After much reflection, this will be my last blog post. I would like to take this opportunity to thank everyone for following my posts and for their insightful comments.I am now refocusing my efforts on enhancing my resources for sustainability champions.

As context, as a certified B Corp, my vision is a sustainable world in which individuals, communities, and businesses thrive within nature’s limits. My two-fold mission is to inspire business leaders to integrate sustainability strategies into company strategies, and to provide useful resources for an army of sustainability champions so that they have the competence and confidence to accelerate the transformation toward a sustainable global society. I want to spend more effort on that last part.

As some of you know, my new book, The New Sustainability Advantage will be released in March. (If you are interested, my publisher is offering a 20% discount on pre-orders.) It is a 10th anniversary edition of its first version, with a recalibrated and more compelling business case for sustainability strategies.  I am working on a new open source set of Excel worksheets to accompany the book.

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I am also working on a jazzy, slider-enabled dashboard version on my web site that will enable people to do a quick simulation of the business case for their company. My Master Slide Set will be renamed “Sustainability Advantage Slides” and will contain a full set of slides to support the new business case.

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In addition to the new book, dashboard, worksheets, and slides that will be released together in March, I’m also creating a new Sustainability Advantage DVD that will encapsulate my talk these days on new business case for sustainability. It will be ready in the summer and will include footage of several talks that I am doing between now and then. I’m still on track to do another 80-100 talks this year. Last year, I did 93 plus wrote the new book, so paying attention to the bi-weekly blog was a bit of a challenge. For people who are unable to attend one of my talks, the DVD will provide an opportunity for them to experience it virtually.

What happens to the blogs? The archives will still be available on my website. You will find them in the sidebar on the right. The part of the home page that was used for new blogs will become a “What’s New” alert area for visitors to my website.

The beginning of a new year is wonderful opportunity to step back and reflect on how I can best use my time. My upgrading of all my resources for sustainability champions deserves priority. I very excited about how they are all coming together, and how much more useful they will be over previous versions.

Watch this space for more alerts about their availability…

For email subscribers, please click here to visit my site and provide feedback.

Bob

In my December 13 blog, 3 Punchy Videos on How to Span the Wealth Chasm, I used three videos to highlight excellent reform proposals to help address the underlying causes of unjust and risky wealth inequities. In a wonderful example of synchronicity, other commentators made similar points that same week. On December 15, Hazel Henderson reinforced the wisdom of a Robin Hood Tax which was the subject of the Bill Nighy clever video that I referenced in my blog.

In her insightful December 15, 2011, CSRwire Talkback article, “Transforming Finance 2.0,” Hazel Henderson makes several points about a “Robin Hood tax,” which she prefers to call a “financial transaction tax (FTT).

• Four names for the levy: “Robin Hood Tax,” “Financial Transaction Tax (FTT),” “Larry Summers tax” based on his 1989 paper, or the “Tobin Tax” first proposed by James Tobin in the 1970s.
• Status: It is embraced by many European countries and the G-20 after widespread campaigning by Attac, OXFAM, and many global civil society organizations.
• Why it is gaining traction: As Hazel Henderson says, “Governments impoverished by their foolish bailouts of bankers and bondholders are now desperate for new revenues.  Many see the FTT as the best way to downsize the global financial bubble, curb high-frequency trading without hurting real investors and raise billions to restore their budgets and other reforms in my discussion scenario, Looking Back from 2010.”
• Practical doability: Often financial institutions, as irreverently portrayed in the Bill Nighy clever video, push back, saying it would be way too complicated to administer. Hazel Henderson and Alan F. Kay proposed an FTT in the 1990s and developed a patented computer program to simplify its collection, FXTRS. Apparently, the mechanism exists to figure out and levy the tax. If it exists, it’s possible.

Let’s suppose it were possible to implement. How much would it raise? It depends on the tax rate and on which transactions are taxed. The most proposed rate for a Robin Hood tax is a mere 0.05%, or 5/100th of one percent of the value of each transaction. The Chicago Political Economy group cites between $750 billion and $1.2 trillion per year (2005–2009) could be raised by such a tax.

