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Redesigning brand values

In the consumer industry, sustainability and profit are converging in core operations—from product design to disposal

As consumer products companies redesign their supply chain and manufacturing operations following the massive pandemic-driven disruptions, addressing sustainability issues is no longer a standalone priority. Instead, executives are seizing this moment to integrate sustainability practices into core operations.

According to our latest research, this shift toward sustainable operations is putting organizations on the fast track to the radical reinvention needed to achieve the quadruple bottom line: protecting people, planet, profit, and purpose.

3 out of 5 executives say they purposefully align sustainability with operations goals to optimize investments and achieve objectives in both areas.

The consumer industry plays an essential role in the fight against climate change. The World Economic Forum estimated that the industry’s carbon footprint is responsible for more than one-third of global greenhouse gas emissions totals. Reducing these contributions is an imperative as progress reports on initiatives to reduce carbon emissions are alarming. They call for “urgent system-wide transformation” across all industries to avoid a large-scale climate disaster.

To understand how industry leaders are balancing these emerging, urgent environmental objectives with ongoing operational goals, the IBM Institute for Business Value and the Consumer Goods Forum surveyed more than 1,800 industry executives across 23 countries. We found:
 

  • Leaders no longer view operations and sustainability initiatives as separate. Instead, three out of five say they are purposefully aligning sustainability with operations goals to optimize investments and effort to achieve objectives in both areas.
  • Almost 75% of leaders agree they need to recalibrate their metrics and how they report on progress toward their sustainability strategy, but they don’t have the capabilities to monitor and measure performance in real time.
  • They are turning to technology to help implement sustainable operations. They estimate technology budgets will grow by 34% over the next three years.
     

Infusing sustainable practices throughout the value chain

We asked executives if their priority initiatives in manufacturing and supply chain management are exclusively for operations or exclusively for sustainability. On average, they categorized less than 10% of initiatives as only for sustainability or only for operations. From design to distribution to disposal, brands are striving to minimize the environmental impact of products across the lifecycle.

77% of industry executives agree that sustainability can accelerate business growth.

Sustainability is becoming part of the company fiber, woven throughout enterprise operations as leaders tackle environmental issues across product design, manufacturing, and the supply chain. These efforts can also give them a competitive edge. Three-quarters of executives agree that sustainability can accelerate business growth.


Embedding sustainability enterprise-wide: Brands are establishing sustainability goals across enterprise operations.

Embedding sustainability enterprise-wide

Extending sustainability into the ecosystem

The consumer products industry has built a complex global network of partnerships to manufacture and distribute goods. Two-thirds of executives say that aligning sustainability metrics with these partners is critical to the success of environmental programs.

But tracking environmental performance is a challenge, both within organizations and with their extended ecosystems. As leaders grapple with what and how to measure, most say they need to redefine metrics with sustainability built in up front. For example, they can involve procurement in product design to address responsible sourcing of materials.

Orchestrating success with technology-driven insight

Consumer industry executives cite multiple digital transformation initiatives—from data-sharing platforms, to AI-powered automation and intelligent workflows, to advanced analytics. Modern technologies enable the data-driven decision-making that can reshape the future of resilient, sustainable operations.

Download the report to explore how consumer industry companies are building more sustainable businesses. An action guide offers steps brands can take to strengthen sustainable operations management.


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Additional content

Meet the authors

Jon Chambers

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, Partner and Supply Chain Transformation Leader, IBM Consulting


Sachin Gupta

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, Sustainability Leader, Consumer Industry, IBM Sustainability Practice


Ursula Heng

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, Associate Partner, UKI Sustainability & Supply Chain, IBM Consulting


Dr. Mahesh Dodani

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, Industry Chief Engineer, Consumer, Travel & Transformation Industries, IBM Technology


Jane Cheung

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, Global Consumer Industry Research Leader, IBM Institute for Business Value

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    Originally published 11 April 2023