Progress
and profit:
how consumer companies will scale sustainability
through collaboration

Supported byProgress and profit: how consumer companies will scale sustainability through collaboration

2

Contents

3

Acknowledgments		

4

Glossary

6

Executive summary

8

Introduction

10 What is pushing consumer companies to invest
in sustainability?
13 How do firms collaborate with their ecosystem?
18 How do consumer companies deepen theircollaboration on sustainability?
21 Conclusion
22 Appendix: Survey details©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

3

Acknowledgments

Progress and profit: how consumer companies will scale sustainability through collaboration is an
Economist Impact report, supported by EY, exploring the extent of collaboration among companies
in the retail and consumer-products industries on collective challenges they face in implementing
sustainability measures. The study also examines key steps that companies could take to enhance
the level of collaboration with ecosystem players in order to achieve their sustainability objectives.
Findings are based on a survey of 400 senior executives from consumer-products and retailcompanies across the Americas, Europe and Asia, as well as on interviews with other “C-suite”
leaders in these sectors.
We would like to extend our thanks to the following interviewees for their time and insights:• Leyla Ertur, head of sustainability, H&M Group• Virginie Helias, chief sustainability officer, Procter & Gamble• Joost Vlaanderen, president, Greater China, Mondelēz International
The report was produced by a team of Economist Impact researchers, writers, editors and graphic
designers, including:• Martin Koehring, project director• Raunak Kalra, project manager• Maryam Rasheed, senior analyst• Barsali Bhattacharya, adviser• Mike Jakeman, contributing writer• Tom Nolan, survey manager
October 2022

©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

4

Glossary

Collaboration

Cohesive, goal-oriented action taken by a company in partnershipwith industry peers, competitors, supply-chain partners, policymakers,
consumers, researchers, civil society or any other entity in its ecosystem
to deliver and scale impact.

Company size

In this report, small-sized companies are defined as those with annual
global revenues between $500m and US$1bn; medium-sized as thosewith revenues between US$1bn and US$5bn; and large-sized as thosewith revenues greater than US$5bn.

Consumer-products
companies

Consumer-products companies are those that make and sell products
intended for the direct use of individual buyers and households, rather
than manufacturers and industries. Synonymous with “consumer-goods
companies”. Consumer-products companies and retail companies (seebelow) can be jointly referred to as “consumer companies”.

C-suiteCompany executives at the management leadership level, including, forexample, chief financial or operating officers.

Ecosystem

An ecosystem is a purposeful business arrangement between two or
more entities (the members) to create and share in collective and mutual
value. A company’s ecosystem includes its peers, partners, competitors,
policymakers, investors, suppliers, customers and communities
supporting the company.

EMEA

Europe, the Middle East and Africa

ESG

Environmental, social and corporate governance (or ESG for short) are
the three key factors used in assessing sustainability.

Net zero

Refers to the global target of cutting greenhouse-gas emissions causedby human activity to as close to zero as possible, with any remaining
emissions re-absorbed or removed from the atmosphere, by the ocean
and forests, for instance, or direct air capture.

©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

5

Purpose-led

A company archetype used to describe firms that have embedded theirdefined mission throughout their organisation so that decisions are
made with its achievement in mind.

Reputation-led

A company archetype used to describe companies that engage with theirpartner network to report and amplify collective action and measurable
outcomes on sustainability, building the right level of transparency toensure that their stakeholders, including consumers, can see and trust in
their sustainability commitment.

Retail companies

Companies that make and/or sell products intended for the direct
use of individual buyers and households, rather than manufacturers
and industries, utilising their own sale channels. Consumer-products
companies and retail companies can be jointly referred to as“consumer companies”.

Risk-led

A company archetype used to describe companies that conduct theiroperations based on best practices and regulations to measure, reportand improve sustainability activities, using the ecosystem to maintainaccountability, ensure compliance and avoid punitive actions.

Sustainability

The ability to meet the needs of the present without compromising theability of future generations to meet their own needs.

Value-led

A company archetype used to describe companies that engage with theirecosystem to collectively develop sustainability solutions to protect andcreate new sources of value for their business ecosystem, as well as forpeople, society and the planet, by using partnerships to ensure that theirsustainability goals help to deliver their financial goals.

