Applying classroom knowledge to solve real-world problems

Through the S-Lab class, students apply knowledge from the classroom to solve real-world problems and see firsthand how businesses are tackling the massive challenges of sustainability. In the process they develop and refine decision making tools that advance the sustainability field.

The 2015 Spring Semester projects investigated a range of sustainability issues from developing methodologies to measure business impacts on the environment for a global fast food chain, to aligning business strategies with social and environmental goals at an organic yogurt company, to measuring the return on investment from environmental and social initiatives at a multinational consumer products company.

The analyses of the S-Lab teams help host organizations take action to improve social, environmental, and economic outcomes in the long-term. For a closer look at the 2015 S-Lab projects and their results, please check out this sampling.

Assessing materiality of sustainability issues to guide strategy with Elevance 

The host: Elevance Renewable Sciences, the Woodridge, IL-based company that creates specialty chemicals from natural oils

The challenge: As sustainability issues take on greater importance for businesses at the local, national, and global level, our host wished to create a strategy on social and environmental responsibility issues. Elevance also sought advice on how to publicly communicate that strategy to various stakeholders.

Our task: Identify which sustainability issues are most relevant and pressing to the company’s key stakeholders; assist in the development of Elevance’s strategy on social and environmental responsibility; provide actionable recommendations on how Elevance should translate its vision and strategy into a business opportunity within the next 12-18 months.

Our approach:

  • Collected data on current and future stakeholder groups’ sustainability priorities and conducted internal and external research on Elevance’s product offerings and primary competencies
  • Developed an interactive materiality matrix using Tableau to enrich the company’s understanding of materiality
  • Assessed Elevance’s market position in sustainability using the matrix and identified drivers for business opportunity and growth

Key insights:

Building a matrix to identify the key social and environmental concerns of a company’s stakeholders is a critical first step in creating a sustainability strategy. Managing and weighing the importance of those issues for stakeholders is a further step that can be beneficial in developing that strategy. We recommend Elevance:

  • Perform and publicize a life cycle analysis for its product line
  • Set goals, track, and report progress regarding its resource footprint
  • Engage stakeholders more frequently via roundtables, conferences, and social media
  • Capitalize on its ability to track and influence suppliers by taking the lead on the issue of water consumption 
 

Identifying sustainability offset projects with Lockheed Martin

The host: Lockheed Martin, the world’s largest defense contracting company that employs over 112,000 people around the globe

The challenge: At a time when governments all over the world are attempting to address the sustainability challenges facing their countries, our host wished to collaborate with those administrations and contribute services that could make a positive impact. In particular, Lockheed sought to explore offsets, which are economic development arrangements required by foreign governments as a condition for the purchase of goods and services from non-domestic suppliers.

Our task: Identify a methodology that will assist companies within the aerospace and defense (A&D) industry to recognize offset opportunities that address sustainability needs of countries where they do business; match country needs with pre-existing company capabilities; evaluate the potential for mutually beneficial scenarios for all stakeholders involved.

Our approach:

  • Developed a six-step methodology for isolating offset opportunities that involves: assessing country needs using third party indices; identifying government priorities in sustainability; evaluating government multipliers; assessing companies’ offset capabilities; and matching companies’ capabilities and country needs
  • Created two illustrative examples of sustainability offset projects Lockheed could pursue in India and Saudi Arabia, two nations where the company is currently engaged in business development

Key insights:

As aerospace and defense companies seek to fulfill increasing offset obligations, there are more and more opportunities for these companies to leverage their capabilities to address environmental and social challenges. We recommend Lockheed:

  • Develop a database of products and services that can be used in offset projects, as well as a sustainability rating of those products and services
  • Sponsor a company-wide initiative, such as a sustainability technology showcase or summit, to increase collaboration and transparency among business segments
  • Use sustainability as a lens for identifying new business opportunities and markets and seek opportunities to expand into those markets
 

Assessing US demand for a sustainable seafood product with the Nature Conservancy

The host: The Nature Conservancy (TNC), the largest environmental nonprofit in the Americas

The challenge: The Marine Stewardship Council (MSC) recently certified six local fishery cooperatives in the Mexican state of Quintana Roo due to their strong commitment to sustainable fishing practices. In conjunction with TNC—which works to improve sustainable fisheries management and marine conservation—these cooperatives wished to explore new market opportunities in search of customers who value sustainable harvesting of Caribbean lobster.

