2B Relationships
Microplastics pose significant risks to business-to-business (B2B) practices, potentially leading to reputational damage if companies’ use of microplastics contributes to environmental harm. The reputational issues could translate into customer loss and decreased revenue, alongside the threat of regulatory repercussions if new laws targeting microplastics are enacted.
To mitigate these risks, companies need to conduct thorough assessments to determine the presence of microplastics in their products, which involves scrutinizing supplier agreements, product details, and safety data sheets. Identifying these sources is the first step towards transitioning to more sustainable alternatives.
Effective communication strategies about microplastic usage and reduction efforts are also crucial in maintaining transparency with customers, investors, and other stakeholders.
“By identifying and addressing potential risks associated with microplastics, companies can protect their reputation and revenue and contribute to a more sustainable future.” Lebelle emphasizes, adding that developing clear policies on microplastics and sustainability can help companies demonstrate their commitment to environmental responsibility and proactive sustainability measures.
Corporate Readiness for Supplier Switch to Enhance Sustainability
Companies’ readiness to completely overhaul their supply chains in favor of sustainability varies widely. Some may cautiously begin by collaborating with alternative suppliers on a trial basis, while others, with sufficient resources and a deep understanding of the benefits, may commit to a full switch more readily.
Achieving such a transition requires several key elements: executive-level recognition of the need for change, financial backing, shareholder endorsement, and comprehensive staff training on new sustainability initiatives. In some cases, this may also mean restructuring teams, seeking external expertise, and looking to other industries for the most effective solutions.
A handful of companies are leading by example in making significant changes. Notable among them are Ikea, Novo Nordisk, and Lego, which have shown a commitment to supporting new suppliers and helping them scale up production.
The transition to alternative materials often comes with high initial costs. To reduce these costs, companies need to help generate demand and commit to large volume pre-orders, which can then drive down production costs through economies of scale. This approach was exemplified by Apple’s 2018 purchase from Alcoa Corporation and Rio Tinto Aluminum, which supported the production of aluminum through a carbon-free smelting process.
“98% of the time suppliers will go into incremental improvements, because that’s the linear thinking of the 20th century.”
The Ripple Effect of Microplastic Avoidance on the Supply Chain
The shift away from microplastics is set to send ripples through the entire value chain, particularly in microplastic-intensive industries like textiles and cosmetics. Suppliers entrenched in the production of microplastics are now faced with the necessity of transitioning to alternative materials.
The feasibility of such a transition is heavily dependent on the supplier’s scale and financial capacity, as well as their commitment to supporting the broader supply chain’s sustainability goals. While contractual obligations can exert pressure on suppliers to initiate change, these measures may result in only incremental improvements, as many suppliers are cautious about undertaking substantial transformations.
“A broader mindset is needed to tackle the microplastic problem in industries.”
For a more profound change, companies must broaden their perspective, exploring and engaging with alternative suppliers outside of their traditional networks. This proactive approach involves reevaluating sourcing strategies and seeking out innovative suppliers who can meet new sustainability criteria.
Regulatory changes are also anticipated to play a pivotal role in this shift. With discussions around harmful substances like per-and polyfluoroalkyl substances, PFAS, gaining momentum, impending regulations are expected to leave suppliers with little choice but to overhaul their operations to comply with new environmental standards.
Balancing Profitability with Sustainability
The quest for sustainability often requires businesses to find a balance between profitability and their environmental commitments. This balance goes beyond the traditional financial metrics and extends to the broader value that sustainable practices can bring to a company.
For businesses, especially those with substantial investments in heavy machinery or infrastructure, the challenge lies in reconciling past investments with the need for sustainable transformation. Writing off these investments as losses can have a significant impact on profitability and necessitates careful communication with shareholders, a task that is particularly delicate for publicly traded companies.
Family-owned businesses, with their generational outlook, may find it easier to align their operations with long-term sustainability goals, as they often consider the legacy they leave behind. In contrast, publicly-listed companies frequently grapple with the pressure to deliver short-term financial returns, making it more difficult to abandon previous investments in favor of more sustainable, yet potentially less immediately profitable, alternatives.
Strategizing Profitability in Harmony with Sustainability
The journey to balance profitability with sustainability is multifaceted, involving an understanding of both overt and covert costs and benefits. Here’s how businesses are navigating this path:
- Talent Management: The modern workforce, particularly younger generations, favor environmentally conscious employers. Companies not prioritizing sustainability may face higher HR costs due to difficulties in attracting and retaining talent. Conversely, sustainable practices can enhance a company’s appeal, reducing recruitment expenses and fostering a loyal workforce.
- Operational Costs: Embracing sustainability can lead to direct operational savings. Energy-efficient practices and waste reduction not only benefit the environment but also trim down operating costs.
- Funding Advantages: Financial incentives are increasingly aligned with sustainability. For instance, French banks offer loans with favorable interest rates to companies with lower carbon footprints. Such financial products make sustainability a financially strategic choice.
- Brand and Shareholder Value: Sustainable practices bolster brand reputation, attract quality talent, and appeal to long-term investors who value corporate responsibility. This can lead to a virtuous cycle of value creation that extends beyond immediate profit and loss statements.
- C-Suite Advocacy: Leadership commitment to sustainability is crucial. Sustainable decisions often require C-suite executives to look beyond short-term financials to the long-term potential of recycling, upcycling, and circular economy initiatives. This may involve difficult choices, such as dismantling existing machinery for recycling, but can lead to repurposing valuable resources like copper and gold.
- Long-Term Viability: Companies that ignore sustainability may find themselves obsolete. With increasing pressure from all stakeholders, sustainability is becoming a license to operate. Those who fail to adapt risk their very survival in the market.
In summary, finding the balance between profitability and sustainability is not just about making financial trade-offs; it’s about recognizing and capitalizing on the broader value that sustainable practices bring to a company, its people, and its stakeholders. It’s a comprehensive approach that considers the hidden benefits of employee engagement, access to specialized funding, enhanced brand value, and the strategic foresight to invest in a circular economy.
“Creating value should go beyond finances. Sustained transformation through brand equity, employee satisfaction, and green funds can add hidden value.” says Lebelle “Sustainable practices attract long-term shareholders and create additional margins. Looking only at finances offers only a limited perspective.”
This article serves as an extract from our full report titled “Microplastics in Industry: Identifying Risks & Opportunities for Action”, providing a synopsis of the pivotal conversations and insights on sustainability in the business sector, and comprehensive insights into industry-specific challenges and actions on microplastics.
