by: Alain Thys
When listening to the case of TNT Post's sustainability efforts at Marktplein 2.0, I could only conclude that no good deed goes unpunished. And as it's a situation which many companies going "green" may be facing soon, it's one to start thinking about today.
At Marktplein, Peter Van Minderhout, Group Director of Corporate Sustainability at TNT, highlighted some of the highly impressive work his organisation does in the area of relief work (and I mean the "real thing" like Darfur, tsunami aid, etc). However, he also indicated a dilemma the company faced for the future.
In short, they had done a reprise of a stakeholder review across a large number of NGO's, customers, etc. to check what these people thought of the companies sustainability efforts (and where they should focus next). And much to their surprise, the message was had evolved from a few years ago. Among their customers, emphasis had shifted from "compliance with regulation", "child labour" and "fair working conditions" in 2004 to "eliminate CO2" today (only preceded by employee working conditions).
Or put more bluntly (my words): "We like what you're doing for the poor and your workers, yet frankly won't buy a penny more for it. Still, if you reduce your CO2 emissions, we would probably increase our orders (and if you don't we'll go elsewhere)."
This shift in itself poses some interesting dilemmas. Still, the real challenge of then responding to this call for CO2-reduction, came when the purchasing departments of these same customers got their hands on the CO2-reduction plans the company was putting in place. Their logic was simple: "as TNT was being more efficient, this should translate itself into lower price. So could we have a discount please?".
This while at the same time some of TNT's highest margin products are exactly the ones that are least efficient in energy (e.g. express freight by airplane). And shifting customers to more efficient means of transportation (e.g. express by train) is much lower margin.
In other words, the company now finds itself in a situation that to comply with the CO2 reduction request from their customers, they need to start cutting heavily into their margin. So in a way - and kudos to TNT for discussing this so openly - they are "damned if they do, damned if they don't".
So I wonder. Will this story repeat itself for EVERYONE who's currently selling to Tesco today, or in 2008 to Casino? Will it be so that customers will first pressure their vendors to "go green" and then send in their purchasing departments to ask discounts for more efficiency? And when this cat gets out of the bag, will these vendors actually resist going green as the business case for doing so erodes?
I don't have an opinion, yet it's definitely a space to watch. Meanwhile I hope the world will show ever more companies like TNT, who first do what is right and then try and figure out a way to also make this profitable for everyone (and even have the conversation in the open). Keep it up Peter!