R&D is most successful when there is strong collaboration with other business units, such as marketing, procurement and customer service. It is urgently important for these functions to have vital — and early — input into R&D. This will ensure that R&D understands the implications of its design choices and thus can better evaluate trade-offs. For example, a software product can be designed with self-help features that enable users to problem-solve more quickly, which could reduce demand for tech support when the most common and/or time-consuming user issues are identified by customer service teams and addressed during R&D.
Examples like these can have significant impact on the sustainability rating of a product or service and, at scale, for the whole organization. AstraZeneca has published a comprehensive report on its integration of sustainability into its complex R&D process — integration that encompasses the entire product development life cycle.
Prioritizing sustainability in R&D and innovation is a way to maximize the sustainability of products and offerings while minimizing costs, resources and labor.
To maximize the probability of success, firms should take these critical considerations into account:
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Assess sustainability in the concept design phase — not after
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Establish harmonized processes to optimize the product simultaneously for function, usability, value and sustainability
An upstream approach is considerably more efficient and effective than the alternative — having to address deficiencies at the end of production or mitigating environmental impact instead of minimizing it. The design phase is the most efficacious and cost-effective point at which to incorporate sustainability considerations — it is the stage when flexibility and the ability to innovate are at their highest. In a software engineering example, the Systems Sciences Institute at IBM has reported that the cost to fix an error found after a product’s release was four to five times higher than to fix an error uncovered during design, and up to 100 times higher than one identified in the maintenance phase.
What level of cost-effectiveness can be achieved? R&D usually accounts for 5% or less of the total cost of a product. But because R&D sits at the very beginning of the development process, accounting for sustainability in R&D can lead to cost savings throughout the entire value chain — not only in materials and resources, but also in reduced costs of environmental mitigation down the line (for example, via the purchase of carbon offsets for emissions that could have been “designed out”).
According to a director we interviewed at a major automobile manufacturer, “It is cheaper to make decisions early in the process, rather than in the late stages; manufacturers need to prioritize exploring what-if scenarios and testing cost impact.”
A number of organizations are integrating sustainability into design
Some organizations are already working actively to integrate sustainability into design.
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AstraZeneca incorporates environmental protection into four areas of R&D — the pipeline, sites, lab operations and discovery, and the development and production of medicines.
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As part of its initiative to reduce greenhouse gas (GHG) emissions throughout the value chain, Pfizer is incorporating environmental risk assessments into R&D as it looks to reduce the environmental impact of producing medicines.
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In May 2022, Intel announced its intention to invest $700 million in a new R&D lab focused on developing sustainable data center technologies.
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Nestle incorporates sustainability across R&D with a focus on carbon footprint, ingredients, process technologies and sustainable packaging.
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Danone is centering its R&D processes around sustainability — for example, by producing yogurt with upcycled fruit.
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ExxonMobil has invested $10 billion over the past 20 years to research and develop biofuels and to advance carbon capture and storage.
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Shell aims to spend $2 billion to $3 billion per year on its New Energies Solution division, which is focused on developing decarbonization and clean energy solutions.
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Ford implemented a Sustainable Materials Strategy, which calls for 20% sustainable materials in new vehicles by 2025. “Nowadays, more than half of our R&D hours are related to sustainability,” a Ford executive told us.
Barriers remain to successful sustainability/R&D integration
Not all companies are at the same stage of sustainability integration as the examples above. For these companies, the question is: What are the main barriers to embracing sustainability in R&D?
The L.E.K. Global Corporate Sustainability Survey 2022 found that the major barriers to sustainable strategy were lack of alignment within management, between leadership and the board, and between the company and stakeholders.
In the context of R&D, we can draw several conclusions:
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Boards are not pushing sustainability hard enough — or at all — as an R&D priority
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Supply problems, not just of materials but also of talent and resources, limit the scope of initiatives
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In too many cases, leadership sees sustainability as separate from fundamental design
These steps can help ensure that sustainability becomes a central R&D consideration
To overcome these challenges and ensure that sustainability is embedded in R&D, leaders and boards should:
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Design for function over form. A multidisciplinary team should consider the functionalities that a product delivers in terms of the services it provides to customers, as opposed to just its form. The team should then identify sustainability goals up front, such as prolonging product life cycles by increasing durability and reparability or reducing the complexity of product design in order to make it easier to separate product components and repair or recycle them.
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Evaluate the options. Map out the impacts and the sustainability performance of production options throughout their life cycle, including resource use and circularity, GHG emissions, and overall impact on the ecosystem.
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Take the full life cycle into account and select the most sustainable product options.
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Factor in marketing and distribution. Select the most sustainable way of selling and delivering the product. Assess the sustainability of delivery logistics, ensure that consumers are educated on the sustainability of the product, and make the support processes more user-friendly and reliant on self-service. User education is key. “If you want a truly sustainable product,” as a director at a major global food company told us, “you have to educate the consumer so they can use it properly and safely. For example, it doesn’t matter if your product is recyclable if the consumer doesn’t know how to properly recycle it.”
Conclusion: Make the case to leadership
At the end of the day, the lesson is this: Successful integration of sustainability into R&D requires buy-in at senior leadership levels — from the C-suite and the board.
To secure that leadership approval:
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Make the case for — and quantify — the role of design in product performance and value (including but not limited to sustainability)
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Don’t limit your lens to materials; look at the full supply chain and the product’s complete distribution and use case
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Make R&D more visible throughout the organization
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Establish — and quantify the impact of — sustainability as a design objective