So what? Compare that to the $700 billion in the Troubled Asset Relief Program (TARP) approved by Congress to bail out “Too-Big-Too-Fail” (TBTF) financial institutions. If there had been a reserve built from an FTT, the financial institutions could have bailed themselves out without tapping into taxpayers’ funds.

As shown in the adjacent slide, some estimates of the U.S. Federal Reserve’s secret bailout of domestic and foreign banks are in the trillions of dollars, which is staggering. If this largess were tempered by the availability of funds raised by a financial transaction tax, perhaps the Fed would be less fast and loose with taxpayers’ money.  So an FTT / Robin Hood Tax / Tobin Tax / Larry Summers tax is doable, relatively painless, and readily able to be administered.

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It’s timely. It would help restore badly-eroded trust and confidence in the financial sector and capitalism in general. Let’s do it.

As usual, the above slide is from my Master Slide Set.

Please feel free to add your comments and questions using the Comment link below. For email subscribers, please click here to visit my site and provide feedback.

Bob

The Occupy / We Are the 99% movements have awakened many people to unsustainable economic inequities. There has always been a gap between the haves and the have-nots. It’s the widening of that wealth chasm during a recession and the co-opting of the political process by corporations that has aroused recent global protests.

Protestors are accused of being heavy on criticism and light on solutions. However, when they put forward well-thought-out proposals, they are ridiculed for being naïve and out of touch with “reality.” That is, they don’t have any good ideas.  Oh, really? These three videos cleverly capture concrete proposals that would help address the underlying causes of unjust and dangerous wealth inequities.

1. Bill Nighy video backing a Robin Hood tax on banks

It’s a no-brainer. It would painlessly raise about $650 billion dollars that would benefit everyone, but financial institutions have consistently opposed it as interfering with their right to unfettered profits. British actor Bill Nighy’s comedy skit shows an interview with a fictitious banker on the Robin Hood Tax. Does it look like a good idea?

2. Story of Broke

The film calls for a shift in government spending away from support for the ailing “dinosaur economy” and toward investments in the 21st Century green economy.” Governments are not broke; they’re just squandering tax revenues on the wrong things. The video makes specific recommendations about redirecting numerous perverse subsidies, making polluters pay, and internalizing externalized corporate costs. These measures would help close the wealth chasm. Do they sound like good ideas to you?

3. Story of Citizens United vs. FEC

The movie explores the history of the American corporation and corporate political spending, the appropriate roles of citizens and for-profit corporations in a democracy and the toxic impact the Citizens United decision has already had on our political process. It ends with a call to amend the U.S. Constitution to confirm that people—not corporations—make the decisions in a democracy.” It would ensure that people, not the military-industrial network of corporations masquerading as people, are in charge of our democracy. Does that sounds like a good idea?

In case Canadians think that the two “Story of …” videos only apply to the U.S., the fundamentals are still relevant, though to different degrees. Plus, if Canada’s policies on issues like climate change are in lock step with America’s, then we have a vested interest in how corporations are overly influencing Congress and skewing government support toward their self-interests.

So when people dismiss the Occupiers as whiners without ideas, the ideas are there. It’s the political will to listen and act that is missing.

Please feel free to add your comments and questions using the Comment link below. For email subscribers, please click here to visit my site and provide feedback.

Bob

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In September, 165 university and college student leaders from across Canada came together for three days with national business and sustainability leaders to explore real sustainability solutions. The Co-Operators Group convened this amazing IMPACT! conference at the University of Guelph, Ontario. I was on an opening night panel with three other cross-sector panelists.

Spurred on by insightful student questions, at one point, I thought it was appropriate to acknowledge that we all have different comfort levels with various options available to us as corporate sustainability change agents. I outlined three things that we can do to make businesses sustainable (the link is to a short video of my spontaneous response). This blog builds on the options that I outlined which are open to us when we wake up and decide to take action to change the current unsustainable business model.

1. Take to the streets

As a North American, I am accustomed to seeing riots and demonstrations somewhere else. In August, rioters in the UK and Israel showed their dissatisfaction with the status quo. It takes a lot to get Canadians and Americans into public demonstrations and general dissatisfaction with the “economic system” is not usually one of them. Until this fall. The upsurge of the Occupy Wall Street / We Are the 99% movement from mid-September to hundreds of cities in North America and 1,700 cities worldwide, shows that the public demonstration option is very much in play as that movement evolves.