Our task: Assess the US market demand for Caribbean eco-harvested lobster; explore ways for the fishing cooperatives to increase their customer base and improve their negotiating power; develop marketing strategies to leverage value-added compensation for sustainably harvested lobsters with MSC Certification.

Our approach:

  • Conducted interviews with a variety of officials from conservation groups and seafood organizations to gain a deeper understanding of the industry
  • Carried out primary research to investigate six broad retailer segments, including restaurant, grocery store, hotel, among others
  • Analyzed the supply chain of the Quintana Roo Spiny Lobster to identify possible logistical issues

Key insights:

The US lobster market is crowded, with both Caribbean importers and domestic New England lobster; yet, there is still opportunity in differentiation. We recommend TNC:

  • Combine the six cooperatives so they can negotiate a contract with a buyer for their full volume to increase their leverage and improve pricing
  • Consider opportunities within the processed lobster market; processed lobster-based goods have longer shelf lives
  • Focus on expanding lobster sales within growing minority markets in the US as both Asian Americans and Latinos have demonstrated a growing demand for lobster in their diets
  • Consider expanding into Japanese restaurants since Japanese consumers are already accustomed to spiny lobster
  • Develop a strong narrative for the MSC certification: Quintana Roo should be a story fishery instead of simply selling a commodity. MSC alone is unlikely to create a differentiated offering
 

Assessing supply chain risk in the utility industry

The host: A multinational utility company serving over 3 million clients in the northeastern US

The challenge: In an effort to reduce its vulnerability to extreme weather events and better prepare for shocks to the supply chain, our host wished to assess the risk levels of its different suppliers. Adding to the challenge, our host lacked sufficient information on the susceptibility of its supply chain to climate change and other risks that leave it exposed to disruptions in its service.

Our task: Develop a framework for identifying aggregate supply chain risk associated with sustainability and additional geopolitical, regulatory, and market threats; explore resiliency strategies that can respond to those risks.

Our approach:

  • Conducted a literature review of best practices in supply chain risk management
  • Reviewed a selection of proprietary tools and methods used by businesses to quantify supply chain risk
  • Created a questionnaire for in-house utility employees and supplier management staff and carried out interviews with officials aimed at gathering information about the risks associated with different segments of the supply chain
  • Located open source data for visualizing climate change and geopolitical risk

Key insights:

In the era of globalization, supply chains have evolved as increasingly complex and diverse systems. While this has brought advantages in the form of cheap labor, direct access to raw material, and tax incentives, a global supply chain is susceptible to disruptions and other risks that can have serious consequences for the company. We recommend our client:

  • Create an in-house cross-functional team dedicated to this issue
  • Design a program targeted at gathering the required data in the most efficient means possible
  • Utilize the supply chain mapping tools available on the market,
  • Enter into non-disclosure agreements (NDAs) with suppliers, which could make them more willing to release their own suppliers’ list and information
 

Implementing an internal carbon fee program with Stonyfield Farm

The host: Stonyfield Farm, the organic yogurt company that is a subsidiary of France's Groupe Danone

The challenge: Since 1997 Stonyfield Farm has counteracted its energy use through the purchase of carbon offsets. In its ongoing effort to be a responsible corporate citizen and reduce the impact of greenhouse gases on the planet, the company wished to explore starting an internal carbon fee program to drive emission reductions.

Our task: Explore the implementation of a carbon fee program that would place a price on carbon emissions and charge a toll to business units responsible for those emissions; develop a business strategy that incentivizes company managers to pursue investments/make decisions that reduce emissions.

Our approach:

  • Evaluated the carbon fee/emissions reduction programs of four leading companies –-Microsoft, Disney, Mars, and Puma—in an effort to uncover useful lessons on program design
  • Created a six-dimension framework focused on implementation and design issues transposable for any organization looking to start an internal carbon fee program
  • Developed a proposal for Stonyfield’s carbon fee scheme that provided details on the feasibility of the program and scope and offered suggestions for its ongoing management

Key insights:

To create buy-in among internal stakeholders, Stonyfield should work both with internal stakeholders and potential program champions in the parent company, Danone. We also recommend that companies like Stonyfield:

