DIRECTIONS
SUPPLEMENT
June 2010
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Directions Supplement
June 10
Nigel Salter
salterbaxter
Is your brand sustainable?
First, it was the NGOs who were asking. Then it was consumers and
employees (some, admittedly not all). And now it is the investment
community and their advisers. So, if your company hasn’t begun
to integrate sustainability into its brand, perhaps this is the wake-up
call that will prompt action. Because the alarm bells are ringing.
Here are two recent examples that
demonstrate the pressure for smart
sustainability thinking in brands is now
coming from across the full spectrum of
stakeholders. The first is from Goldman
Sachs Sustain:
1
2
oldman Sachs, Global Investment
G
Research, Change is coming:
A framework for climate change –
a defining issue of the 21st century.
“We are approaching a tipping point at
which these issues’ (environmental and
social) importance to business performance
and investors will escalate. The equity
market is only just beginning to reflect the
magnitude of change that lies ahead.” 1
I NG Equity Markets Research,
The third industrial revolution:
Multi-committed company
(MCC) – the archetype to capture
consumer loyalty.
The second example is from ING2, and one
of their Equity Markets research papers
focusing on the Food, Beverages and HPC
sector, with the telling title of ‘The Third
Industrial Revolution’. The writers clearly
state that the eight interdependent crises
that we face (demography, ethics, socialeconomic, food, water, climate, energy and
political) will be the catalyst for the Third
Industrial Revolution, which they define
as being real responsible and sustainable
growth. And they see companies which
redefine their business models to include
responsibility in their marketing and sourcing
as being in the position to pick up the prize
of ‘hard’ business benefits of lower costs from
supply chain synergies and higher sales.
“Companies can reap profits from consumers’
social and environmental concerns and the
understanding that resource scarcity will
result in a permanent change to business
models. In our view, the third industrial
revolution will on one hand save the planet
and on the other accommodate the consumer
explosion we expect in the coming decade.”
Whilst the prize might be becoming
increasingly clear, the ways of reaching that
prize are still being explored and uncovered.
In this Directions supplement, we highlight
four companies who are already redefining
their brand and marketing strategies; we
hear from Interface, one of the pioneers in
sustainability, on what they have learnt on
the dos and don’ts of creating a sustainable
brand; and we provide two different
perspectives on how consumer power
is influencing a change towards more
sustainable practices. We finish with a look
at the relationship between sustainability
and innovation. The response to the
challenges we face requires innovation like
never before. There are no set rules and no
easy formulae – but where would the fun be
in that?
Approaches to creating a sustainable brand
Olivia Sprinkel
salterbaxter
Each company’s approach to creating a sustainable brand will be
unique, depending on the company’s culture and brand, sector,
issues and audiences. We have highlighted here four different
approaches – stakeholder engagement, company as educator, handson involvement and partnership. In reality, a successful strategy is
likely to include all these elements in varying proportions, but
successful companies will have a clear focus for their strategy. And
they tend to share the same fundamental characteristics: leadership
vision; internal engagement; high-profile, consistent communications
and long-term commitment rooted in the values of the organisation.
Four approaches
1) GE – stakeholder engagement
GE’s journey towards being a sustainable
brand began in 2003, driven by customer
pressure to improve efficiencies and reduce
emissions. GE’s response was to create a
space for engagement and imagination
within the business, listening to stakeholders,
including customers, government and NGOs,
and challenging them to imagine what their
world was going to look like in 2015 and
beyond. From this the ‘ecomagination’
strategy was born, and engagement has
continued to be central to ongoing activity.
Lorraine Bolsinger, formerly vice president
of ecomagination, said “We can’t put a stand
up once a year, run a few commercials, and
say ‘This is what we’re doing’. We have to be
diligent every month on bringing new stories
to our colleagues, our customers, and NGOs.
That engagement is a huge ongoing issue”.
In the last few years, online engagement
has been central to ecomagination’s success,
with traffic and length of user visits to
ecomagination.com outstripping that of other
CSR websites such as Chevron’s ‘willyoujoinus.
com’ and Coke’s ‘makeeverydropcount.com’.
