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Harvard Case - "Carbon is the new calorie": Logitech's carbon impact label to drive transparency in sustainability

""Carbon is the new calorie": Logitech's carbon impact label to drive transparency in sustainability" Harvard business case study is written by Julia Binder, Heather Cairns-Lee. It deals with the challenges in the field of Strategy. The case study is 18 page(s) long and it was first published on : Dec 30, 2022

At Fern Fort University, we recommend Logitech aggressively implement its carbon impact label strategy across its entire product portfolio, leveraging this initiative as a cornerstone for a broader digital transformation strategy. This strategy will not only enhance environmental sustainability but also drive competitive advantage by attracting environmentally conscious consumers, fostering brand loyalty, and strengthening Logitech's position as a leader in corporate social responsibility.

2. Background

Logitech, a leading manufacturer of computer peripherals, faces increasing pressure from consumers and investors to address its environmental footprint. The company recognizes that transparency and accountability are crucial for building trust and driving sustainable growth. To address this, Logitech is introducing a carbon impact label on its products, providing consumers with clear information about the environmental impact of their purchases. This initiative aims to empower consumers to make informed decisions and contribute to a more sustainable future.

The main protagonists of the case study are:

  • Logitech: The company seeking to implement a carbon impact label to enhance transparency and sustainability.
  • Consumers: The target audience for Logitech's products, increasingly concerned about environmental impact.
  • Investors: Stakeholders who evaluate Logitech's performance based on environmental, social, and governance (ESG) factors.

3. Analysis of the Case Study

Applying Porter's Five Forces Framework:

  • Threat of New Entrants: High - The market for computer peripherals is relatively easy to enter, with many potential competitors emerging.
  • Bargaining Power of Buyers: Moderate - Consumers have a variety of options available, but Logitech's brand recognition and product quality provide some differentiation.
  • Bargaining Power of Suppliers: Moderate - Logitech relies on a network of suppliers, which could potentially exert pressure on pricing and availability.
  • Threat of Substitute Products: Moderate - Consumers can choose alternative input devices, such as touchscreens or voice assistants, which may impact Logitech's market share.
  • Rivalry Among Existing Competitors: High - The market is characterized by intense competition, with established players like Microsoft, Razer, and HP vying for market share.

Analyzing Logitech's Value Chain:

Logitech's value chain involves various stages, including:

  • Research & Development: Designing and developing innovative products.
  • Manufacturing: Production of peripherals using various materials and processes.
  • Marketing & Sales: Promoting and selling products through various channels.
  • Distribution: Delivering products to customers efficiently.
  • Customer Service: Providing support and resolving customer issues.

Identifying Key Opportunities and Challenges:

  • Opportunities:
    • Increased consumer demand for sustainable products: Growing awareness of environmental issues drives demand for eco-conscious products.
    • Enhanced brand image and reputation: Transparency and commitment to sustainability can strengthen Logitech's brand image.
    • Competitive advantage: Differentiating through sustainability can attract environmentally conscious consumers.
    • New market opportunities: Expanding into new markets with strong sustainability focus.
  • Challenges:
    • Cost of implementation: Measuring carbon impact and labeling products requires resources and expertise.
    • Potential impact on pricing: Consumers may be willing to pay a premium for sustainable products.
    • Maintaining transparency and accuracy: Ensuring the carbon impact label is accurate and reliable is crucial for trust.
    • Potential for greenwashing: Communicating sustainability efforts authentically and avoiding misleading claims is essential.

