Cost and footprint management
In an environmentally-conscious world that focuses on short-term profit, the savings potential of less wasteful approaches is increasingly being recognized. Strategy& service offerings help organizations improve their ‘footprint’ be it focused on emissions, energy usage or resource usage, including:
- Lean production: Lean production has long proven its financial benefits. It is now re-emerging for its ability to reduce waste and other environmental impacts. Of course this also brings further cost savings.
- Energy and emissions management: We consistently find opportunities to profitably reduce clients’ energy usage and emissions. In addition, climate change concerns are creating a price for greenhouse gas emissions, enabling organizations to profit further from new rounds of energy and emissions reduction projects.
- Low carbon supply chains: Optimizing supply chains for both costs and environmental footprint can create substantial benefits for companies and customers — as well as improving supplier practices.
- Closing the loop: Leading companies worldwide recognize the potential of recycling and remanufacturing to reduce their costs and environmental impacts. They are creating new operating models with strong customer appeal — giving them additional competitive advantage.
Business model enhancement
While many companies have begun to understand low carbon and sustainability issues and are implementing basic footprint development and risk management practices, they have not moved to the next level. This next level typically delivers substantial value from integrating sustainability into everyday business activities. Greener sourcing, market positioning, customer segmentation and future strategies are just such opportunities.
- Greener sourcing: Customer/consumer preferences increasingly mean that organizations need to better understand the impact of their entire industry value chain on their own products and services, and know how to use this information to improve their offerings.
- Greener market positioning: Beyond environmental benefits, internal green initiatives can enhance an organization’s credibility and appeal to a range of stakeholders including regulators and customers. This can help, for example, with securing planning approvals or improving the appeal of a brand. Done carefully, based on a genuine track record of sustainability actions, significant value can be unlocked.
- New customer segments: The new greener customer psychographic is willing to pay more for green products. This represents an attractive new market for many companies. However, this segment is difficult to identify and access as it cuts across demographics. Information can be found within a company’s databases and unlocked to reveal customer willingness to pay and the product characteristics sought by this segment.
- Future-focused strategies: In a fast-changing world with volatile commodity price fluctuations, a rapidly changing regulatory landscape, and evolving customer preferences, companies seek strategies that maximize their options and mitigate risks. Scenario analysis and corporate wargaming, originally developed by Strategy& in the 1950s, are popular tools to inform strategy in this dynamic environment.
Regulatory change and new industry requirements
Well developed new policies, imposed by governments or key industry players, can directly drive environmental improvement and also present opportunities for early movers to be rewarded for their foresight. Recent events around the world have demonstrated the need for evidence-based, fair and consensual policy and legislation on low carbon and sustainability — as well as efficient and effective implementation.
Our focus, for both our public and private sector clients, is on delivering tangible results, including:
- Policy research and analysis: Governments and corporations (such as Walmart and Proctor & Gamble) are setting increasingly stringent green policies. For these organizations, understanding the implications of proposed policies is vital to ensure cost-effective responses, minimize adverse impacts and consequences, build acceptance of proposed changes. Conversely, for those impacted by policy change, an early and thorough understanding of a new policy, and the ability to influence its development, create competitive advantages.
- Policy implementation: For many governments and corporations, implementing sustainability policy requires additional capacity and capabilities. Using external assistance for these one-off tasks is proving a valid and cost-effective solution, accessing international best practice and cross-disciplinary skills to minimize failure risk and rectification costs.
- Carbon markets: Emerging carbon market mechanisms around the world are seeing companies and governments establishing and managing a portfolio of carbon assets, requiring new capabilities and creating new profit opportunities. For those in developing nations, the clean development mechanism creates further opportunities.
Growth and innovation
Many low carbon and sustainability responses represent disruptive change. Strategy& is experienced in helping organizations identify and capture the opportunities that result from these disruptions. For example:
- New product development: Changing customer preferences and emerging technologies are creating new green product opportunities. These opportunities require a rigorous business case demonstrating demand, quantifying risks and returns, as well as a detailed implementation and commercialization plans. The rewards of new green products extend beyond increased revenue and competitive differentiation to environmental benefits and improved staff morale.
- New business opportunities: A rigorous, exhaustive and efficient opportunity search process (such as Strategy&’s growth lens methodology) enables companies to identify attractive new business lines where existing strengths are built upon to create competitive advantage.
- Renewable and alternative energy sector growth: Low emission energy sources allow utilities to alter their portfolio mix, thereby managing risks and emissions. For electricity users, renewable energy also offers the chance to reduce their emissions footprint through on-site generation. Production of renewable energy equipment provides further growth opportunities for investors.
- ‘Cleantech’ deployment and growth: Emerging cleantech companies face unique commercialization and growth challenges as they take on industry incumbents and low-cost producers. Robust growth strategies are needed to unlock latent potential and capitalize on competitive advantages, while managing the many risks.
Many of our more established clients work with us to understand the impact of emerging ‘cleantechs’ on their industries and the risks and opportunities that they create.