©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

6

Executive summary

Companies see sustainability as an opportunity to achieve growth, create cost-saving
efficiencies and build trust with stakeholders by responsibly managing their environmental
and social impacts. Sustainability-oriented collaborations must have a clear business case to
be appealing. In our survey of 400 C-suite executives from retail and consumer firms, the largest
proportion—just over one-third (34%)—described their short- to-medium-term sustainability
strategies as “value-led”. A slightly smaller proportion (33%) defined theirs as “reputation-led”.
Recent global macro events ( including covid-19 and the war in Ukraine) have highlighted
the weaknesses of our highly interconnected, “just-in-time” approach to manufacturing,
while further emphasising the case for collaborating on sustainability. A large majority (83%)
of respondents rated the efficiency and resilience of supply chains as a key driver of their company’ssustainability initiatives. Most companies (89%) are keen to collaborate with ecosystem players on
sourcing raw materials, indicating that pooling resources provides both greater business value andlowered environmental impact resulting from their operations.

©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

7

Although companies already collaborate on sustainability, they recognise that to deliver
sustainability initiatives at scale there is room to expand partnerships. There is an appetite forworking together: 85% of respondents said that they would focus on creating common sustainability
strategies with their peers and partners. Almost half (45%) said that collaboration with theircompetitors is accelerating, while 29% said it was not yet optimised. Some key areas also sufferfrom a lack of prioritisation. Biodiversity and land use, along with circularity—key issues that could
define the supply chain of companies—were the least managed and prioritised within respondents’ecosystems. Additionally, while 34% see their relationship with policymakers as optimised, just 6%
regard collaborating with policymakers as a critical issue in the next three to five years, even though it
is likely that the regulatory environment will intensify over the coming years.
Companies seek collaboration for three main reasons: boosting skills, improving business
operations and increasing the efficiency of supply chains. Respondents agree that broadening
access to skills and best practices will help to scale their sustainability measures. Faster
implementation is also believed to deliver a better financial performance. Finally, collaborating on
supply-chain processes helps companies to enhance their sustainability efforts and makes processes
more resilient in times of distress.
Leadership buy-in is critical for companies to forge successful partnerships and scaleinitiatives. The approval of senior leaders was chosen by 89% of respondents as the most importantfactor in driving a company’s sustainability approach in the medium term. With a motivatedleadership team, companies could redefine their approach to collaboration and prioritise the mostcritical measures chosen by our respondents: identifying and leveraging their own collaborative
strengths, allying with competitors based on shared values and outcomes, and sharing transparency
solutions along the supply chain.

©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

8

Introduction

Pressure is mounting on corporations and governments to set andimplement stringent environmental, social and corporate governance(ESG) strategies. However, navigating these expectations at scale iscomplex. Companies must make significant investments to incorporate newtechnologies, acquire suitable skills and streamline their operations. Deeper
collaboration with other participants in the business ecosystem—not justwith supply-chain partners, but also competitors and regulators—could
make this transition easier. Working together enables the sharing of bestpractices, builds trust and revives momentum. Goals, such as achieving netzero emissions, will be achieved only if all parties, including governments,organisations, companies and individuals, take collective action. As Virginie
Helias, chief sustainability officer at Procter & Gamble, says, “We have all
realised that what we can do on our own is limited. To get to net zero, there
is absolutely no possibility that we can do it on our own. Collective action
and cross-sector collaboration are imperative.”
Maximising economic value remains the primary factor in determining
business decisions, but an increasing number of consumer companies
are realising that sustainability and profitability need not be mutually
exclusive. Four macro trends suggest that making sustainability thecornerstone of business strategy is now a necessity for success.

“We have all realised that what we can do on our own is limited.
To get to net zero, there is absolutely no possibility that
we can do it on our own. Collective action and cross-sector
collaboration are imperative.”
Virginie Helias, chief sustainability officer, Procter & Gamble©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

9

First, consumers are more aware than ever before of the impact of products they buy and thecompanies they buy them from. The exposure of environmental damage and unethical sourcing of
raw materials and labour has made consumers more conscious about their purchasing decisions.
Second, policymakers are gradually tightening regulations around sustainability, including plastic
waste, carbon emissions and water use. For example, the US Inflation Reduction Act of August2022 allocates the bulk of US$430bn to managing the impact of climate change, while plastic
taxes, limits imposed on disposable plastic items and waste-reduction programmes are providing
fresh incentives for companies to act together to reduce landfill packaging. Further measures
are likely to be inevitable if targets are to be met. The EU aims to reduce net greenhouse-gas
emissions by 55% from 1990 levels by 2030, while China and India have declared net-zero targetsof 2060 and 2070, respectively.
Third, the covid-19 pandemic, the war in Ukraine and the challenging combination of rising
inflation and interest rates have brought global trade links into focus. Consumer-products and retailcompanies have realised that they are only as healthy as the weakest link in their supply chains.
Reinforcing their supply chains in the wake of these macroeconomic shocks will give these firms an
opportunity to accelerate their commitment to sustainability.
Finally, technology is making sustainable solutions more accessible by enabling their scale andreducing their cost. It is also making supply chains more transparent. This should make it easierfor firms to track and publicise the impact of their sustainability efforts, and also hold them moreaccountable for any unethical practices.

