June 27, 2023
Best practice: use innovation to fast-track sustainable business transformation
Everyone is eager to learn from the best. When it comes to corporate sustainability, our expert Alexandra Pella has spotted a strong correlation between innovation and sustainability. Get a quick overview in this article containing three ‘simple’ steps to best practice.
Being management consultants, we have the privilege of observing – and influencing – the inner workings of many, many companies. At Ramboll, we see a clear trend among our clients at the forefront of sustainable business practice; they have made sure that sustainability has been implemented into the innovation function. We see this across different sectors – consumer goods, manufacturing and industry – and it greatly fast-tracks these organisations’ sustainable business transformation.
These clients have set ambitious strategic objectives around sustainability and have often already embedded sustainability into their vision and mission. Importantly, they’ve identified the innovation function as paramount for effective operationalisation of this change. If the target is a sustainable business, it requires a sustainable product portfolio, and the future of a product portfolio is determined by the quality of the innovation function, its people and processes.
Figure 1 The impact journey from doing less harm to doing more good
Embedding sustainability is a dynamic process and requires a holistic approach based on revising:
- Strategy and targets
- Innovation process and metrics
- Decision-making tools
1. Embedding sustainability into strategy and targets
When we refer to sustainability, it’s important to note that the most relevant ESG topics – or material topics – differ depending on sector and company characteristics. Companies affected by the first wave of the Corporate Sustainability Reporting Directive (CSRD) for example, currently are in the midst of prioritising these topics through double materiality assessments.
2. Integrating sustainability into the innovation process and metrics
Most innovators and designers will be familiar with the sweet spot of innovation being defined as the overlap of three main lenses:
- Desirability - Does the user need it?
- Viability - Does it make commercial sense?
- Feasibility – Is it technically and operationally deliverable?
These are all essential angles to innovation, however, if your innovation process is built around a model like this, you will systematically be designing unsustainable products, services, and business models. The simple solution is to add a sustainability lens to the equation. Simple, but far from easy.
- Sustainability – Does the solution have a neutral or positive net impact on people and planet?
We advise clients to aim for a stepwise change where sustainability is first explicitly introduced to the innovation process. In practice, this means mapping out the current process in place, breaking it down, and identifying the most critical opportunities for integrating sustainability. The long-term target then, is for sustainability to be naturally embedded rather than separately called out. Moving through this journey will help you move towards a net positive impact as a business.
Figure 2 The innovation process transformation over time, embedding sustainability
The starting point for identifying the right sustainable innovation metrics are your material topics. Within these topics there are a plethora of potential metrics to be mapped and prioritised from existing frameworks, standards and initiatives. Which metrics to prioritise will depend on company specific parameters such as the type of goods produced, regulatory and geographical aspects, as well as organisational structure.
For example, regulatory aspects alone informing Circular metrics include CSRD: ESRS E5, the EU Taxonomy, the Ecodesign Directive, and the Right to Repair.
3. Driving sustainable choices - from ideation workshops to board meetings
User friendly decision-making tools is a must. These will range from board and senior management level overview tools, giving a bird’s-eye overview of direction, through to departmental and down to product level decision making tools such as scorecards and stage gates used in the innovation process.
A rule of thumb for an effective decision-making tool in this space is that it should help drive decisions that place a company’s resource use within the planetary boundaries while balancing other aspects of a healthy business.
We’ll continue unpacking these and related topics in coming articles
In coming articles, we’ll discuss themes such as the overlap between innovation and product portfolio management and unpacking how topics such as ESRS E5 (Resource use and circular economy), Ecodesign and Right to Repair are changing the innovation and design process. Stay tuned and feel free to reach out to discuss sustainable strategy and innovation with us.
Want to know more?
Head of Strategic Sustainability Consulting Finland
Key drivers and disruptors for circular economy in 2023
Efforts to mainstream circular practices depend on increased regulation and access to finance.
Circular disruption in the buildings value chain
The ripple effect of aggressive regulation coupled with investor and customer expectations will drive a circular economy disruption in the buildings sector. In this article, our circular economy experts explain the consequences for the main actors in the buildings value chain.