  • Set an appropriate carbon price, which would generate enough funds to re-invest in further operational improvements
  • Roll out a carbon fee program as a pilot that could ultimately become an integrated part of all operations, including the parent company
  • Incentivize managers to incorporate the price of carbon in their product line’s profitability analysis and forecast, through team awards, individual performance bonuses
  • Create other internal initiatives to build excitement about carbon fee reduction 
 

Charting the future of water stewardship strategy with McDonald’s

The host: McDonald’s, the world’s largest fast food chain with 36,000 locations around the globe

The challenge: In 2013, McDonald’s launched its “five pillars” of sustainability strategy, which involved developing and operating environmentally efficient restaurants among other commitments. As the availability of freshwater becomes more volatile, McDonald’s wished to further sharpen its focus on water stewardship— with regard to McDonald’s restaurants and supply chain.

Our task: Evaluate the extent to which McDonald’s existing sustainability strategies tackle the challenges of water scarcity; offer suggestions to mitigate potential disruptions in water quantity and quality that could limit the company’s business operations; provide ideas to address water-related concerns that pose a reputational risk to the McDonald’s brand.

Our approach:

  • Developed an informational foundation of how the global water system is used and assessed how public and private institutions currently address water stewardship
  • Conducted research on private sector corporations to identify best practices at leading companies
  • Benchmarked water practices at 15 food companies to identify gaps between McDonald’s current water strategy and the strategies of its competitors
  • Assessed McDonald’s strategy on a micro-level by focusing on two commodities: beef and coffee

Key insights:

Given McDonald’s aspiration to lead in sustainability and drive change within the food industry, it must raise awareness on water usage both internally and externally. We recommend the company:

  • Publicize its motivations for incorporating water stewardship into its corporate sustainability strategy and use water risk assessment tools to inform its financial and regulatory disclosures
  • Commit to a performance-based goal to either reduce water consumption or increase efficiency
  • Leverage relationships with suppliers to form sourcing standards within the global beef industry to improve beef production techniques
  • Engage competitors in the effort of sustainable water use in food procurement
 

Quantifying the sustainability benefits of LiquiGlide

The host: LiquiGlide, the Cambridge, MA-based startup that creates slippery surfaces for viscous liquids

The challenge: LiquiGlide sought to calculate the environmental benefits of its product in terms of how it decreases friction in production and manufacturing processes, which could cut greenhouse gas emissions.

Our task: Quantify the sustainability advantages of LiquiGlide to motivate potential customers to license the technology as a way to reduce costs; demonstrate environmental benefits of LiquiGlide that could be publicized to various stakeholders, including employees, consumers, and shareholders.

Our approach:

  • Conducted Life Cycle Analysis (LCA) to develop a framework for quantifying LiquiGlide’s sustainability benefits
  • Created an LCA case study on latex paint that compared the baseline paint production process against the LiquiGlide-embedded process
  • Extrapolated our analysis to other products and recommended necessary next steps to evaluate and measure environmental effects and benefits in other relevant industries

Key insights:

By prioritizing and quantifying its environmental benefits, LiquiGlide stands to maximize its profits and shareholder value through greater resource efficiency, business model resilience, innovative capacity, and brand strength. We recommend that LiquiGlide:

  • Work with paint manufacturing companies and other customers to procure real-time data on water consumption, electricity mix, etc. to improve accuracy of LCA
  • Extend future analyses to quantify recycling and waste impacts as well as supply chain impacts in the production process
  • Conduct studies on the consumer-end of LiquiGlide—for instance, looking at what types of paint cans are recycled and what typically happens with the cans post-use—to better understand its recycling impacts and potential benefits
 

Investing in fishing co-ops with the Environmental Defense Fund

The host: The Environmental Defense Fund (EDF), one of the world’s largest environmental organizations

The challenge: The fish populations around Belize’s Mesoamerican Reef—the largest barrier reef in the Atlantic Ocean—have suffered from overfishing due to open-access policies. EDF wished to attract private, international investment in Belizean fishing cooperatives (co-ops), to promote economic sustainability.

Our task: Analyze the criteria for attracting private, international investment in Belizean fishing co-ops; provide guidance on ways EDF could help the region become a magnet for such investment and propose potential revenue opportunities.

Our approach:

  • Explored the organizational processes of existing co-ops and evaluated their configurations and enforcement mechanisms
  • Analyzed the cost structure of these co-ops to determine their debt levels; examined how effectively they collect, store, and process their products
  • Modeled future pricing and demand by looking at the extent to which current regulations control pricing and quantity
  • Conducted research on the co-op’s marketing strategy and the extent to which the products are advertised as “sustainable.”