©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

10

What is pushing consumer
companies to invest
in sustainability?
The profit motive remains paramountPrimarily, retail and consumer-products
companies still see sustainability through abusiness lens: 88% of the survey respondents
stated that market and consumer trends had
a high or very high significance in driving
sustainability initiatives within their firm. A
similar proportion, 87%, said that it was businessprofitability and growth that encouraged themto invest in sustainability. These two factors are a
comfortable fit: companies must be able to meetcustomer expectations in a highly competitive
sector in order to remain in business, andconsumers are clear that sustainability is an

important consideration in their purchasing
decisions. According to Joost Vlaanderen,president of Mondelēz International’s operationsin China, “Companies like ours want to drive
sustainable, profitable growth. If you don’t havea sustainability strategy that works and that
resonates with consumers, then that growthgoes out of the window.”
Firms want to strengthen their supply chains
Enhancing the efficiency and resilience of supply
chains was given a high or very high significanceby 83% of respondents as a key driver of theircompany’s current sustainability activities.

Fig 1: Drivers of company’s current sustainability activities(% of respondents)
Consumer/market trends and expectations

88%

Business profitability and growth87%

Efficiency/resilience of supply chain

83%

Human rights and community welfare

82%

Environmental concerns

81%

Investor/financial pressure

80%

Government regulations and industry
standards

80%

Company values and branding

77%

Source: Economist Impact survey©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration“There is a collective agenda of making surethat we stick within that 1.5°C [as targeted by
the Paris agreement]. And at the same time wealso need to grow market share. They are notmutually exclusive—quite the opposite, they arecomplementing each other.”
Joost Vlaanderen, president of Mondelēz International’s operations

Covid-19 and the war in Ukraine have exposed
the weaknesses of our highly interconnected,“just-in-time” approach to manufacturing
and logistics. As companies future-proof theiractivities against external shocks, they recognise
the opportunity to become more sustainable
at the same time. According to Ms Helias at
Procter & Gamble, “All of those external factors
have done one thing, which is to accelerate theurgency of working on sustainability. The way
we solve it is by getting into more strategic andlong-term partnerships with our suppliers.”
Many companies are motivatedby value creation
When asked about their future sustainability
approach, 34% of participants stated that theircompanies will continue to be value-led (byusing sustainability as a way of protecting andcreating new sources of value for their businessas well as for people, society and the planet)over the next three to five years.
Almost the same proportion of respondents(33%) chose the “reputation-led” approach,whereby outcomes of sustainability initiatives
can be presented to potential customers as
evidence that the firm wants to enhance its
transparency and build trust. Companies
headquartered in high-income countries
were 13 percentage points more likely to be
reputation-led compared with companies in
middle-income countries. There are multiple
potential reasons for this, including greater
consumer choice in high-income countries,
higher levels of disposable income (which

11

allows consumers to pay more for sustainableproducts), more transparency in productlabelling and higher levels of consumerawareness and scrutiny.
However, the overall message from our
respondents is that their firms see sustainability
as an opportunity to improve their financial
performance as well as a way to improve theirenvironmental impact. Responses also suggestthat any sustainability-related collaborations
within their ecosystem must be underpinned bya strong competitive advantage. Mr Vlaanderenof Mondelēz International puts it simply: “Thereis a collective agenda of making sure that westick within that 1.5 °C [as targeted by theParis agreement]. And at the same time wealso need to grow market share. They are notmutually exclusive—quite the opposite, they arecomplementing each other.”Fig 2: Approach of company to engage
with its ecosystem on sustainability goals
in next three to five years?
(% of respondents)

34%
Value-led19%
Purpose-led

14%

33%

Risk-led

Reputation-led

Note: Respondents had to select one answer only.
Source: Economist Impact survey©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

