How to Make Sustainable Materials Use Matter
A recent SAP Insights survey on sustainability found that companies’ biggest barrier to taking more environmental action is their uncertainty about how to embed sustainability into business processes and systems. Making more sustainable choices about materials use is one way to address that challenge.
Apple, for example, gives customers the option of returning their used phones, laptops, and other products. Newer items earn trade-in credit, which the company recoups by refurbishing and reselling them. It also disassembles unrepairable and obsolete technology, both for parts and to extract and recycle or reuse materials like aluminum and gold. As one result, the latest MacBook Airs, Mac Minis, and iPads are encased in 100% recycled aluminum from Apple’s own manufacturing scrap as well as postconsumer building and construction waste. This approach recaptures the value of materials that would otherwise be discarded while keeping e-waste out of landfills and incinerators.
Indeed, the SAP survey identified sustainable materials use as one of respondents’ top two priorities for investing in the environment, roughly equal to their commitment to addressing climate change. We also found a minority of companies, which we call the Nows, that believe sustainability is financially material* to their operations today and are already profiting from their investments in it. The Nows are significantly more committed than other survey respondents to investing in sustainability across the board, including sustainable materials use.
And the business case for that investment is incontrovertible. In 2020, the Center for Sustainable Systems at the University of Michigan found that raw materials use has grown at more than three times the speed of population growth in the United States alone. Given an expanding global population that insists on an ever-higher standard of living, combining reuse and recycling with more sustainable raw materials would help ensure companies have enough resources to keep up with demand.
There are, of course, trade-offs. Companies may have to spend more up front to redesign their products and manufacturing processes to make better use of current materials or substitute different ones. But it’s likely they can build on their existing processes and systems, which will help them see a fairly prompt return on investment. Along the way, it’s possible they may also identify previously unnoticed opportunities to cut costs and create new income streams.
“There’s increased interest in materials choices because they can fit into a larger sustainability narrative,” says Kevin Dooley, chief scientist at The Sustainability Consortium, a nonprofit helping the global consumer goods industry create more transparent and environmentally sound supply chains. “And there are many ways to approach materials use based on what will appeal to customers while meeting sustainability goals.”
Dooley offers the example of a university that wants to make its logo T-shirts “greener.” Arguably, the university has multiple choices of more sustainable materials. Synthetic fabric from recycled plastics is highly durable and requires less water to produce than cotton. Cotton, on the other hand, can be recycled, is biodegradable, and doesn’t shed microplastics into the water when it’s laundered. If the university can source organic cotton (or an alternative material like hemp) from a nearby farmer, it can promote its support for the local economy. The fabric the university chooses will depend on how it wants to balance multiple sustainability priorities with traditional factors such as cost, quality, and price.
The business value in sustainable materials
To some degree, a combination of consumer demand and government regulation is driving many companies toward more sustainable sourcing and use of materials. Consider the current pressure to eliminate single-use plastics, driven by both heartrending photos of animals that starved to death with stomachs full of trash and predictions like that of the World Economic Forum: that without intervention, the oceans in 2050 will contain more plastic waste than fish. Consumers are reacting with demands that companies use less plastic. Meanwhile, governments are responding with increasingly stringent regulations and are ratcheting up taxes, fees, and bans on single-use plastics. At the same time, they’re pushing companies to take responsibility for the disposal costs as a way to encourage them to choose different materials, or at least to design products and packaging that contain less plastic and can be reused multiple times.
There’s also significant evidence that customers are putting their money where their demands are. In 2020, sales of sustainably marketed products grew seven times faster than those of other consumer packaged goods and accounted for more than half of overall growth in the category. Nonetheless, Dooley notes that while The Sustainability Consortium members he works with are finding current value in selling sustainable products to consumers, they’re getting even more value from their overall sustainability efforts in the form of cost savings.
Companies discover savings opportunities when they invest the time and effort into collecting data about their current materials use. The more data they have, and the more visible and accessible it becomes, the more useful it is for generating insights that lead to greater efficiency, increased cost savings, and potential new opportunities.
Calculating the true costs of your materials use – not just to manufacture and package a product, but also the way it’s used and eventually disposed of – may initially seem burdensome or impractical to the point of impossibility. But the more you understand those costs and how you incur them, the more you can identify opportunities to create value, recapture it, or both.
Exploring the full lifecycle costs of materials contributes to a comprehensive view of sustainability in the markets where you do business, which in turn provides metrics for areas where you can set goals and take action. For example, you may identify ways to avoid materials (like plastic) that can’t currently be recycled in a key market. You might also develop new product designs based on more sustainable materials. Sportswear brand Cariuma makes knit sneakers from thread that combines plastic reclaimed from the ocean with highly renewable bamboo – an approach that reduces manufacturing waste and promotes alternative textiles while creating new markets among eco-conscious consumers.