And GE’s brand has benefited as well – an
online video tracking survey showed brand
favourability of 45% for non-viewers of the
videos on ecomagination.com, rising to 75%
for video viewers. Inspired by the success
of ecomagination, GE have now launched
‘healthymagination’, focused on creating
better health for more people. Engagement
leads to stories, which in turn stimulates the
imagination – and the innovation for which
ecomagination has become known.
2) E.ON – company as educator
There are no easy answers in the energy
debate. Rather than shying away from this,
E.ON UK has recognised that they need to
take the lead in educating consumers about
the need to change energy consumption
habits and building awareness about the
options for different sources of energy, an
important element of their ‘Changing Energy’
strategy. Firstly they have opened up a space
for engagement and debate with their
‘Talking Energy’ campaign. Advertisements
ask questions such as ‘Why would an energy
company want me to use less energy?’ and
lead to online discussion areas including
YouTube. This is now being followed up with
the Energy Fit campaign, developed in
conjunction with an online panel of 15,000
consumers. The panel told E.ON that they
wanted tools and tailored information to help
them reduce energy use. So as part of the
campaign, E.ON is making energy monitors
available to customers. Educating is not a
one-way street, but a dialogue, in which
listening plays an important part.
3) Pepsi – hands-on involvement
from consumers
Pepsi’s approach has been based on getting
consumers involved hands-on. A high profile
example of this is Project Refresh in the
US, which invites users to vote for community
projects that they would like to see funded.
Pepsi have diverted traditional television
advertising spend to this project, recognising
that increasingly companies are going to be
finding other ways of building brand awareness
and loyalty, often with sustainability as a
central component. In April 2010, PepsiCo
also launched the Dream Machines initiative,
together with Waste Management and Keep
America Beautiful. This project, which provides
on-street recycling points, has the aim of
increasing recycling rates in the US from
34% to 50% by 2018. Whilst the project has
been attracting criticism from some quarters
for greenwashing, at the very least it is
raising awareness about recycling amongst
American consumers and encouraging them
to take action.
4) Cadbury’s – the partnership approach
Cadbury’s, founded on Quaker principles,
has carried this partnership approach to
ethical business through to the present day.
Partnership is evident in both their actions
and in their tone of voice. Their current
advertising is focused on promoting the
partnership that they have with their suppliers.
The Cadbury Cocoa Partnership was founded
in 2008 in partnership with the United Nations
Development Programme, local governments,
farmers and communities. It has the ambitious
aim of securing the economic, environmental
and social sustainability of approximately one
million cocoa farmers and their communities
in Ghana, India, Indonesia and the Caribbean.
Companies are recognising that the issues
raised by sustainability demand a new approach
to doing business, one which is rooted in
collaboration and partnership, as the issues
are too big for companies to tackle alone.
Directions Supplement
June 10
Ramon Arratia
Sustainability Director
EMEAI, InterfaceFLOR
InterfaceFLOR’s six dos and don’ts
for creating a sustainable brand
A sustainable brand cannot be achieved with a marketing agency
brief. As consumers have become more aware of sustainability issues
such as climate change, marketers are rushing to ‘green’ their brands.
Too often this is approached as a ‘sticking plaster’ when what is
needed is a completely new ‘healthy life-style’.
Interface’s sustainability strategy, Mission
Zero, was conceived in 1994 and we have
learned many important lessons in our journey
to embed sustainability into our organisation,
our products and our people. Mission Zero
has been so effective in defining our brand
that Interface tops the Globescan survey of
over 1,500 opinion formers in 90 countries.
We receive more unprompted mentions as
a sustainability leader than any other
company, including many that dwarf us in
size and profile.
Here are our six dos and don’ts for creating
a sustainable brand:
1. Do: Set seriously ambitious goals
Mission Zero’s strength lies in its boldness.
In 1994, this radical long-term vision
immediately attracted attention. At the time
some people told us it was naïve to think
zero environmental impact achievable. But
it has inspired fundamental changes in the
way people work at InterfaceFLOR precisely
because it is so challenging.
Don’t: Set your sights too low with
unchallenging short-term targets.
Sustainability transformation requires
disruptive innovations.