12

EY PERSPECTIVE
Driving more value from partnerships
In these unprecedented times, it seems
that persistent disruption is the only thingcompanies can rely on, and the resilienceneeded to navigate that disruption could
erode the ability of ecosystems to scale
sustainability initiatives and deliver
meaningful positive change. But it is clear
companies don’t want to go it alone toachieve their sustainability goals—85%
of respondents are looking to work moreclosely with partners to create common
sustainability strategies. However, it’s also
evident that this is challenging, with 68%
of respondents hampered by a lack of clear
targets. This begs the question of how
companies can be so confident in theirecosystem partnerships if they are not certain
about what they want to collectively achieve.
To overcome this, companies must look attheir own business first and then apply thosevalues to the partners that they work with.
For most companies, business motives are
the driving force behind their sustainability
activities, with social and environmental
concerns seen as less influential than market
expectations and brand value. Additionally,
almost two-thirds of companies identify
their sustainability strategies as being led by
reputation or value, which talks to the needfor sustainability to deliver top-line growthand bottom-line savings.

These motives point to a significant
opportunity for companies to collaborate
on sustainability as a means of reinventing
fundamental aspects of their business.
Companies can collaborate to havetheir cake and eat it by marrying theirsustainability ambitions to value-accretiveand scalable projects that will bringcollective benefits to their value chain andtheir wider ecosystem. For example, using
pre-competitive agreements between
common procurement teams to identify
and drive investment in targeted sustainable
technologies or raw materials would drive
down costs, accelerate scale and enable a
positive environmental outcome.
Equally, sharing best practices and exploring
circular synergies between different sectors
is not just “the right thing to do”, but will
also unlock real value for businesses
which can align with collectively defined
standards of measurement or create
profitable solutions from the by-productsof their peers. As biofuel production fromunwanted materials in the alcoholic-drinks
industry has proved, the waste produced
by one company can be central to the value
created by another.

Kristina Rogers
EY global consumer leader©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

13

How do firms collaborate
with their ecosystem?

A divergence of priorities
This reinforces the view that working unilaterally
will achieve some results at the company level,
but companies that enhance collaboration withecosystem players will not only reduce theirenvironmental impact further, but do it fasterand in such a way that spreads risk, delivers
greater economies of scale and demonstrates
the commitment of the entire industry tosustainable practices.

Most consumer companies surveyed are making
adequate progress in the areas of sustainability
that they have chosen to prioritise. However,they admit that these efforts are often internal
only and that their impact on their ecosystem isminimal. For example, one in three respondents
believe that biodiversity and land use are notprioritised in their ecosystem. The figure ranges
between 22% and 30% for other topic areas.

Fig 3: Company’s prioritisation of sustainability topic areas(% of respondents)

Don’t know/not applicable
No extent within mycompany and its wider
ecosystem
To a moderate extent within
my company and no extent
within its wider ecosystem
To a large extent within mycompany and no extent
within its wider ecosystem
To a large extent within mycompany, and to a moderate
extent within its wider
ecosystem
To a large extent within mycompany and within its wider
ecosystem

Waste management

1

5

16

Emissions (carbon emissions including
1
Scope 3 emissions, air pollutants)

7

Packaging and plastic pollution

11

5

Consumer education

11 4

Working conditions and human rights

1

Diversity and inclusion

11 4

Water/natural-resource intensity

2

6

Circularity (sharing, leasing, reusing,
repairing, refurbishing and recycling)

2

6

Biodiversity and land use

2 3

0%

17

39

34

18

43

33

16

42

33

18

43

33

15

45

32

39

31

22

8

37

38

20

8

39

39

23

35

50%

29

100%

Source: Economist Impact survey©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

14

Fig 4: Level of maturity of company’s sustainability-related collaborations with ecosystem entities(% of respondents)
Optimised - companies state that they have set targets, and are on track to meet or exceed all of them.
Accelerating - companies state that they have set targets, and are on track to achieve most of them and scale investment
for the remaining few.
74

74

73

73

29

26

72

72

29

34

71

32

34

33

69
30

65

63

28

45

30

48
44
40

39

39

38

38

37

stic
s fi
rm
s
Log
i

O
sec ther
tor priv
par atetne rs

ors
est

atio
oci
ass
Tra
de

Inv

ns

rs
ake
ym
Pol
ic

and Cocomnsum
mu ersnityW
and asterec -proycl ces
ing sinfirm gs

Indus
comtry pe
pet ers/
ito
rs

Aca
de
ins reseamia /titu rch
tio
ns

Sup

plie

rs

33

Source: Economist Impact survey

Ecosystem collaboration is accelerating, but
is not always optimised
Consumer companies are broadly confident on
the direction of collaboration in their ecosystem.
Most respondents (between 64% and 75%)
believe their ecosystem is either optimised(companies have set targets and are on track
to meet or exceed all of them) or accelerating(companies have set targets, and are on track toachieve most of them and scale investment for
the remaining few).
However, a significant number of respondents
see scope for improving the quality of thesecollaborations: 45% believe that work with
suppliers is accelerating but not yet optimised,
while a similar percentage (44%) believe thesame about collaboration with peers andcompetitors. Collaboration with suppliers[...] targets should ideally be measured“by an independent third party, so that[the company] can be held accountable”.

