Making Net-Zero Profitable

A Plan for Net Zero

Can CPGs Achieve Profitable Sustainability?

Increasing global inflation has exposed the fragility of what Stephen Picard, vice president of strategy consulting at Publicis Sapient, deems "green pet projects"—that is, sustainability or emissions goals that do not create market value.

How can consumer products (CP) companies, from electronics to consumer-packaged goods (CPG) to luxury, determine the difference between a green pet project and a sustainable company transformation that provides long-term value?

There are three pillars of sustainable transformation: consumer behavior, data and action. When combined, these pillars will make sustainable efforts truly profitable.

The three pillars of profitable sustainability

“As soon as companies engage in sustainable actions beyond compliance, which very few have done, their long-term value increases due to a perceived ability to mitigate reputational risk and bolster customer and employee loyalty."
- Stephen Picard, Vice President of Strategy Consulting at Publicis Sapient

Engaging consumers in sustainability

While consumer discourse around sustainability strengthened in 2023, consumer behavior has been slower to change than many CP firms imagined. A Publicis Sapient survey found that 77 percent of U.S. adults say they would avoid retailers that aren't sustainable, but only 54 percent also say they purchase products even if they know they aren't sustainable.

It seems that although most consumers care about sustainability, it doesn’t always influence their purchasing behavior. This is often because of rising costs of living limiting sustainable purchasing power.

According to Emmanuel Krantz, senior director of CX and innovation at Publicis Sapient, the cost-of-living crisis has continued to accelerate polarization between consumers and societies that act on sustainability and those that don't. During economic downturn, higher-income consumers are still able to purchase more expensive and more sustainable products, while lower- and median-income consumers fall back to looking for the lowest prices.

At the same time, even if many consumers are prepared to pay more for sustainable products, a lack of accessible recycling and product disposal options can get in the way of a product’s intended impact.

For example, around 25 percent of recycling from “single-stream” recycling programs (found in the majority of U.S. neighborhoods) is contaminated, and goes straight to the landfill. On top of that, research suggests that U.S. consumers only recycle about half of their household recyclables. This means CP firms need to think beyond consumer behavior to achieve net-zero goals.

“Initially, many CP companies turned the responsibility of sustainability onto consumers, asking them to pay more for sustainable products, or go out of their way to reuse or recycle goods and packaging. As the economy has worsened, we see a growing sentiment among consumers that this responsibility should in fact sit more with big companies—as it is often their large-scale business practices that are doing the most harm—and that many of their consumer-facing efforts to address sustainability are superficial.”

Emmanuel Krantz, Senior Director of Customer Experience and Innovation at Publicis Sapient

Using emissions data for sustainability

As looming regulations come to the forefront, sustainable consumer behavior needs to be combined with robust emissions data, which will also help to drive profitable corporate action.

Companies operating or incorporated in the EU will have to begin to measure scope 3 emissions in the 2024 financial year, to begin reporting in 2025, according to The EU's Corporate Sustainability Reporting Directive (CSRD). This is because scope 3 emissions account for the majority of overall emissions in most industries, and more than 90 percent of overall emissions for the capital goods sector, specifically.

While reporting mandates in other regions like the U.S. haven’t been confirmed, CP firms that invest in the technology required to collect this data will not only be prepared for future regulations closer to 2030 but will also be able to use the data to strategically identify areas of opportunity that will lead to maximum emissions reductions.

Only 44 percent of companies in manufacturing and apparel industries report scope 3 emissions, according to research from 2021. In order to respond to this growing need for scope 3 emissions data, CP firms need to take a new approach:

Invest in cloud-based, ERP emissions data management to store and analyze scope 1, 2 and 3 emissions and operations data in real time on a single platform

Identify the top contributors to GHG emissions from suppliers, transportation and manufacturing, and identify where emissions reductions can also reduce costs

Creating sustainability partnerships

Deciding which sustainability project to implement to actually move the needle toward net zero (and long-term profitability) is still a major obstacle for CP companies due to lack of internal knowledge and resources.

In 2024, long-term collaboration across technology providers and sustainability experts will be essential, because most CP firms don't have the internal expertise required to create impact.

Technology providers can help marry ERP operations data and real-time carbon emissions to optimize the product lifecycle

Sustainability experts can analyze the complexities of environmental impact while offering out-of-the-box solutions like green manufacturing processes. The challenge is there, but finding a unique competitive differentiator can help organizations set new industry standards

Environmental, social and governance (ESG) consulting can help test the viability of a completely new business model and scale it profitably

“Without partnerships, true sustainable transformation, involving data, consumer behavior, and action isn’t possible.”

Oded Lavie, Vice President of Innovation, Creative Technology and Business Development at Publicis Groupe

2024 sustainability trends by sector

Finally, CP firms should think about the maturity of their sector when it comes to 2024 investments.

These are the top sustainability recommendations from our industry experts, based on consumer trends, proprietary research and sector expertise:

Consumer electronics and white goods industry sustainability

E-waste management: Many consumers don’t properly recycle or dispose of e-waste, but retail partnerships for reuse and secondhand purchases can make a circular economy more accessible for consumers.

Carbon-neutral shipping: Maritime shipping contributes to 3 percent of worldwide GHG emissions—more than flying. As the airline industry latches on to sustainable airline fuel, electronics companies need to measure their shipping emissions to make progress toward net-zero goals.

Beauty and personal care industry sustainability

Clean beauty: As consumers embrace the trends of “de-influencing” and “minimalism,” consumer engagement, healthcare and subscription models can increase customer lifetime value without incentivizing consumerism.

Personalization: Consumers will pay more for personalized beauty products that address all of their needs at the same time, combined with sustainable ingredients as an added bonus.

Food and beverage industry sustainability

Industry partnerships: Sector partnerships, like the sustainability partnership between AB InBev, Colgate-Palmolive, Coca-Cola and Unilever, will drive industry-wide standards and learning while also reducing costs.

Product lifecycle management: To systematically reduce scope 1 and 2 emissions, engage in product lifecycle management, partnering with experts on solutions to reduce waste, rather than siloed sustainability projects that don’t drive long-term value.

To drive sustainable transformation through emissions data, consumer behavior and corporate action, contact us.

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