2. Do: Address the elephant in the room
InterfaceFLOR’s sustainability strategy
gained credibility because it addresses our
material issues, even the biggest challenges
that aren’t easy to solve. In our case it was
cutting the umbilical cord to oil, with one of
our main raw materials – nylon yarn.
Don’t: Focus only on easy wins or non-core
business issues like philanthropy.
3. Do: Sign up your CEO
High visibility leadership and commitment
from the top of the company have been vital
in demonstrating that Interface is serious
about sustainability. Founder and Chairman,
Ray Anderson, has relentlessly engaged
employees and external stakeholders for
fifteen years on the subject, believing he must
convince people ‘one mind at a time’. In this
we have been lucky as many business leaders
genuinely try to start the change towards
sustainability, but lack the commitment and
longevity in office to succeed.
Don’t: Think you can ease sustainability in
from the bottom-up.
4. Do: Shout about the business case
We made sure our people could clearly see
how sustainability would benefit Interface’s
business. Results came quickly. As we worked
towards Mission Zero, costs went down not
up, exposing the myth of a choice between
environment and profits.
And the business case soon became
stronger as our customers increasingly
wanted to buy more sustainable products.
We became the sole carpet supplier for
government buildings in a country where
60% of the points were awarded for
sustainability criteria, for example.
Don’t: Rely on doing good as your argument.
Profit is essential.
5. Do: Make sustainability personal –
one mind at a time
An engineer is turned on by machines. Give
them a technical challenge. A sales person is
turned on by sales. Give them a sound sales
argument. Sustainability communications
must be segmented.
Don’t: Have top down, celebratory, positive,
biased, non-segmented internal comms.
6. Do: Use sustainability as a source
of innovation
Putting sustainability at the centre of
everything we do has helped us come up
with ground-breaking innovations such as
Tactiles™, our adhesive-free installation
system. Sustainability has helped our
business expand into new markets and
create a competitive edge.
Don’t: View sustainability solely in terms of
corporate behaviour. Product performance is
where the real new market opportunities are.
The technology that is making
sustainability transparent
Nigel Salter
and Olivia Sprinkel
salterbaxter
Imagine a world in which consumers can scan the barcode of
a product in the shops with their phones and access detailed
information about the company’s sustainability performance.
That world is already here. The Good Guide
iPhone application in the US and the Barcoo
iPhone app in Germany does just that. The
Good Guide, available online as well as an app
(www.goodguide.com), contains ratings for
over 65,000 products, from food to toys to
personal care and household products. It
provides health/nutrition, environmental and
social ratings, with the ratings compiled from
a series of databases.
52%
of UK adults have bought
a product primarily for
ethical reasons
Shopping by values
But will anybody use it? According to the
Co-operative Bank’s Ethical Consumerism
Report 2009, 64% of UK adults say that
they have avoided a product because of a
company’s behaviour, 52% of UK adults claim
to have a bought a product primarily because
of ethical reasons and 39% of people have
actively sought information on a company’s
behaviour or policies. These figures suggest
that people are increasingly taking into
account a company’s behaviour as part of
their purchasing decision, and if it as easy
as scanning a product in a shop, the number
of people who actively seek out information
will surely only increase. The advent of such
applications means that increasingly there
will be no place left to hide for companies –
consumers won’t have to dig deep into CR
reports to find information, it will be there
in the palms of their hands. The trend towards
transparency and consumers shopping by
their values will push companies into
integrating sustainability into their brands,
whether they like it or not.
Online information and mobile phone apps
are only the beginning. According to Daniel
Goleman, author of ‘Ecological Intelligence’,
some retailers are talking to Good Guide about
putting its product ratings next to price tags
on shelves. And a good rating could soon be a
pre-requisite to getting your product on the
shelf in the first place – some retailers are
starting to use Good Guide as a screen in
deciding which products to stock.
A choice for companies
So there is a choice for companies to make.
They can let consumers seek out information
about their products online, via their mobile
or from information provided by the retailer.
Or companies can be proactive in starting a
conversation with the consumer and
encouraging them to find out more about
where the products come from and what they
are made of, guiding them through the
product journey, helping them to make a
positive choice to buy the product and to feel
good about doing so. In this way, sustainability
can be integrated into the brand experience.
