Cosmetics Design put this question to Marcos Vaz, who is the managing partner at Brazil-based consultancy firm O.N.E. Sustentabilidade, which is an issue the company is facing with its Brazilian clients in the wake of continued economic and political volatility.
Vaz is set to give a presentation titled ‘Sustainability During Economic & Political Crises’, at the Sustainable Cosmetics Summit in Sao Paulo later this month, so we got to talk to him ahead of the event to find out what he thinks is the best course of action.
Facing up to the challenge
“Since the beginning of 2015, in our contacts with customers, partner companies and colleagues in the corporate world, we have heard different manifestations on the same theme: the political and economic crisis in Brazil are complicating the lives of businesses and negatively impacting the progress of corporate sustainability agendas,” said Vaz.
“Many asked us what other companies were thinking about that and what were they doing to overcome this situation. We then decided to examine in a more structured way, how companies have reacted to the unfavorable economic environment, addressing specifically the adjustments in the form or intensity with which they develop their sustainability agendas and which solutions they were finding to the challenges arising from the crisis.”
The resulting study was based on interviews with 18 company executives from a variety of industries that included the food, home care, speciality chemical, perfumery and cosmetic sectors.
The study found that in general all companies questioned had taken measures to counteract the fall in sales with budget cuts, but those cuts depended on how affected each company had been by the crisis.
Commitment to sustainability can remain strong
“Of course, the resources allocated to the actions of sustainability were also reviewed. However, in our study, we saw that the magnitude of the cuts varied depending on how embedded is sustainability in the business strategy,” Vaz said.
The responses to the questionnaire elicited these key findings:
* 40% of the companies maintained their investments in sustainability or made reductions in line with the average adjustment made to all other business processes.
* An equal number of companies (40%) made sustainability budget cuts disproportionately greater than those carried out in other internal processes.
* Finally, a smaller group of companies (one in five) adopted the opposite strategy and increased investments in sustainability.
“Those companies [that increased investment] are the more experienced ones in applying sustainability principles to develop business opportunities and see the investment in sustainability as a lever for creating new businesses and strengthening both reputation and client loyalty. They recognize that this investment will leave them more capable of seizing the opportunities that will be unlocked when the economy recovers,” Vaz said.
All about the 'survival mode'
He also notes that the main impact of the crisis on the sustainability agenda is that companies enter the “survival mode”, leading to the cancellation of initiatives and loss of momentum. In doing so, these businesses can end up disconnecting consumers and compromising their ability to provide solutions to consumers’ immediate needs.
“In this context, one of the best strategies to maintain competitiveness during economic crisis without compromising the sustainability agenda, but actually reinforcing it, is to enhance efforts on innovation,” Vaz said.
Specific to this, the company’s research finds that when it comes to investing in innovation and new product development, new products that are developed with sustainability as a key element are more likely to succeed because they meet and address consumer needs.
Indeed, 79% of the companies surveyed consider sustainability issues in their innovation processes, while 53% of those respondents reported exploring with greater intensity the social and/or environmental benefits.
Vaz also notes that the remaining 21% of the companies report not systematically using sustainability attributes in their innovation processes.
“Coincidently (or not), the companies which have managed to overcome some of the negative effects of the crisis with innovations are those that most intensely guide their processes to sustainability,” said Vaz.
“Conversely, companies that did not report guidance to sustainability in its innovations, described major [negative] impacts resulting from the crisis in their business.”
For more information on Marcos Vaz’s presentation at the Sustainable Cosmetics Summit in Sao Paulo, September 14 – 15, please click here.