Page 79 - Design for Environment A Guide to Sustainable Product Development

58 Cha pte r F o u r

FIGURE 4.3 Pathways to shareholder value through environmental
performance Improvement.

2. Sustainability can directly improve intangible assets such as
reputation, brand equity, strategic alliances, human capital,
and innovation. For example, Xerox’s pioneering efforts to
design products for reverse logistics and asset recovery have
both improved its manufacturing technologies and strength-
ened its customer relationships (see Chapter 11).
3. Sustainability can provide strategic advantage by creating
value for stakeholders. Each company can choose to focus on
the stakeholder issues that are best aligned with its own inter-
ests and core competencies. For example, Procter & Gamble
has focused its sustainability efforts on creating innovative
products that address worldwide needs for water, health,
and hygiene (see Chapter 16).
Shareholder value is driven by a combination of Economic Value,
corresponding to financial performance, and Intangible Value (see side-
bar). Past efforts at building a business case for sustainability have
focused mainly on estimation of financial returns associated with
EH&S initiatives, such as converting wastes into by-products. How-
ever, these contributions tend to be incremental in nature, and are
generally seen as tactical rather than strategic. The more strategic
contributions of sustainability tend to be associated with nonfinancial
value drivers, such as relationships and reputation, which provide
a prospective, rather than retrospective, view of shareholder value.
To portfolio managers and investment analysts, these intangible
strengths are often the hidden clues that differentiate companies
with com par able financial statements. In other words, improvements