2. Create a parallel economy with new business models

Abandon the status quo business models and build better ones from scratch that are variously called hybrid organizations, social enterprises, B Corporations, and fourth sector companies. The Business Alliance for Local Living Economies (BALLE) and the Transition Network are working with local communities to build resilient, more self-sufficient, more robust, local economies all over the world. They are using exciting new forms of ownership and capitalization to form more sustainable enterprises, very analogous to the cooperative movement, to develop a local parallel economy.

3. Morph unsustainable companies into sustainable enterprises

Help companies be more profitable as they build on their sustainability initiatives during their sustainability journey, playing the business game using today’s metrics and rules. As they gain confidence that they really can be more responsible without any financial sacrifice, they legitimize metrics that give them credit for their social and environmental efforts as well as their economic contributions. That is, they will build sufficient courage to become re-purposed sustainable enterprises.

Some people choose “none of the above,” and wallow in despair with an occasional therapeutic rant. I have chosen door #3, and provide resources to sustainability champions who have selected the same option. I applaud those choosing door #1, although it may be difficult for them to change hats and work with companies as trusted advisors if they are known as “radical” activists. Or maybe not. We’ll see. Those choosing door #3 are providing a rich diversity of sustainable business models from which the rest of us can choose.

Hopefully, we’ll all meet at the same place, even if we use different doors and paths to get there. The destination is sustainable enterprises thriving in sustainable communities in a more democratic and equitable sustainable society. I expect some IMPACT! participants will get there before the rest of us. I hope they leave the light on. We’ll be there soon.

Please feel free to add your comments and questions using the Comment link below. For email subscribers, please click here to visit my site and provide feedback.

Bob

Every company faces a particular set of physical and operational risks from severe weather, or political uprisings, or other snags in its value chain. Sustainability strategies lead to more local supply chains and a focus on local markets. Doing so may mitigate risks associated with far-flung supply chains which events like earthquakes in Japan, floods in Tailand, or uprisings in Greece could severely disrupt.

Further, when a company reduces its carbon footprint, it mitigates future severe weather events.

Extreme weather events are happening more frequently, can damage the company’s facilities, and may require extensive time and money to rectify. The homes of employees may be severely damaged, or infrastructure providing access to the company site may be destroyed. Supply chain resilience after severe weather events is a growing issue for companies with far-flung global operations and suppliers. Storms at supplier locations or en route can jeopardize supply and force the company to use more expensive alternative sources.

Adverse weather conditions can severely curtail a company’s supply. Weather-related supply chain disruptions cause revenue flow disruptions.This excerpt from Chiquita Brand’s International’s 2010 10-K report provides insights into how adverse weather conditions can severely curtail a food company’s supply.

“Our results of operations have been significantly impacted in the past by a variety of weather-related events. For example, as a result of flooding which affected some of our owned farms in Costa Rica and Panama in December 2008, we incurred approximately $33 million of higher costs, including logistics costs, related to rehabilitating the farms and procuring replacement fruit from other sources.

“From time to time, we have experienced shipping interruptions, port damage and changes in shipping routes as a result of weather-related disruptions. While we believe we are adequately insured and would attempt to transport our products by alternative means if we were to experience an interruption, an extended interruption in our ability to ship and distribute our products could have a material adverse effect on us.”

At the other end of the value chain, customers who are affected by weather may be in no position to require further products. They may be just trying to survive and rebuild. If the company has not diversified its revenue streams, prompted by sustainability product and service opportunities, the resulting loss of revenue could be financially catastrophic, even though the company’s own facilities are unaffected by severe weather.

Replace “severe weather event” in the preceding paragraphs with “rioting in the streets” and the arguments apply equally well. If a company’s suppliers and / or customers have been disrupted by natural disasters or civil unrest, we conservatively assume the top-line loss is 2% of revenue. What are the odds of these disruptions or delays occurring? Of course, it is difficult to say. The frequency and severity of natural and political disasters seems to be increasing. Nevertheless, we conservatively assume that the probability that the revenue stream will be interrupted in the next three to five years is only 5%. If we assume the company’s current revenue is $500 million, the revenue impact multiplied by its probability results in $500,000 of the company’s revenue being in jeopardy.