Key insights:

Belize, like many other countries, would benefit from conservation and business investments that support fishery sustainability and improve the livelihoods of local fisherman. To help Belize pursue these types of sustainable seafood investments, we recommend EDF:

  • Establish a baseline relationship with the local government, but leave the majority of program management to local leadership
  • Train local fisherman to handle the day-to-day operations of the business to increase commitment
  • Focus on eliminating debt for the co-ops and, while not optimal, acknowledge that philanthropic donations or government grants may be necessary
  • Pursue sustainable certification for retail price premiums and increase investment in branding of Belizean conch and lobster to expand geographic coverage
 

Developing a positive water balance strategy with Colgate-Palmolive

The host: Colgate-Palmolive, the $17.2 billion multinational consumer products company that makes a range of soaps, detergents, and oral hygiene products

The challenge: Colgate-Palmolive, which has long operated a water management program, sought to launch a more holistic water stewardship strategy. In particular, the company wished to implement a variety of published goals including one that involved replenishing water withdrawn in highly stressed regions.

Our task: Evaluate the benefits and disadvantages of a “positive water balance program,” which aims to return to the community as much water as a company uses; provide suggestions on how Colgate-Palmolive might launch such a program as well as recommend potential alternatives.

Our approach:

  • Benchmarked water practices at other private sector corporations to identify best practices
  • Created two in-depth case studies—one on Coca-Cola, the other on Unilever—to illustrate how other companies have responded to water stewardship challenges
  • Conducted research on the ways in which positive water balance programs reduce corporate impacts and engage stakeholders
  • Developed a five-step Positive Water Balance Decision Making Strategy for Colgate-Palmolive, which could be applicable across other industries

Key insights:

To achieve positive water balance, companies must evaluate their entire supply chain to determine areas where they might be able to make contributions towards reducing and replenishing water. For our host to successfully launch such a policy, we recommend it:

  • Determine its corporate baseline and current footprint in water stressed regions
  • Set parameters for its program and create measurement methodology
  • Participate in site-level planning by exploring technical options for Reduce, Reuse, Replenish; evaluate engineering feasibility, time, and cost
  • Ensure continuous improvement to site-level execution by monitoring and evaluating progress and sharing successes internally and externally
 

Recognizing sustainability through awards programs with the Innovation Center for US Dairy 

The host: Innovation Center for US Dairy, which works with the dairy industry to address barriers to and opportunities for innovation and sales growth

The challenge: In 2011, the Innovation Center for US Dairy began an awards program to recognize farmers incorporating sustainability into their operations. The group sought to improve the structure of the award program to increase consumer engagement while retaining high quality participation from farmers and the dairy industry.

Our task: Determine how US Dairy can better market this non-monetary award to farmers in a way that encourages increased involvement; explore ways to raise awareness of dairy-related sustainability issues among consumers.

Our approach:

  • Interviewed key stakeholders in the industry to gain a deeper understanding og the awards program and the various players involved
  • Designed metrics to benchmark the US Dairy award against similar industry awards to discern key differences across organizations
  • Created best practices for the launch and maintenance of innovation awards
  • Developed recommendations for how the organization can improve end-consumer awareness and engagement

Key insights:

Through its Sustainability Awards Program, the Innovation Center for US Dairy has a prime opportunity to share best practices and to pave the way toward a more sustainable dairy future. To improve the award system and increase awareness for consumers and the industry, we recommend the organization:

  • Involve consumers in the voting process through “popular choice” awards
  • Leverage relationships with partners and sponsors at the regional and local levels to ensure consistent involvement throughout the process
  • Develop promotional materials such as ribbons, signs, and certificates to distribute to award winners and runners-up
  • Use social media both to help farmers advertise their success and target consumers who care about sustainability
 

Advancing Community-Supported Fisheries with the Environmental Defense Fund

The host: Environmental Defense Fund (EDF) whose mission is to preserve the natural systems on which all life depends 

The challenge: EDF seeks to minimize exploitation of near shore tropical fish by small-scale fisherman. In particular, EDF sought opportunities to increase the value of seafood that may help reduce the pressure on overfished stocks while simultaneously providing economically viable business models for tropical fishermen and their communities.

