Innovation through Sustainability: It’s as Simple as Soda Pop

Call it what you will: pop, soda, Coke, Pepsi, Cheerwine, bubbly juice… countless Americans have an insatiable thirst for carbonated drinks, but we all know the costs of consuming a lot of soda over time can add up and it’s often bad for us. Plus, the discarded cans and bottles take a heavy toll on the environment, piling up in landfills across the world.

Enter SodaStream, an appliance you can use to make carbonated drinks straight from the faucet. SodaStream International Ltd., the product’s manufacturer, has a completely sustainable business model featuring reusable bottles that can last one year or more, rechargeable CO₂ canisters and any number of flavored syrups to liven up your drink. The result: landfills are spared more than 1,000 plastic bottles per consumer every year, customers reuse system components, and this savvy company gains major profits and a well-earned reputation for being innovative and environmentally conscious. Over the past few years the company has also achieved remarkable growth, increasing revenue by 51% and net income by nearly 60% from 2011 to 2012. What CFO wouldn’t be impressed with that?

Without a doubt, creating innovative and sustainable products as well as organizational programs that satisfy stakeholder expectations requires the investment of time and resources. However, this investment comes along with an increased identification of risks and reduced costs, as well as a growing number of long-term benefits and opportunities, including greater market share, an expanded customer base, revenue growth and entry into new markets. Not to mention smart corporate branding.

There are a number of organizations besides SodaStream International that are focusing on sustainability, not only as a driver of growth and innovation but also as a risk management tool. In doing so, they serve as worthy role models for organizations within and outside their industries.

Here’s a look at what three other organizations are doing.

1. General Electric’s ecomagination and healthymagination strategies have generated significant revenue growth and operational expense reduction, while also improving health care quality, access and cost as well as creating more clean-technology products and reducing water usage.
2. The Sustainable Agriculture Initiative at Nestlé encourages best agricultural and sourcing practices to secure a long term supply of safe, quality-assured and regulatory-compliant agricultural materials. SAIN has helped Nestlé obtain reliable sources of raw materials at a competitive cost and improve quality control and risk management. It has also enhanced communications with local stakeholders, and reputation and brand image.
3. One way IBM closely aligns its sustainability efforts with its business objectives is by focusing on cost implications in its production cycles. This focus has saved $50 million in electricity expenses over two years, which is in addition to the environmental benefits of generating less electricity.

As sustainability continues to prove its worth in terms of market value, competitive positioning and reputation management, organizations will increasingly be looking to maximize the opportunities it presents. To help organizations learn how to incorporate sustainability into their enterprise risk management processes, the AICPA is offering a Linking Sustainability and Enterprise Risk Management video webcast on March 28 and an Expanding Enterprise-wide Risk Oversight to Consider Sustainability-related Risks and Opportunities workshop May 2 to 3.  For more information about upcoming webcasts, events and other sustainability-related reporting and assurance information, please visit the AICPA’s sustainability webpage.        

Is sustainability an integral element of your organization’s strategy? What steps are you taking to spur the innovation that underlies sustainability?

D. Scott Showalter, CPA, CGMA, Professor of Practice, NC State Poole College of Management.  Prior to joining the faculty at NC State, Scott was with KPMG for more than 33 years, 22 as a partner. He has been involved in numerous sustainability report efforts while in practice and as an academic.

Sustainable innovation image via Shutterstock

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