We have now looked at seven threats to revenue if a company decides to not embrace sustainability strategies. In 5 Reputational Risks to Revenue without Sustainability Strategies, we calculated that a company with $500,000,000 revenue could be jeopardizing $20,250,000 of that revenue from a poor reputation on 1) energy and carbon management, 2) water management, 3) materials and waste management, and 4) eco-system damages, as well as 5) the risk to revenue from poor reputations of the company’s suppliers. In The Risk to Revenue from Less Competitive Prices, we found that another $5,000,000 could be at risk. Today, we found that sudden disruptions in the supply chain could threaten another $500,000. All told, the seven threats to revenue add up to $25,750,000, or 5.2% of today’s revenue.

Is that a big deal? Yes. Is it big enough to cause a company to rethink how sustainability strategies could help avoid this risk? Maybe. Do all these assumptions apply to all companies? No, which is why having worksheets that can be tailored to each company’s situation is helpful.

A new, re-calibrated, and more compelling business case for sustainability strategies will be described in the 10^th anniversary edition of The New Sustainability Advantage that will be released next spring. Its accompanying Sustainability Advantage Simulator Worksheets will help a company of any size in any industry sector monetize its potential decreased revenue without sustainability initiatives. Stay tuned …

Please feel free to add your comments and questions using the Comment link below. For email subscribers, please click here to visit my site and provide feedback.

Bob

There are at least seven threats to a company’s revenue stream if it fails to embrace sustainability strategies. In my last blog, we outlined five risks to revenue from a poor reputation on; 1) energy and carbon management, 2) water management, 3) materials and waste management, and 4) eco-system damages, as well as 5) the risk to revenue from poor reputations of the company’s suppliers.

This week, we’ll look at another: the risk to revenue if the company loses its competitive price advantage.

No margin, no mission. Social responsibility and sustainability include growing sufficient revenue and profitability to sustain the organization’s mission. There is nothing wrong with building enough margin into the prices of products to generate healthy profits. However, there are two ways a company could jeopardize its margin.

First, it is one thing to be expensive; it is another to be more expensive than competitors. The adjacent slide shows the concerns that drive companies’ climate change strategies. Pricing worries are behind the top three. If competitors are quicker to harvest the benefits of materials, energy, and water efficiencies, they could gain a price advantage and attract customers away.

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Second, there is also evidence in the consumer goods retail sector that a business could be leaving margin on the table, or on its competitor’s table, if it does not invest in a good CSR reputation. In their May 24, 2011 article in Advertising Age, “Does Corporate Social Responsibility Build Customer Loyalty?” Jackie Luan and Kusum L. Ailawadi describe some interesting findings. Their 2010 study of 3,000 grocery shoppers showed that four dimensions of CSR performance positively influence consumers’ attitudes toward a retailer: environmental friendliness, treating employees fairly, community support, and sourcing from local growers and suppliers. Grocers who offer locally sourced products and who are known to pay their employees fairly earn their customers’ goodwill and loyalty If a retailer is able to improve consumers’ perception of its fair treatment of employees and its local sourcing by 20%, the amount of business from those customers increases by 1.7% and 2% respectively. These numbers appear small, but they represent a sales increase of 10% to 15% for the average retailer in the study.

The big surprise in the study was that if a retailer chose to leverage its improved CSR perception into higher prices rather than more sales, a 20% increase in customers’ perception of employee fairness “translated to a price premium of about 12%, and a similar increase in local product sourcing translates to a price premium of about 16%…Consumers do not just respond to the price charged; they also respond to how fair they think the price is. High prices are considered fairer if they can be attributed to “good” motives like covering the cost of CSR efforts rather than to “bad” motives like pure profit-taking.”

To run the numbers, let’s assume the company’s current revenue is $500 million We conservatively assume that companies not practicing good CSR could find themselves with a price disadvantage that jeopardizes 10% of their revenue, and that there is a 10% chance of this occurring. That results in $5,000,000 of the company’s revenue being in jeopardy if they decide to not embrace sustainability strategies while their competitors do.