Our task: Explore the current structure of Community Supported Fisheries (CSFs), a direct-to-consumer business model that connects fisherman to local consumers, and determine whether this model is feasible in the developing world; analyze how CSFs are created and measure the value they provide to customers; provide guidance on ways to incorporate sustainability considerations into the CSF development process and marketing efforts.

Our approach:

  • Examined CSFs using Bill Aulet’s Disciplined Entrepreneurship (DE) framework for creating successful startups
  • Conducted interviews with practitioners to understand how CSFs acquire their first customers and extrapolate industry best practices
  • Analyzed marketing strategies employed by various CSFs within North America to create indicators of consumer values
  • Created case studies from real CSFs, which can help future CSF organizers approach the challenge of creating a sustainability-oriented CSF and avoid common pitfalls

Key insights:

Maintaining economic support for fishermen is a critical aspect to the longevity of a CSF, and this is perhaps even more important in the developing world. To implement aspects of the CSF model in the tropics, we recommend EDF:

  • Consider ways to shorten the fishery supply chain by, for example, eliminating the freezing step, which would reduce transportation and energy costs
  • Create constant communication with customers through annual surveys and face-to-face interactions to ensure CSFs are meeting customer needs
  • Focus on marketing strategies that highlight the CSF product’s sustainability, traceability, and location
  • Take advantage of the growing trend of ecotourism to support a CSF in the developing world
 

Incorporating sustainability accounting standards into the investment process with Arabesque Asset Management

The host: Arabesque Asset Management, the London and Frankfurt-based investment firm that leverages sustainability data (ESG) with quantitative models

The challenge: Since 2013, Arabesque has operated as an independent firm focused on making sustainable investments more financially attractive. For this project, our host sought to assess the viability of integrating Sustainability Accounting Standards Board (SASB) reporting framework data into its investment processes.

Our task: Develop an understanding of the SASB mission and reporting process with a specific focus on the telecommunications industry; analyze data based on the SASB materiality framework for the sector; provide recommendations for Arabesque and the sustainable investment movement for implementing the SASB structure into the investment process

Our approach:

  • Conducted research on SASB data on publicly traded companies by industry sector 
and identified material issues defined by SASB
  • Aggregated data to arrive at score for 20 shortlisted companies
 within the telecommunications sector, one of ten sectors that SASB has developed standards for
  • Analyzed scores to assess how using SASB data can enhance a values-focused investing strategy

Key insights:

The SASB framework may be leveraged to create improved company and/or investment performance. But given the lack of data availability and disparity in data quality, there are significant challenges to integrating this information into investment portfolios. We recommend Arabesque:

  • Use the SASB index as an indicator of risk management and company transparency, rather than as an indication of actual sustainability metrics
  • Encourage companies to begin reporting on SASB’s chosen material issues through a concise, systematic one-page disclosure, which could in turn be used by SASB as a platform for engaging with firms on these issues
 

Evaluation and optimization of HFCV infrastructure strategies

The host: Toyota, the global motor vehicle company with a market capitalization of $239 billion

The challenge: Our host had plans to launch a new line of hydrogen fuel cell vehicles (HFCV)—cars that provide faster fueling time with longer range than current electric battery vehicles and have the potential to decrease air pollution in cities. However, the lack of hydrogen fueling stations presented a problem for widespread adoption.

Our task: Evaluate the needs and challenges facing fuel distributors, e.g., convenience stores, in terms of their potential financial and operational investment in this industry; develop a business plan that reduces barriers to investment.

Our approach:

  • Evaluated the business of hydrogen infrastructure by using Michael Porter’s Five Forces framework to look at considerations for potential new entrants before investing
  • Analyzed operational and financial considerations that preclude investment
  • Created infrastructure development scenarios to isolate factors that motivate or dissuade stakeholder cooperation

Key insights:

A strong carbon mitigation strategy in the automotive industry will involve collaboration from various stakeholders, including private investors, distributors, and the government. Currently there is a lack of financial incentive for investment in hydrogen infrastructure. To foster that, we recommend the company:

  • Encourage capital investment for developing hydrogen fuel stations, which will in turn spur vehicle sales, by forming partnerships across the industry
  • Promote government funding, tax credits, and other subsidies aimed at reducing emissions/incentivizing investment and leveling barriers to entry
  • Develop HFCV equipment that allows for technological synergies such as providing power or heat to stationary buildings