seems to be more established for companies
with headquarters in middle-income countries
compared with those with headquarters inhigh-income countries. This is likely to be dueto the global complexity of operations tied tomultinational companies—the large size of thesecompanies can become a hindrance to scaling up
their sustainability measures across the board.
Major challenges around target-setting,external shocks and skills
Around two-thirds of respondents highlighted
the absence of clear indicators or targets as asignificant or very significant challenge whencollaborating on their sustainability-focused
activities. Without setting joint targets thatare ambitious and achievable, there may be
scepticism about whether all partners are pulling
their weight. Setting and monitoring mutuallyagreed targets helps to build trust and improve
operational transparency. Mr Vlaanderen of
Mondelēz International also believes that thesetargets should ideally be measured “by anindependent third party, so that [the company]
can be held accountable”.

Joost Vlaanderen, president, Greater China, Mondelēz International©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration15

Fig 5: Scale of potential challenge faced by company on sustainability-focused collaboration(% of respondents, ordered by total proportion classifying challenge as very significant or significant)Very significant challenge
Small challenge

Significant challenge

No challenge at all

Moderate challenge

Don’t know/not applicable

Absence of clear target or indicators
to measure collaborative progress

31

Geopolitical, macroeconomic
or supply-chain shocks

25

37

18

9

43

19

10 3

Uncertainty on who funds what

26

38

19

Interoperability, trust and coordination
issues across partnerships

25

39

19

Scarcity of skills/expertise
to execute strategy

32Stringent or obstructive regulations

28

Cost restrictions/inefficient cost allocation

27

Lack of an orchestrator driving momentum
and planning for unforeseen developments

32

35

Insufficient information flow acrosspartnerships preventing informed
decision-making

25

36

Differing priorities of ecosystem partners
and low stakeholder buy-in

25

We found that, compared with their larger peers,
small and medium-sized companies (revenue
less than US$5bn) were 16 percentage points
more likely to rate the absence of clear targets asa significant or very significant challenge whencollaborating on sustainability-focused activities.
This could be because smaller firms may lack theresources, talent, size and influence that could
enable them to deliver at scale on targets set
within the company or industry.
Another major challenge highlighted by our
respondents was major disruptions emanatingfrom geopolitical, macroeconomic or supplychain shocks. The overlapping global crises
posed by the pandemic and the economic
fallout from the war in Ukraine have createda highly unpredictable external environment.
Firms have had to concentrate on fundamental
questions of how to manage rising costs,

32

4

10 3

21

14 2

26

23

35

0%

22

22

26

6

12

30

Inability to calculate value and benefitsof collaboration

Source: Economist Impact survey

10

34

31

5

21

28

9

11

4

5

12

4

13

4

11 3

50%

100%

navigate trade disruption and maintain their
supply chains. This has squeezed the spaceand resources available to work together onlonger-term projects, such as reducing waste
and emissions, that do not generate short-termbusiness value. Our respondents answered
particularly vigorously questions related tothe stresses put on supply chains: almost
90% said that they were currently working
with their ecosystem partners to improvesustainability sourcing; there were also highlevels of collaboration on storage and logistics,
packaging, and recycling (all 76%).
By contrast, 65% and 62% of respondents
were collaborating on product design andmanufacturing, and consumer education,
respectively. The gap in collaboration between
suppliers and consumers highlights a potential
mismatch in strategy. Consumers and how©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

16

Fig 6: Company’s status of sustainability-focused collaboration on different components
of value chain (% of respondents saying “yes”)
89
76

76

74

Pro
du
c
ma t desnuf ignact anduring

nag Waem steentmacli
rep ng an
airi d
ng

Re
cy

Pa
life ckag
cyc ingle m deana sign
gem andent

rag
log e and
isti
cs

Sto

Sou

rc
ma ing ra
ter w
ials

65

62

use Con/ed sum
uca ertion76

Source: Economist Impact survey

they use a product accounts for a significant
proportion of a product’s environmental impact.
Meanwhile, product design and manufacturing
dictates what raw materials are required. This
points to the need for a more holistic approachto engaging and working with all stakeholders
to ensure that interdependent factors can be
accounted for.