The five reputation-based risks we looked at in our previous blog put $20,250,000 of the company’s current $500,000,000 of revenue at risk. We just added another $5,000,000 for a new total of $25,250,000.

That’s bad. It gets worse. Next week, we will look at a seventh risk to revenue and then total it all up.

As usual, the above slide is from my Master Slide Set.

Please feel free to add your comments and questions using the Comment link below. For email subscribers, please click here to visit my site and provide feedback.

Bob

If a company decides to take a pass on sustainability strategies, it behoves sustainability champions to forewarn them that they may be jeopardizing their reputation with their customers. That reputational risk can quickly translate into lost revenue if customers decide they are more comfortable doing business with competitors.

It helps to size the potential revenue at risk by estimating its impact and factoring it by the probability of it occurring within the next three to five years. Assuming the company’s current revenue is $500 million, let’s look at a methodology for sizing five reputational risks to revenue:

1. Risk to revenue from poor reputation on energy and carbon management: This is directly related to customers’ climate change concerns and their perceptions of the company’s sincere efforts to reduce its carbon footprint. In fact, risk mitigation is the main reason companies pay attention to their carbon footprints, as shown in the adjacent slide.

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If we assume 5% of revenue is at risk and there is a 25% probability of this impact within the next three to five years, that results in $6,250,000 of revenue at risk.

2. Risk to revenue from poor reputation on water management: All industries are wrestling with the critical issues of peak water, water footprinting, and embedded water in both products and services. How companies address, or fail to address, these concerns may increasingly be seen as a matter of fiduciary duty and reputation. If we assume 5% of revenue is at risk and there is a 25% probability of this impact within the next three to five years, that results in another $6,250,000 of revenue at risk.

3. Risk to revenue from poor reputation on materials and waste management: As well, environmental pollution is often a companion of desperate efforts to find, mine, and refine vital natural resources. One of the ways in which a company’s reputation can be sullied is by direct or indirect involvement in the abuse of people, especially indigenous people, who get in the way of resource extraction. Reputation-destroying news stories about these social and environmental impacts can lead to customers going elsewhere for their products and services. If we assume 5% of revenue is at risk and there is a 20% probability of this impact within the next three to five years. That results in another $5,000,000 of revenue at risk.

4. Risk to revenue from poor reputations of the company’s suppliers or customers: No longer are companies expected to report only on their own operations; now they are also held accountable for the operations of their suppliers. When a company’s reputation is only as good as the reputation of the worst-behaving supplier in its supply chain, it is exposed to guilt by association. If we assume 5% of revenue is at risk and there is a 10% probability of this impact within the next three to five years, that results in another $2,500,000 of revenue at risk.

5. Risk to revenue from poor reputation on eco-system damages: As shown in the adjacent slide, the value of ecosystem services is about $33 trillion. A study from environmental research group Trucost estimated the cost of environmental damage by the 3,000 biggest companies in the world as about $2.2 trillion in 2008.

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That figure equals 6% to 7% of the companies’ average revenue. We assume 5% of a company’s revenue could be at risk when the public learns of its externalized cost of damages to vital ecosystems. Assume an ultra-conservative 1% possibility of this nascent impact being internalized in the next three to five years. That results in another $250,000 of revenue at risk.

Using the above very conservative assumptions to quantify potential percentages of revenue at risk and the probabilities of this happening in the next three to five years, these five risks could put $20,250,000 of the company’s current $500,000,000 of revenue at risk. That is about 4% of its revenue. That’s huge. This methodology yields similar results, regardless of the company / size.

Next time, we will look at two more risks to revenue. Stay tuned …

As usual, the above slide is from my Master Slide Set.

Please feel free to add your comments and questions using the Comment link below. For email subscribers, please click here to visit my site and provide feedback.

Bob

“Thanks, but no thanks. Maybe later.”Those words are like the kiss of death to a sustainability champion. Usually the rebuff follows a presentation to a busy executive who is surprisingly unexcited about the financial opportunities the company can capture if it embraces sustainability strategies. Now what?

