Consumer demand for sustainably produced products is surging, and CPGs must take notice. A recent study from McKinsey and NielsonIQ found that products that make environmental, social and governance (ESG) claims experienced 28% cumulative growth over a five-year period, compared to a 20% rate for companies that made no such claims.
The consumer demand for sustainable products — coupled with stricter regulations and heightened environmental awareness — is pushing CPG companies to re-evaluate their practices. When executed successfully, sustainably produced products can give CPG companies a competitive advantage via:
- Enhanced market positioning: Companies that demonstrate a genuine commitment to sustainability can establish themselves as leaders in a dynamic market.
- New revenue streams: Developing sustainable products can open doors to new customer segments and untapped revenue potential.
- Brand loyalty and customer engagement: Consumers increasingly connect with brands that share their values. Sustainable practices can foster deeper loyalty and stronger customer engagement.
It's clear that embracing sustainability is no longer optional — it's essential for long-term CPG success. Still, the challenge lies in striking a balance between sustainability goals, product portfolio considerations and cost pressures.
There's a way to achieve this balance: innovation efficiency. Think of it as a strategic approach that empowers you to create impactful, sustainable solutions without sacrificing efficiency or profitability. The key is creating an efficient, repeatable process.
Let’s take a closer look at the challenges to efficient sustainability processes and how innovation management software can give CPGs the help they need to streamline those processes.
Challenges to efficient CPG sustainability and innovation
Balancing sustainability with core business goals presents a complex challenge for CPG companies. Here's why:
- Identifying high-impact innovations: Not all sustainable ideas are created equal. Prioritizing those with the most significant environmental benefit is crucial.
- Streamlining innovation: The process of taking a sustainable idea from concept to market can be slow and cumbersome. Streamlining this process allows for faster action.
- Cost optimization: Sustainable solutions often come with an initial cost increase. Finding the right balance between environmental impact and affordability is key.
- Demonstrating ROI: Justifying investment in sustainable practices requires a clear understanding of the return on investment. Quantifying the environmental and social impact is essential.
This is where CPG innovation efficiency comes into play. By maximizing the effectiveness of their innovation efforts, CPG companies can more easily pinpoint sustainable innovation, streamline the processes, reduce cost and show the value of sustainable products. But how? Capturing that efficiency is simplified with the help of technology.
Powering innovation and sustainability
Developing sustainable products at scale isn’t easy. It’s a complex process that can’t be accomplished manually. Innovation management software can be a powerful tool for CPG companies seeking to improve the efficiency and impact of their sustainability initiatives. Here are some ways it can be applied:
- Idea capture and evaluation: Software allows CPGs to identify a wider range of doable sustainable ideas, from eco-friendly packaging materials to water-saving formulations.
- Portfolio management: Prioritization becomes easier when sustainability impact is considered alongside other key business factors. Innovation management software allows for the creation of a balanced portfolio of sustainable innovations.
- Collaboration and resource allocation: Bringing together internal and external sustainability experts can expedite progress. Innovation management software fosters collaboration by providing a central platform for knowledge sharing and resource allocation.
- Data availability: Measuring the success of sustainability initiatives requires robust data. Lifecycle assessments and carbon footprint tracking tools can be integrated with innovation management software to provide valuable insights.
Innovation efficiency isn't just about saving money — about maximizing the impact of every innovation effort. In the context of sustainability, this translates to prioritizing initiatives with the greatest environmental and social benefit, while still achieving business goals. Innovation management solutions allow CPG companies to unlock unprecedented efficiencies that simplify the challenging task of building sustainability into corporate DNA.
Learn how Sopheon Accolade can help your CPG company achieve sustainable success through innovation efficiency.
