Use sustainability to build an advantage

Once upon a time, corporate social responsibility (CSR) was merely a fringe activity. Some companies treated it as a subset of reputation, reporting and risk management. Others managed to avoid it altogether. But a few pioneers took it more seriously and started to look at the impact of their supply chain and operations in order to reduce any harmful side effects.

Today, CSR is a must. Large companies are under pressure from shareholders, employees and customers to show a genuine leading position. What form that takes can vary. If you are a car company, it could be switching to electric car manufacturing. If you are in food, it could be the shift to plant-based diets, clean eating and health. In packaging, you could be looking at reducing the use of virgin materials, especially plastic, and increasing recycling rates.

As the reality of the need for sustainable business has taken hold, companies and brands have also upped their ambitions. Some, such as Oatly, Tesla and Impossible Foods, have succeeded in creating eco super-brands. In larger organisations, the new gold standard is committing to being people and planet positive (IKEA), resource positive (Starbucks) and regenerative (Walmart). This means that beyond ‘net zero’ targets, these companies aim to do more good overall than harm.

While becoming sustainable can add complexity and cost, the good news is that it can also build competitive advantage. In 2019, a comprehensive study of more than 71,000 consumer-packaged products by NYU Stern Center for Sustainable Business found that those labelled as sustainable grew 5.6 times faster than those that were not. There are numerous ways that sustainability can align with marketing objectives, including increased growth, loyalty and advocacy, targeting new segments, and the ability to charge a premium for more ethical goods.

The difficulty is often how to communicate sustainability in your marketing. How do you take credit for your efforts and bring people with you? The danger is that you lapse into greenwashing – any attempt (deliberate or otherwise) to appear greener than you really are. This will often backfire because NGOs, media or regulators will challenge you for making misleading claims. Companies do need to walk the walk before they can talk the talk.

One way to avoid greenwashing is to communicate sustainability in ways other than by making claims. I’ve often advised clients to do something sustainable with consumers rather than just messaging. Encourage consumers to recycle, rent, buy local, share lifts and spend more time in nature. REI, an American outdoor equipment retailer, shuts up shop on Black Friday and encourages consumers and staff to #OptOutside – spend time outdoors instead of shopping. This move was positively received and boosted marketing measures such as awareness of the brand, advocacy and loyalty. On just one measure, REI boosted its social media impressions by 7,000% with this campaign. It also positively contributed to the culture and communities it does business in.

These days, working out what your purpose is before then pursuing that with marketing is a common approach. Every brand at Unilever is encouraged to define its purpose. The CEO of Unilever, Alan Jope, went as far as to say: “We will dispose of brands that we feel are not able to stand for something more important than just making your hair shiny, your skin soft, your clothes whiter or your food tastier.”

Unilever brands such as Ben & Jerry’s and Seventh Generation are radical and activist. Others are more gently purposeful. For instance, Hellmann’s focuses on enjoying real food and reducing food waste.

There are situations where you want to tell consumers that your products are genuinely greener. Here it is a matter of being understated, modest and authentic. It is important to be critically aware of how creative licence can easily turn into unintended greenwash. The difficulty is that marketing tends to exaggerate, enthuse and extend simple product features.

Past campaigns criticised for greenwashing include Lexus’s 2007 advertising for its hybrid SUV, offering “high performance, low emissions, zero guilt”. It was indeed a better choice than a petrol SUV, but much less green than buying a small car. The carbon dioxide emissions figure for the Lexus was 192g/km, whereas a normal petrol engine for a Fiat 500 of the same vintage was only 118g/km. Also, about half the emissions of any car are ‘embodied’ – from mining, manufacturing and so on, and large luxury cars have a much bigger footprint here too. So the Lexus – better than similar non-hybrids, sure. Zero guilt? Perhaps not.

The obvious way around this problem is to have your sustainability people working with the people who write and design marketing materials. But even when a claim is completely true, it can be misleading. I used to marvel at Lavazza Tierra coffee claiming on the pack that it was ‘100% sustainable’. How had they achieved this, I wondered? They farm coffee, roast it, pack it, ship it around the world… without any negative impact? When researching my latest book, Greener Marketing, I discovered how this howler came about. The coffee is Rainforest Alliance certified. When displaying a label under this scheme, you have to say how much of the contents are certified. For instance, a chocolate brownie might be 50%: the cacao is certified, but not the flour, oil or sugar. In Lavazza Tierra’s case, the contents were 100% certified. But by carrying a big label on the tin saying ‘100% sustainable’, it was giving a very different impression.

The deeper, more strategic way to deal with sustainability information is to embrace what has become known as radical transparency. Clothing retailer H&M topped the Fashion Transparency Index 2020. Back in 2013, the brand began to publish details of all its supplier factories online. In 2017, it started providing detailed transparency information for clothes within its Conscious Exclusive range. Then, in 2019, it gave detailed information for every single garment on the H&M website: “For each of our garments, we now share details such as production country, supplier names, factory names and addresses, as well as the number of workers in the factories. In addition, customers can find out more about the materials used to make a specific garment. By sharing extended details on where our garments are made, we make it easier for customers to make more informed choices when shopping.” H&M is not without its critics, but it has shown how being rigorous and accurate with sustainability information can create its own kind of halo effect.

Many of these examples are global companies with large marketing budgets and valuable brands to defend and build. How can you approach the subject when you have a small business and limited means or expertise? Some of the most sustainable companies I know are small. They manage it by genuinely setting out to do the best for people and the planet, and by sharing what they are doing with their consumers, who are often enthusiastic. Many of the smaller companies leading on sustainability have embraced the B Corporation standard (along with some large companies such as Danone and Natura). The B Corp certification (see the March issue of this magazine) gives a rigorous framework for setting ethical standards and sticking to them. It’s well worth checking out.

 In summary, sustainability is now a must-do. It can build competitive advantage. But mixing sustainability and marketing communications can easily lead to greenwash. As a marketer might say, when it comes to making eco claims, less is more.

Further reading into sustainable business is available through the articles below.

These articles and others are available below to logged-in ICAEW members and ACA students.