Bettering Decisions with Portfolio Sustainability Assessments

Accelerate sustainability through Portfolio Sustainability Assessments
Using Portfolio Sustainability Assessments
Publ. date 26 Nov 2018
Through Portfolio Sustainability Assessments (PSAs) companies are able to collect insights into the sustainability performance of existing product portfolios. But how can companies capture the full value from these results? In general, PSAs determine hotspots of products that provide the most potential to capture additional value through improved decisions on key business processes. Perhaps surprisingly, the powerful PSA tool is not widely applied yet in the global business environment.

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Leveraging the PSA results

Portfolio Sustainability Assessments identify areas of a portfolio that have the highest impact by combining life cycle analyses with sustainability-related risks and opportunities from the market. Companies are able to leverage the results of Portfolio Sustainability Assessment in multiple ways:

  • Firstly, PSA outcomes support business managers in their decision making and provides direction to the journey for new product development by identifying where to direct research and development efforts. 
  • Another outcome is the potential overview for strategic partnerships to jointly develop more sustainable solutions.
  • The outcomes of the PSA can also guide decision-making on other business processes in the field of strategy, investments, as well as mergers and acquisitions, to support long-term business growth.

Learnings from a frontrunner industry

The chemicals sector is frequently recognized as an industry where companies have broadly implemented Portfolio Sustainability Assessment methodologies. Solvay, Clariant, and DSM are some of the most well-known examples in this field. These companies use the assessments to steer their decision-making on product portfolios to become more sustainable and innovation decisions are in part based on the outcomes of the PSAs. Ranking the stars of the portfolio provides companies with insights on which products are the sustainability top-performers, which should be eliminated or refused, and which offer the most potential for sustainable innovation. Solvay, for example, uses the outcomes of PSAs to help the business grow its portfolio by leveraging on opportunities and turning challenges into solutions, looking at both the sustainability performance and signals from the market.

WBCSD’s Framework for Portfolio Sustainability Assessments

Other industries have not jumped upon the PSA-wagon yet. This is surprising, given the fact that the tool is not industry-specific and could be applied in other impactful industries as well. To improve quality and consistency among PSA approaches, the World Business Council for Sustainable Development (WBCSD) published a common framework for Portfolio Sustainability Assessments. 

The main benefits of implementing a company-specific approach to sustainable portfolio assessment along the lines of the WBCSD Framework include:

  • Improved management decision making on innovation
  • Steer product portfolios for developing sustainable solutions
  • Enhanced resilience to (societal) risks
  • Identification of long-term growth areas
  • Create a shared language for sustainability performance evaluation

Ready to develop your approach?

Is your company looking to develop an approach to steer product portfolios towards improved sustainability performance? Get in touch with Lars Gielen at +31 6 28 02 18 80 or lars@finchandbeak.com to learn how you can develop a credible and robust approach that is based on the proven framework by WBCSD.

Image Source: Pixabay

About Lars Gielen

Motivated young professional with specific expertise in strategic management, circular economy and business model canvas. | lars@finchandbeak.com

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