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Key To Sustainability: Innovation, Not Indexes, Is Essential

by Marc S. Reisch
November 1, 2010 | A version of this story appeared in Volume 88, Issue 44

Sustainability-oriented innovation, rather than the public relations benefits of sustainability indexes, is what chemical companies should be paying attention to, says Goetz Erhardt, a senior executive partner at consulting firm Accenture.

In a survey of 1,100 chemical firms, customers, and retailers conducted earlier this year in cooperation with the American Chemistry Council, a trade association, Accenture found that chemical companies largely have a 1990s mind-set when it comes to sustainability, Erhardt says.

Sustainability indexes such as the Dow Jones Sustainability World Index and the Carbon Disclosure Project's Leadership Index profile leading corporations' sustainability posture. But the study Accenture conducted found that, at least among chemical makers, most companies aren't taking sustainability far enough.

Chemical firms placed too much importance on product stewardship and regulatory compliance, Erhardt says. Chemical makers value these efforts, which they should be doing as a matter of course, more highly than their customers do, he explains. Erhardt isn't recommending that chemical companies lighten up on stewardship and regulatory compliance. Customers expect that sort of attention to housekeeping matters, he says, but they aren't willing to pay extra for them.

According to the survey, chemical firms overrate the value they themselves bring in customer support and technical knowledge, Erhardt says. And the study also found that chemical firms are too often reactive to complaints such as those from consumer organizations that want, for instance, to see a reduction in pesticide residue on produce sold in stores.

Instead, chemical companies should place more emphasis on the development of innovative products and processes that help customers save energy and costs, the survey found. Products that are recyclable are in demand too. Those are aspects of sustainability that chemical firms often do not exploit.

Sustainability indexes only provide a snap shot of firms' sustainability efforts. However, Accenture finds, "Chemical firms don't recognize the value they can get from their customers for developing more efficient products," Erhardt says.



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