4. Recommendations

  1. Develop a comprehensive carbon impact labeling system: This system should be transparent, accurate, and consistent across all product categories. Logitech should partner with independent third-party organizations to verify the accuracy of its carbon footprint calculations.
  2. Integrate carbon impact labeling into product design and development: Incorporate sustainability considerations into the design process, aiming to reduce the environmental impact of products throughout their lifecycle.
  3. Implement a digital transformation strategy: Leverage technology and analytics to streamline carbon footprint measurement, optimize manufacturing processes, and enhance transparency through online platforms and mobile applications.
  4. Communicate the carbon impact label effectively: Develop a clear and concise communication strategy to educate consumers about the label and its significance. Utilize marketing channels such as social media, website, and packaging to highlight Logitech's commitment to sustainability.
  5. Engage with stakeholders: Actively engage with consumers, investors, and industry partners to gather feedback and build consensus around the carbon impact labeling initiative.
  6. Monitor and evaluate the impact: Continuously monitor the effectiveness of the carbon impact label and its impact on consumer behavior, brand perception, and financial performance.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  1. Core competencies and consistency with mission: Logitech's commitment to innovation and customer satisfaction aligns with the goal of developing sustainable products and enhancing transparency.
  2. External customers and internal clients: The carbon impact label addresses the growing demand for sustainable products from environmentally conscious consumers and investors.
  3. Competitors: By embracing sustainability, Logitech can differentiate itself from competitors and attract consumers who prioritize environmental responsibility.
  4. Attractiveness ' quantitative measures if applicable: The carbon impact label has the potential to increase brand value, attract new customers, and improve financial performance through reduced operational costs and increased sales.

Assumptions:

  • Consumers are willing to pay a premium for sustainable products.
  • Logitech can effectively communicate the value of its carbon impact label.
  • The carbon impact label will be perceived as credible and trustworthy by consumers and investors.

6. Conclusion

Logitech's carbon impact label initiative represents a significant opportunity to drive sustainable growth, enhance brand reputation, and gain a competitive advantage. By embracing transparency and accountability, Logitech can position itself as a leader in environmental sustainability and attract a loyal customer base that values responsible consumption.

7. Discussion

Alternatives not selected:

  • Ignoring the issue of sustainability: This would likely lead to negative perceptions from consumers and investors, potentially harming Logitech's brand image and financial performance.
  • Implementing a limited carbon impact labeling program: This would provide less comprehensive information to consumers and could be perceived as a token effort, failing to achieve desired impact.

Risks and key assumptions:

  • Cost of implementation: The cost of developing and implementing a comprehensive carbon impact labeling system could be significant.
  • Consumer acceptance: Consumers may not be willing to pay a premium for sustainable products, or they may not understand the significance of the carbon impact label.
  • Accuracy and reliability: Ensuring the accuracy and reliability of the carbon impact label is crucial for maintaining consumer trust.

8. Next Steps

  1. Develop a detailed implementation plan: Define roles, responsibilities, timelines, and budget for the carbon impact labeling project.
  2. Pilot test the carbon impact label: Launch a pilot program with a select group of products to gather feedback and refine the labeling system.
  3. Communicate the initiative to stakeholders: Engage with consumers, investors, and industry partners to build awareness and support for the carbon impact label.
  4. Monitor and evaluate the impact: Track key performance indicators such as consumer engagement, brand perception, and financial performance to assess the effectiveness of the initiative.

By taking these steps, Logitech can effectively implement its carbon impact label strategy and position itself as a leader in sustainable business practices. This initiative has the potential to drive significant value creation for Logitech, its stakeholders, and the environment.

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Case Description

This topical case covers the period from 2019 to 2022, when Prakash Arunkundrum, head of global operations and sustainability at Logitech, was focusing on reducing the company's carbon footprint. It recounts how he and his team gained internal support to embark on an ambitious carbon labeling initiative and created a transparent methodology to assess, validate and communicate the life cycle carbon value of Logitech's products. The case highlights Logitech's journey to becoming climate positive, based on four key pillars; 1) reducing carbon in its products, 2) transitioning to renewable energies, 3) restoring forests and supporting climate impacted communities, and 4) rethinking how to support and enable reuse. However, Prakash realized that the real hurdle would be gaining industry-wide adoption of carbon labeling by other companies and competitors in the tech sector. Logitech tried to garner support for Carbon Clarity by making its approach open source, by investing significant time and energy to raise awareness about the benefits of carbon labeling, and by holding discussions with interested companies, including competitors. Yet despite interest from other companies, they had not yet committed to supporting Carbon Clarity. Prakash was baffled as to why they would not commit and wondered how to make progress to drive sustainability.

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