The Business Case for a Product Stewardship Program

Why do companies have to focus on developing a robust product stewardship program?

According to a report by the consulting firm McKinsey’s November 2011 “Resource Revolution” report, there is going to be resource scarcity that will affect product development.  Consider that there will be 3 billion more middle class consumers by 2030; the global car fleet is predicted to double to 1.7 billion by 2030; China is anticipated  to annually add two and a half times the floor space (the  size of Chicago); the cost of an oil well has doubled over past decade, and new mining discoveries has flattened despite quadrupling exploration spending.

All this leads to the conclusion that we need to make products differently than ever before. All those middle class consumers will want to have the same products as we have in the West, but where will all those raw materials come from?  The cost of raw materials will no doubt increase and become scarcer.

Addtionally, governments have been developing new regulations to force greener products to be designed.  Regulations like REACH, RoHS, WEEE and packaging design and ‘take-back’ requirements have been increasing in all regions of the world. I know for my company, Johnson & Johnson, we have initiated a governance process to insure we are in compliance with these growing types of regulations.  This is more complicated than typical EHS regulations because there are groups involved with compliance that we are not typically interfacing with, e.g. sales and marketing, packaging design, research and development (R&D).  And the regulations are not facility-specific. Compliance with the European Union’s REACH regulation, for example, can cover several different sites and R&D organizations.  When environmental regulations can affect product sales, you have to pay attention.

All these are really good reasons to have a robust product stewardship program and design greener products.  However, to me the biggest driver for upping your product stewardship program is customers demand for greener products.  When your biggest customer in the world, Wal-Mart, starts asking you for greener products, you have to respond.  This demand doesn’t only apply to the retail customer, but it is getting bigger with business-to-business customers, too.  My company has a significant amount of our sales to hospitals; and they are asking for more sustainable products.  In fact in research we recently commissioned a global survey of hospitals determined that 54% of hospitals said that green attributes are very important in their purchasing decisions.  So we are seeing that the demand for greener products is much broader than just retail consumers.

Making the business case for having a product stewardship program becomes so much easier when you can show management that the market demands greener products.   Having seen this trend coming, I was fortunate to be able to convince management to take our design for the environment program up a notch and develop a branded greener product development program.  Partnering with a third party consultant, Five Winds International, we performed benchmarking and voice of the customer interviews to come up with a process we call Earthwards®.

Having a branded program is helpful for our customers to easily identify our greener product offerings and it also helps internally to get momentum and focus on greener products.   If EHS professionals want to make a difference with their work, it becomes really exciting when you can help your business by increasing sales while making significant environmental improvements to your products.

 

 

About Al Iannuzzi

Al Iannuzzi, Ph.D. is a Senior Director of Environment, Health, Safety and Sustainability for Johnson & Johnson, where he directs the global product stewardship and green marketing programs. He is the author of the books, "Greener Products: the Making & Marketing of Sustainable Brands" (CRC Press 2011) and "Industry Self-Regulation and Voluntary Environmental Compliance" (CRC Press, 2002), and has written numerous articles on product stewardship and environmental compliance.

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