Our 21st century economy is being reshaped by consumers searching for “in me, on me and around” solutions. Examples of this consumer activism abound. Fast food restaurants like McDonalds confront stagnate revenues as consumer search for foods that deliver on taste, price and health. A recent Gallup poll found that 73% of Americans want a strong emphasis on renewable energy. This compares to only 21% of Americans who feel the emphasis should be on fossil fuels. One manifestation of this consumer shift is that solar consistently represents over 50% of new generating capacity in the U.S.
The millennial generation is a key force driving the reshaping of our economy. The millennial generation is increasingly displacing the boomer generation in the workforce and buying power. Millennials place an increased emphasis on business social responsibility in deciding what to buy and who to work for.
The cumulative impact of these mega trends is a multi-trillion dollar global Green Economic Revolution. A new generations of green companies are emerging. These companies are using innovations in clean tech, organic agriculture, artificial intelligence and the Internet of Things to deliver products that align value with values. Think autonomous cars, net zero energy buildings and farm-to-fork restaurants as examples of how sustainability innovation is reshaping our economy, the environment and individual businesses.
The question is how does your business harvest this growth opportunity?
Freya Williams, Futerra North America CEO, addresses this question in her new book, Green Giants. Her book profiles nine companies with green products that achieve $1 billion or more in annual sales. This first article profiles the business case for sustainability that Williams outlines in Green Giants. The next article will outline her six factors for achieving green sales growth. A third article is a case study on Clif Bar, and their CEO Kevin Cleary, on how they have used sustainability to achieve a 17% annual growth rate.
Green giants are proving sustainability sells
Winning customers and growing sales is the bottom line business case for sustainability. Here are notable examples of companies that are growing sales by going green:
Target. Target’s Made to Matter product line encompasses approximately 100 products in food, baby, beauty and household categories. These products are defined by their reduced waste/packaging, no use of additives or harsh chemicals, reduced sugar and dietary criteria. In 2015 the Made to Matter product line achieved $1 billion in annual sales with 30% sales growth.
Toyota and Tesla. Toyota is on track to globally sell 1.4 million hybrid cars in 2016. This represents 17% annual sales growth. Tesla announced a 2017 launch of an all electric car selling for $35,000 before tax incentives with a 200 mile range on a full charge. The company has received $10 trillion dollars in pre-orders!
Costco. Costco is now America’s largest organic grocer. It’s Kirkland Organics brand achieved $4 billion in 2015 sales.
Walmart. Walmart has deployed a Sustainability Index to qualify vendors and products. A company that scores #1 on this index within their product category, or a minimum 80/100 score, qualifies as a Sustainability Leader. The sales of Sustainability Leader products exceeded $1.5 billion in 2015.
Williams notes that these companies are not green unicorns. Mirroring Green Giant best practices is a new generation of companies like Patagonia, Method and Warby Parker that are rapidly growing toward $1 billion in annual green revenues.
Green giant sales success is also having a “pivoting” impact on competing companies. To remain competitive the competitors of green giants are adopting green business best practices. As Williams summarizes, the business case for sustainability is that green sells and the proof is in the growing numbers of companies succeeding at winning customers and growing revenues with green products.
How to sell a billion dollars of green products?
Based on the evidence the obvious question is how to align your company with the Green Economic Revolution? A related question is what are best practices used by Green Giants to grow revenues that can be applied to your business? That will be the focus of the second part of this three part article.
The third part of this article series will profile one of my favorite companies and CEOs. Clif Bar, and their CEO Kevin Cleary, are best in class leaders in using sustainability best practices to grow business results. This third article in the series will profile their latest innovations that are achieving 17% annual growth.
The business case for sustainability is proven. Author Freya Williams’ book, the Green Giants, documents the growing trend of companies achieving at least a billion dollars per year in green product sales. Example Green Giants includes Costco annually selling over $4 billion in organic food and Walmart annually selling $1 billion of products that achieve high scores on their Sustainability Index.
The question every business leader should be asking is how to reshape your company to realize this revenue growth opportunity?
The six factors that drive green sales success
In Green Giants Williams identifies six factors common to companies that have successfully achieved at least a billion dollars per year in green product sales. They are:
Leadership. Commitment by a senior leader, most especially the CEO, is the foundational step common among Green Giants. In these companies sustainability is not just a staff function. Sustainability is central to the CEO’s vision. Sustainability is integrated into the entire business strategy.
Disruptive Innovation. Green giants use sustainability to drive innovation. Sustainability drives their use of lean manufacturing tools to achieve goals like zero waste manufacturing that reduces both costs and environmental impacts. Sustainability drives their use of emerging technologies like artificial intelligence, solar or the Internet of Things to win customers while also addressing problems like global warming. A poster child for this trend is Tesla and their disruptive solutions in solar, batteries, AI technology that enable zero emissions autonomous driving.
Purpose Beyond Profit. Especially among millennials, purpose sells. Williams calls this the Purpose Paradox.
The purpose paradox is that companies with a purpose beyond making money end up making more money!
Built In, Not Bolted On. Sustainability is not a staff function for Green Giants. It is integrated into every function within the organization. Increasingly, it is being integrated into every job.
Incentives. Sustainability performance and work associate compensation are tied together. Most especially for the CEO. This moves sustainability from a “nice thing to do” activity. It makes sustainability a core motivation for work associate performance.
Mainstream Appeal. Green Giants are pioneering marketing innovations. Green Giants have reshaped their marketing messaging to communicate how their product improves taste, makes a consumer feel cool or saves money. It moves sustainability beyond a message on what consumers can do to be more sustainable. The mainstream appeal message focuses on what sustainability can do for the consumer in terms of the consumer’s goals and aspirations.
New Behavioral Contract. Green Giants are pursuing a business culture based on transparency, responsibility and collaboration. The revenue growing mantra is “behaving your way to billions.” I call this Facebook authenticity. Today’s consumers are deciding what to buy based on what fellow consumers, company work associates and NGOs post on social media. This is the new form of advertising in the 21st century. Today’s business brands are defined by authenticity earned through what Williams calls the new behavioral contract.
Exclusive interview with Green Giant author Freya Williams
If your company is searching for revenue growth, and what company isn’t, then this exclusive interview with Freya Williams taken at Sustainable Brands 2016 is a must watch. In this video she outlines best practices that will grow sales by making a difference.
I normally limit edited videos to 3 minutes. This one is almost six minutes long. Watch this video to be challenged, and helped, on how to grow sales by going green.
About the author
Bill Roth is a clean tech pioneer who led the team that launched the first hydrogen fueled Prius. He is a featured contributor on Triple Pundit and Latin Business Today. His book, The Secret Green Sauce, has been used by thousands of business people to implement proven green best practices that make money and a difference. Bill’s latest book, The Boomer Generation Diet, is his personal story on how to achieve sustained weight loss while still having fun and living more. The book’s ten customizable best practices are the sustainable solutions to our national weight crisis that threatens our health and medical cost bankruptcy.