There are only two reasons a company changes: it wants to capture opportunities and / or it wants to mitigate risks. Convincing a company executive to fully embed sustainability into its strategies and operations therefore requires a compelling two-part business case. As shown in the adjacent figure, this case must include the risks of what might happen if the company does not take action, as well as the benefits it can reap if it does.

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The risks bring a sense of urgency to the decision. In a sales situation, we sometimes use the FUD factor — planting seeds of fear, uncertainty, and doubt about what could happen if the proposed solution is not adopted. The risks help show that the status quo is not a viable option. This blog series will provide the FUD factor for the sustainability business case, starting with risks that could erode revenue.

Regulatory and litigation risks are usually top of mind when companies think of sustainability-related risks, and most companies have learned how to avoid or manage them. The new kid on the block — reputation risk — may grow to be the most important for many businesses.

Why? There are seven potential hits to revenue if a company eschews sustainability strategies. Five of them arise from potential brand erosion on environmental footprint issues; one is based on lack of action to mitigate escalating energy, water, and material expenses; and the last is the threat of sudden disruption of the company’s supply chain or access to customers.

1. Risk to revenue from poor reputation on energy and carbon management
2. Risk to revenue from poor reputation on water management
3. Risk to revenue from poor reputation on materials and waste management
4. Risk to revenue from poor supplier reputation and behaviors
5. Risk to revenue from poor reputation on eco-system damages
6. Risk to revenue from less competitive prices
7. Risk to revenue from sudden disruptions in the value chain

There are other potential threats, including another seven operating risks, but this is a reasonable cross-sector starter set of risks to the company’s revenue if they decide to take a pass on sustainability strategies. Quantifying the potential impact of these risks supports a comeback to the “Thanks, but no thanks” objection, when you might say, “I understand your hesitancy, but let’s make sure you are also okay with the potential risks of not using these sustainability-related strategies.” An executive’s low appetite for risk may trigger a green light for sustainability strategies, even if the potential opportunity benefits did not.

In upcoming blogs, we will examine each of the seven potential risks to revenue, monetize its potential impact, and factor that amount by the likelihood it will occur within the next three- to five-years. Stay tuned…

As usual, the above slide is from my Master Slide Set.

Please feel free to add your comments and questions using the Comment link below. For email subscribers, please click here to visit my site and provide feedback.

Bob

In my last two blogs, we looked at how company sustainability efforts can help generate more revenue because of its enhanced brand image as a responsible corporate citizen, as well as more revenue from new products and new markets. This week, we will look at additional revenue from selling services and leasing products.

There are four new revenue streams that companies exploit when they focus on selling services instead of producing goods that deplete natural capital.

1. Lease the product instead of selling it. Value is delivered as a flow of services. For example, InterfaceFLOR’s Evergreen Lease® system leases flooring rather than selling it. In return for a monthly leasing charge, InterfaceFLOR supplies, installs, and replaces its carpet tiles when they are worn or soiled. A company that leases products will take them back at the end of their useful lives and recycle their components. The steady flow of monthly lease payments stabilizes the peaks and valleys of income from more volatile sales. Leasing also reduces the need to maintain manufacturing capacity to meet peak demand, another source of waste and risk.

Interestingly, leasing reverses the motivation behind the throw-away society. Instead of using planned obsolescence to boost sales, manufacturers are encouraged to make more durable and easily upgradeable products. The longer the product lasts, the more profit for the company. Happily for the environment, longer durability avoids waste and overflowing landfill sites.

2. Use economies of scale to provide off-site outsourcing for non-core customer functions. An example of this approach is computer companies that provide computing services for companies which previously had their own in-house IT departments.

3. Grow revenue by creatively supplementing current product revenue with associated contract services. Think of this as a kind of onsite outsourcing. The focus of differentiation shifts to bundled services and providing end-use value while ensuring cradle-to-cradle product stewardship. For example, under the Pay-As-Painted program, Chrysler contracts out its in-plant paint shop to its paint supplier, PPG. Chrysler pays PPG a fixed amount for each vehicle that leaves the paint shop with a finish that meets Chrysler’s performance quality expectations.