Finally, many firms claim that skills shortages
and a lack of expertise are significant challenges
when collaborating in their ecosystem.
Competition for sustainability experts is a
struggle for retail and consumer-products
companies, given the difficulty of hiring
employees in a relatively new field in a tightlabour market. This issue is compounded bycompetition from up-and-coming corporates
and startups with attractive offerings and brandvalue, many of which have a more impressive
track record of sustainability activities. However,there is an opportunity for companies to use
sustainability initiatives as a means of attracting
fresh talent. There is also a positive correlation
between the availability of talent and thelevel of maturity that a market has in termsof sustainability. For example, respondents
in EMEA-headquartered companies were 13
percentage points less likely than those inother regions to suggest that scarcity of skills
is a significant or very significant challenge.
This could be due to European policymakers
implementing sustainability regulations forcorporations earlier than those in other regions,thus triggering the deepening of a sustainability
talent pool.

©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

17

EY PERSPECTIVE
Don’t limit your pool of partners
By considering value, risk and reputation,companies can collaborate to develop
sustainable solutions that win on all key
dimensions: improving performance,
delivering better impact and remaining
cost-effective.
To make sustainable collaboration work,
it should be considered through the rightlens. If companies take the view of creatingcompetitive advantage as the primary driverof collaboration, there is a risk that efforts
to collaborate, especially with competitors,
will require lengthy legal negotiations andbusiness cases that could undermine thecollective value they can bring. However, if
companies see the shift to more sustainablebusinesses as an opportunity to remake
industries and value chains, the absolutenecessity of collaboration will be clearer.
This points to the need for companies
to apply their collaborative thinking to amuch broader ecosystem. When asked torate their three most critical collaborative
measures to enable sustainability, less than
9% of respondents saw consumer andcommunity education as critical, and an
even smaller proportion (2%) saw working
with policymakers as critical. Most consumer
companies see consumers as a significant
factor in driving their sustainability
strategies, so the reluctance to work with
consumers to deliver on them seems like aconspicuous miss, especially since significant
emissions and much of the waste associatedwith a product can come at the point ofconsumption and disposal.

Equally, given that almost two-thirds of
respondents saw stringent regulation
as a significant barrier to sustainable
collaboration, only 6% thought adding
capacity to shape standards, regulationand legislation is the best collaborative
measure to scale sustainability in thenext three to five years. The failure toprioritise collaboration with policymakers
is compounding the problem, especiallywhen governments can provide much of theinfrastructure, incentives and governancefor positive sustainable impact. The
rapid development in the electric-vehicle
market over the last decade would nothave occurred without key interventions
and support from governments. For the
consumer industry, similar collaboration will
be needed to increase recycling rates andreduce emissions and waste.
When considering ecosystem collaboration,companies must clearly start with their own
business and extend this to their supply
chains, their partners, their peers, even
their competitors. But they should not stop
here. Instead, they should seek to integrate
their sustainability strategy holisticallywithin the markets where they operate byengaging with consumers, communities,
governments and organisations. This will
not only deliver the scale they need todrive improvement, but it will also deliver
the value and growth that enables theirbusiness to thrive tomorrow.

Jim Doucette
EY global consumer sustainability leader©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration18

How do consumer companies
deepen their collaboration
on sustainability?
Corporations recognise the challenges aroundthe shortage of skills and the inadequatetransmission of knowledge, best practices
and scalable solutions. Companies are keen tocollaborate with partners to fill these gaps. Our
survey suggests that gaining greater access toquality skills, solutions, innovations and bestpractices is the most important collaborative
measure to scale sustainability efforts over the
coming three to five years. “By collaboratingwith others—NGOs, scientists, policymakers,
competitors, trade unions and many more—wecan facilitate collaboration, increase our impact,
learn and together accelerate change,” says Leyla
Ertur, head of sustainability at H&M Group.