You may even discover new ways to shift or extend your entire business model. Seventh Generation, which makes eco-friendly cleaning products, created an ultraconcentrated version of its flagship laundry detergent that contains 50% less water and requires 60% less plastic to package. By having consumers reconstitute the detergent from their own taps instead of paying to ship water around the world, the company distributed more product at less cost while making that product even more sustainable.
Meanwhile, in places where governments are using regulations to promote recyclable materials and minimize waste, companies willing to pay more for materials that include recycled content will find opportunities to recoup these costs through lower taxes and fees in those markets.
It’s likely one reason the Nows in the SAP Insights survey are so enthusiastic about investing in better materials use is because they see its potential to deliver an impressive ROI, even though that may take some effort to achieve.
Two approaches to sustainable materials use
The ultimate goal for sustainable materials use is a circular economy that increases value by eliminating waste. However, changing materials in products or using them differently can be complicated and expensive. You had good reasons for choosing the plastics, fabrics, metals, or minerals in your company’s products and packaging. It takes planning to account for all the potential impacts from choosing differently.
“One area of saving can come from your logistics operations,” says Ian Catley, director at Turnkey Group, whose software provides real-time data collection and analytics to help companies more effectively manage environmental, social, and governance efforts and associated risks. “Perhaps you can’t easily switch the materials you use, but with better planning you could switch air freight to ocean freight, with a significant reduction in both cost and greenhouse gas emissions.”
Catley notes that even a seemingly minor decision to change a product wrapper made of polyethylene to one made from compostable materials may require new manufacturing and shipping processes to ensure the revamped wrapper performs as well as what it replaced.
Still, it makes sense to start exploring new approaches to materials use in two key areas: resource recapture and packaging. After all, every resource you recapture is one you don’t have to buy. And every product has to be packaged, even if only for the trip from producer to purchaser.
1. Recapturing resources
Manufacturers are developing alternatives to purchasing raw materials, particularly by reclaiming valuable materials from complex products as Apple does. In fact, these efforts are especially common with electronics: a single circuit board can contain more gold and copper than an entire ton of mined ore, while the cobalt necessary for lithium-ion batteries is increasingly scarce and expensive. In some cases, recovering and reusing resources can be more cost-effective, as well as more environmentally sound, than extracting raw materials.
A handful of manufacturers are creating products that actively sequester climate-changing greenhouse gases. One example is Interface, a flooring manufacturer with a line of carpet tiles that combine recycled nylon and vinyl with latex extracted from exhaust captured on its way out of factory smokestacks. By locking these industrial emissions into flooring instead of letting them drift into the air, each 10’x20′ installation of these tiles keeps about 12 pounds of CO2 out of the atmosphere – the equivalent of driving more than 13 miles in an average passenger vehicle.
2. Rethinking packaging
Manufacturers are doing more to recycle and reuse packaging. They are also moving away from petroleum-based plastic that lingers in landfills for thousands of years to create new forms of packaging made of cardboard, organic fibers from renewable sources like wool and bamboo, and compostable plastics made from corn or sugarcane that degrade within months.
Catley says that even though manufacturers’ focus on packaging is predominantly driven by opportunities to reduce costs, such as transportation and compliance fees, companies may also see their efforts as benefiting their reputation. As he points out, “Companies don’t want customers to see their branded materials washed up on the beach.”
Sustainable materials use takes leadership
The SAP Insights survey found that companies are more likely to take action on sustainability when their leaders consider it a priority. This finding points to an approach for exploring how to use materials more sustainably.
The Nows report that their top motivation for taking environmental action is CEO and board commitment. They also assign accountability for it to significantly more roles across the organization than other companies do, ensuring a sustainability mindset permeates the enterprise.
The Nows have also been collecting data around sustainability longer, are taking more actions in pursuit of sustainability, and are achieving better business outcomes as a result.
Business leaders can apply these insights in three specific ways:
First, create a sustainability vision and agenda to make clear to the organization why sustainable materials use matters and to get buy-in at multiple levels.
Second, identify and explain the business benefits, such as cost savings or supply chain resilience, of reducing, reusing, and recycling the materials your company already uses, as well as the potential benefits of transitioning to other materials.
Third, spread the responsibility for making materials use more sustainable throughout the organization, from purchasing to design to manufacturing. Getting more parts of the business involved, invested, and actively experimenting with alternatives increases the volume and variety of data you can use to develop and refine your approach.
“The product lifecycle from cradle to grave is on every company’s agenda,” Catley comments. “Even renewable materials aren’t all that renewable yet, so it makes sense to make that a high priority. Materials use sits squarely in the middle of the supply chain, and any smart company is looking at that from end to end to find ways to reduce risk and increase value.”
*By material, we mean an event, fact, or issue that is reasonably likely to affect the financial condition or operating performance of a company and should be publicly disclosed (along with the corresponding financial statements).