By ranking the stars, companies can screen and evaluate product portfolios on sustainability performance to optimize decision-making, reduce risks, improve brand reputation and use the results for different purposes – decision making as well as communication towards investors improving the attractiveness of a company for a vast audience. The US SIF (Forum for Sustainable and Responsible Investment) has reported that between 2014 and 2016 the amount of SRI investments in assets have increased by 33% in the US alone.
The World Business Council for Sustainable Development (WBCSD) has developed a common framework for companies to create unified understanding on Portfolio Sustainability Assessments (PSAs). Their framework, developed together with a host of member companies such as Solvay, Clariant, and DSM, describes a 5-step process for PSAs:
WBCSD’s ambition is to use the framework to further stimulate conduction of portfolio assessments. Evaluating sustainability performance of product portfolios can ultimately steer companies towards improved sustainability performance and support investor decision making.
One of the early examples of sustainable portfolio management to determine the sustainability performance of its product portfolio is Solvay. The Belgian specialty chemicals giant has set itself the goal of generating at least 50% of its annual revenue from sustainable solutions by 2025. Their ambitions are well brought to life by the claim of J-P. Clamadieu, Solvay’s CEO, that:
“Sustainability is not some kind of add-on that comes on the side. It is really something that must guide the way we act on a daily basis to manage a Group like Solvay, at the highest level, but also on the operational level on the ground”.
In order to accomplish this, Solvay maps its product portfolio on two evaluation criteria: environmental footprint and sustainability-related market challenges and opportunities.
Based on this assessment, each product can be plotted in a matrix not dissimilar to the GE McKinsey matrix developed in 1970. Solvay is already well underway is assessing its portfolio this way. Starting in 2016, by now the sustainability performance of 84% of the total turnover has been analyzed using their SPM tool. Of this, 43% consists of sustainable solutions, compared to just 18% in 2013. For more information on Solvay’s SPM approach, please visit Solvay’s corporate website.
Is your company planning to start measuring and evaluating the sustainability performance of your product portfolio? Finch & Beak can help you design your tailor-made approach following the 5-step process from WBCSD's Framework for Portfolio Sustainability Assessment. Please contact Jan van der Kaaij, Managing Partner, at email@example.com or call +31 6 28 02 18 80 for more information.