Among medium-sized firms, the largest
proportion of our respondents saw the faster
implementation of new sustainability measures
as the most important factor. This suggests thatmany mid-sized firms are aware of the benefitsof new technology and processes and havebegun the process of adoption, but may lack thecapacity to receive the full benefit at present.
However, they may also be more agile andmore able to introduce new technology without
being encumbered by outmoded infrastructure,compared with their larger rivals. In turn, large
firms are more focused on achieving better
operational efficiency within the production andsupply-chain process, which again speaks to how

Fig 7: Most important collaborative measure by company to scale sustainability efforts(% of respondents)
Greater access to quality skills, solutions, innovations
and best practices

27

Better operational efficiency within the production
and supply-chain process

23

Faster implementation of new sustainability measures

20

Lower costs and funding support to effectively allocate capital cost

14

More transparency in labour and human-rights practices acrossthe value chain
Added capacity to shape standards, regulation and legislation
related to sustainability

106

Note: Respondents had to select one answer only.
Source: Economist Impact survey©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

19

Fig 8: Company’s sustainability approach in the next three to five years (% of respondents)
Agree/strongly agree

Disagree/strongly disagree

Neither disagree nor agree

Don't know/not applicable

Leadership and stakeholder buy-in

89 1

Work with partners to create common
sustainability strategies

85 1

91
14

Strive to be as self-reliant as possible

82 2

16

Build better technology solutions

81 2

17

3

19

Build more effective industry allianceswith binding commitments

79 3

17 1

Engage in collaborations and focus
on potential gains

79 2

19

Engage more with government

78

Intensify efforts to attain sustainability
accreditations

77 2

Build stronger links with startups
and academia

75

Better access to best practices

73 2

0%

4

20 1
20 1
25

50%

100%

Note: Respondents had to select one answer only.
Source: Economist Impact survey

many firms consider sustainability as an aspectof achieving business value.
Thumbs-up from the boardroom
The biggest proportion of our respondents
said that securing buy-in from leadershipand stakeholders was the most important
step they would take in the next three to five
years in order to adopt an ecosystem-wide
scalable sustainability approach. Remarkably,
85% said that they would focus on creating
common sustainability strategies with theirpeers and partners, as “many of the challenges
we face today are too complex to tackle
alone”, according to Ms Ertur of H&M Group.
Our respondents appear to recognise that thesurvival of their businesses in a changing climate
and in a world with finite resources requires
collaborative efforts to innovate and improve.

For those eager to collaborate, exchanging
information on complementary strengths andcommon motivations and business interests
with peers and competitors would strengthen
sustainability capabilities and help to address
gaps in skills and expertise. Increasingtransparency along supply chains may also boost
understanding of how other companies in theecosystem can work together to build greater
resilience to external shocks.
Missing the policymaker connection?
However, it was also notable that only 2%
chose closer collaboration with policymakers.
Companies appear not to be focused oncontributing to legislation or shaping theregulatory landscape in which they areoperating. According to companies, there
could be three reasons why this might be the©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration20

Fig 9: Most critical measures to enhance company’s collaboration in the next three to five years(% of respondents)
Identifying and leveraging collaborative strengths of your own
company and partners

21

Allying with competitors based on shared sustainability values
and envisioned outcomes20

Sharing transparency solutions along the supply chain

17

Building collaborative procurement groups

17

Improving due diligence in selecting the right ecosystem partners

13

Educating consumers/community members on sustainability topics
Joining forces and actively working with policymakers

92

Note: Respondents had to select up to three answers. Economist Impact rebased the results to 100%.
Source: Economist Impact survey

case. First, firms, especially larger ones, areable to look further into the future, whereas
governments are more concerned with what
can be achieved during their current legislative
term. Second, a trend of voters returning morenationalistic or protectionist administrations
into power can create problems for firms that
operate in several countries. Third, there is areal need to educate politicians, given the gap
between what they perceive and scientific fact.
Each of these issues could be getting in the wayof the establishment of proper public-private
collaborations on sustainability.
Effective relationships between privatecompanies and governments can be hard to
manage, given the pressure on the former
from their customers and the latter from their“A true private-public partnership is somethingthat we need to learn how to do well. Because I
believe that that’s the solution. I don’t believein government fixing the problem by itself, or [a]company fixing [it] on its own. It has to be together.”voters. Mr Vlaanderen of Mondelēz International
recalls battling against governments attempting
to apply an overly reductionist approach tofood labelling: “If you’re too slow, government
will intervene and puts a green stamp on‘healthy’ food and a red stamp on ‘unhealthy’
food. Experts will tell you reality is a lot more
complicated than this and therefore will not
address the challenges. It is better for industry
to be proactive on food labelling and consumer
education. This is what we are doing with our
mindful snacking labelling.”
For all of these difficulties, Ms Ertur of H&M
Group specifically identifies “an increasing roleof joint frameworks, supported by governments
and policymakers” as an area wherecollaboration is likely to deepen in the coming
years. Indeed, Ms Helias at Procter & Gamble
reinforces the sentiment that “a true privatepublic partnership is something that we needto learn how to do well. Because I believe thatthat’s the solution. I don’t believe in government
fixing the problem by itself, or [a] company
fixing [ it] on its own. It has to be together.”