Chemical companies use this approach to sell chemical performance instead of chemicals. Through innovative systems like Dow Chemical’s CHEMAWARE program, companies can drastically increase their efficiency (up to 80% reduction in solvent use) while seeing emissions decrease. Achieving this is possible as customers are charged per square meter of product cleaned or time used to clean parts on-site.

4. Package homegrown expertise and open up a consulting practice and new revenue stream. For example, using its 15 years of experience applying sustainability in competitive global markets, Interface offers practical guidance to other companies through its InterfaceRAISE consulting practice. VeriForm’s “greening experiences” with its metal fabrication process in 2007-2008 enabled it to launch an independently owned energy management company, VeriGreen, to advise companies on how real-world, practical solutions can quickly reduce energy costs and increase profits for others.

So companies benefit from leasing, outsourcing, contracting, and consulting revenue streams, while the environment benefits from less waste and resource depletion.

This is the third blog outlining how companies can increase their revenue using smart sustainability-oriented strategies.

• August 23, 2011: More B2C and B2B revenue from a more sustainable brand,
• September 6, 2011: New revenue from new products and new markets,
• Today: New revenue from leasing and services.

The potential increase in revenue from an appropriate combination of these three approaches can be significant. So can the lightening of the company’s environmental footprint. The sustainability advantage is a win-win proposition.

Please feel free to add your comments and questions using the Comment link below. For email subscribers, please click here to visit my site and provide feedback.

Bob

In my last blog, we outlined how companies can gain more Business-to-consumer (B2C) and business-to-business (B2B) revenue from a more responsible company brand. This week we will look at a second way that sustainability strategies bolster revenue: the green attributes of the company’s products and services become differentiators.

The payoff for differentiation is increased market share as customers who seek “green” solutions are attracted to the company’s products and services over its competitors’. That is, the sustainability attributes of a company’s products are differentiators to B2C and B2B customers who seek “green” solutions.

The adjacent slide and the one below show the consumer demand for green products is still strong, although surveys indicate that consumers will not pay much extra for green products. However, by applying creative approaches to manufacturing and design, environmentally friendlier products need not be more expensive or lower in quality.

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When green and non-green products achieve price equity, there is evidence that consumers choose the greener one.

There are parallel B2B revenue opportunities. GE is the classic example of a company determined to dominate the B2B market for green products. As explained by GE’s ecomagination 2009 annual report, the ecomagination portfolio of products and services, which includes “green” appliances, aviation, energy, healthcare, lighting, oil and gas, transportation, and water products, grew from 15 in 2005 to over 90 by 2009.

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When GE first launched its ecomagination thrust in 2005, it quickly generated 6.4% of the company’s sales — $10.1 billion toward GE’s overall revenue of $157.2 billion in 2005. Four years later, GE’s ecomagination revenues had grown to $18 billion, even in a challenging global environment, and accounted for about 10% of GE’s revenue. In 2011, GE pledged that ecomagination revenue will grow at twice the rate of total company revenue between 2010 and 2015, making ecomagination an even larger proportion of total company sales.

Siemens has a similar aggressive green product strategy. Its environmental portfolio includes products used in renewable energy; power transmission and distribution; green solutions for transportation; building technologies; lighting; environmental technologies; and healthcare. In fiscal year 2010, Siemens’ environmental portfolio accounted for around €28 billion, or 37%, of the company’s total revenue of €76 billion.

Siemens and GE want to be the go-to companies for green products in their market sectors. Companies like them “creatively destruct” their own product lines as shown in the upper left-hand quadrant of the adjacent slide, to develop innovative new green products before their competitors do. Then they take them to market in the upper right-hand quadrant, tapping into exciting new growth markets.

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In my previous blog and this one, we have looked at two ways in which sustainability strategies can the top line: they can make the company’s brand more attractive in its B2C and B2B markets, and they can open up new revenue opportunities from new products and new markets. In my next blog, we’ll look at a third sustainability-enabled revenue stream.

As usual, the above slide are from my Master Slide Set.

Please feel free to add your comments and questions using the Comment link below. For email subscribers, please click here to visit my site and provide feedback.

Bob