Consequences of ignoring sustainability could be larger than you think

I've been holding onto the results of some rather chilling research, that is if you manage a business that has anything to do with the consumer goods industry. The crux of the matter is this: if you ignore environmental sustainability, you could see your earnings slip by between 13 percent and 31 percent by 2013, and you could see them slip further by 19 percent to 47 percent by 2018.

The data comes from a joint research project conducted by World Resources Institute and A.T. Kearney, that has been published as part of a report called "Rattling Supply Chains: The Effect of Environmental Trends on Input Costs to the Fast Moving Consumer Goods Industry."

The report isn't necessarily taking some sort of activist stand with respect to sustainable business practices. Rather, it analyzes how environmental legislation and climate changes could affectd commodity prices, the supply of raw materials, transportation costs, and so on. It also provides some instructive idea about how to take action. Here are the four suggests it makes in that regard:

  1. Understand how dependency between your most fundamental cost drivers and emerging environmental trends.
  2. Check out what other companies in your industry and in your specific supply chain are doing about sustainability.
  3. Set some priorities according to their short-term and long-term impact on your cost structure, revenue and overall brand reputation
  4. Get cross functional teams involved in sussing out the solutions, which could everything from product redesign to revised sourcing strategies.

If your company has anything to do with consumer goods, especially those affected by commodity pricing (chocolate anyone?), it would be smart to read this report.

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