Virginie Helias, chief sustainability officer, Procter & Gamble©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

21

Conclusion

Most companies are serious about improving their impact and scaling up
sustainability initiatives by collaborating with their ecosystem. But to makea meaningful difference, they must focus on working more effectively andmore broadly with an array of stakeholders that could include competitors,
governments, regulators and consumers themselves. Although this sounds
like a risky business strategy, these partnerships need not be a zero-sum
game. Collaboration can yield more efficient sourcing, effective industry
alliances and an expanded consumer base. Progress could drive profit for all
partners in the ecosystem and deliver value to both people and the planet.
Our study reveals several gaps in collaborative efforts by companies
to scale sustainability initiatives. The extent of collaboration on issues
relating to resource intensity, including biodiversity, circularity andwaste management, is limited at present. There may also be missed
opportunities relating to companies working with policymakers toshape legislation that balances the interests of businesses with thoseof policymakers and wider society, and with consumers to adopt new
behaviours. These new behaviours will create a new collaborative culture.
Ms Helias at Procter & Gamble observes that there is no intrinsic way ofcollaborating on sustainability, but it is rather about “building the culture
for it”. Such a culture of collaboration can help to support profit as well assustainability at scale, enabling future generations to reap the benefits.
The key ingredient that underpins efficient collaboration is leadership
resolve. As suggested by our survey, leadership buy-in is the critical
input for companies seeking to reduce their environmental impact.
Well-defined, long-term priorities with leadership buy-in will form thebasis for a long-term, scalable sustainability approach grounded inecosystem-wide collaboration.

There is no intrinsic way of collaborating on sustainability,
but it is rather about “building the culture for it”.
Virginie Helias, chief sustainability officer, Procter & Gamble©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

22

Appendix
Economist Impact surveyed 400 respondents at the C-suite level in retail and consumer-products
companies in ten countries between May and July 2022.

Un
itSector breakdown (%)
Consumer products
companies 50%

Retail companies
50%

Un
ite
of A d Stame tes
rica

dom
Kin
g

Sin
gap
ore

12.5%

ed

ia

Ge
rm
any

5.8%

12.5%

a

5.8%

12.5%

Ch
in

5.8%

Ind

Fra
nce

30%

rali
a

5.3%

Au
st

5%

Sw
e

Bra

zil

5%

den

Country-level breakdown (%)

Company size breakdown

C-suite breakdown

Greater than
$5bn 8%$1bn to lessthan $5bn 50%

CEO/board 28%$500m to lessthan $1bn 42%

Other C-suite 72%©Economist Impact 2022

Progress and profit: how consumer companies will scale sustainability through collaboration

23

While every effort has been taken to verify the accuracy of thisinformation, Economist Impact cannot accept any responsibility
or liability for reliance by any person on this report or any of theinformation, opinions or conclusions set out in this report.
The findings and views expressed in the report do not necessarilyreflect the views of the sponsor.

©Economist Impact 2022

LONDONGENEVASÃO PAULO

The Adelphi
1-11 John Adam Street
London WC2N 6HT
United Kingdom
Tel: (44) 20 7830 7000
Email: london@economist.com

Rue de l’Athénée 32
1206 Geneva
Switzerland
Tel: (41) 22 566 2470
Fax: (41) 22 346 93 47
Email: geneva@economist.com

Rua Joaquim Floriano,
1052, Conjunto 81
Itaim Bibi, São Paulo - SP
04534-004
BrasilTel: +5511 3073-1186
Email: americas@economist.com

NEW YORK

DUBAI

750 Third Avenue
5th Floor
New York, NY 10017
United States
Tel: (1.212) 554 0600
Fax: (1.212) 586 1181/2
Email: americas@economist.com

Office 1301a
Aurora Tower
Dubai Media City
Dubai
Tel: (971) 4 433 4202
Fax: (971) 4 438 0224
Email: dubai@economist.com

HONG KONG

SINGAPORE

1301
12 Taikoo Wan Road
Taikoo Shing
Hong Kong
Tel: (852) 2585 3888
Fax: (852) 2802 7638
Email: asia@economist.com

8 Cross Street#23-01 Manulife Tower
Singapore048424
Tel: (65) 6534 5177
Fax: (65) 6534 5077
Email: asia@economist.com