For example, Coca-Cola in the UK have an
application on their website, where you can
type in the first two letters of a code on the
can or bottle, and this will tell you where the
Coke began its journey to you. This provides
a neat way in to engaging you with the rest
of the product journey and what Coca-Cola
is doing to minimise impact, from ingredients
to distribution.
Of course, this approach is dependent on
having the performance to support such
transparency – but if consumers are
demanding it and purchasing decisions are
increasingly dependent on it, then companies
will need to up their performance accordingly.
64%
of UK adults have avoided
a product because of a
company’s behaviour
Directions Supplement
June 10
Michael Gidney
Deputy Executive
Director, Fairtrade
Foundation
Ethical business – why it’s not just
the suppliers who benefit
Leading businesses ignore human rights, environmental and pay
and conditions issues at their peril. Failure to abide by the spirit
of protocols and laws can exact a hefty price if new in-depth
research* commissioned by the Fairtrade Foundation is anything
to go by. This shows that one in five British consumers punish
socially irresponsible companies through their shopping choices.
And, within the committed Fairtrade consumer
sector, this rockets to more than two-thirds
who say they always or often punish
companies for not being socially responsible.
That’s the stick.
“The carrot
comes in the
shape of huge
brand loyalty
for companies
who make a
point of doing
the right
thing”
The carrot comes in the shape of huge
brand loyalty for companies who make a
point of doing the right thing. In fact nearly
a third of consumers, according to a poll of
1,500 consumers undertaken by Globescan,
are likely to reward companies for being
socially responsible.
It’s proof that placing importance on
sustainability – whether it is paying a fair
price to farmers in the developing world for
commodities or reducing a firm’s environmental
footprint – pays huge dividends.
Look at how the Co-op and Sainsbury’s
supermarkets have fared since scaling up their
work with Fairtrade. The Co-op was the first
UK retailer to sell Cafedirect coffee, Fairtrade
bananas and wine. Its strategic decision to sell
as many Fairtrade products as possible is by
no means a direct reason for it becoming a
fifth force in British supermarket retailing.
But its Fairtrade shift has played a part by
tapping into UK shoppers’ sense of justice
for producers in the developing world.
Likewise Sainsbury’s, under the leadership
of Justin King, has shifted all its own brand
bananas, sugar and tea to Fairtrade. Not only
did the move transform the fortunes of
communities in some of the world’s poorest
countries but it coincided with Sainsbury’s
sales growth through a recession. And, in
bananas, Sainsbury’s shift to Fairtrade saw
an overall significant sales rise.
Ethical consumerism is now part of the retail
mainstream. And Fairtrade is leading the
charge. Retail sales in the last 12 years have
risen from £16m in 1998 to £800m in 2010.
*http://www.fairtrade.org.uk/press_
office/press_releases_and_statements/
may_2010/millions_of_uk_consumers_
punish_businesses_who_dont_treat_
workers_fairly.aspx
True, the UK’s overall grocery sales top
£120 billion, but against all market predictions
that Fairtrade would only be a temporary
fad the sector year-on-year posts sales
growth that far outstrips the conventional
market. Furthermore, Fairtrade has become
a gateway – a point of difference – for major
brands in a way that sees huge financial and
reputational benefits.
Incredibly when asked to spontaneously
name any ethical product label, one in three
shoppers cited the Fairtrade mark – 20%
above other labels.
Within the Fairtrade movement, we see
growing evidence that companies and brands
that become Fairtrade certified more often
than not see sales and reputational uplifts. It
may explain why Starbucks, on the receiving
end of some unfavourable press in recent
years, markedly increased its Fairtrade coffee
offer last year.
Marks & Spencer, the UK’s biggest clothing
retailer, has committed to sourcing Fairtrade
cotton and food goods as part of its Plan A
mission aimed at reducing its carbon footprint
and becoming a fairer business partner with
its suppliers. It is a policy born out of
enlightened self-interest. Consumers want
competitively priced goods but not at any
price. It is clear shoppers are concerned that
workers in developing countries receive a fair
wage. And Fairtrade is undoubtedly seen as a
way of guaranteeing they benefit.
Consumers know what they want. So
businesses these days cannot afford to come
up short. And when you think about it, that’s
fair enough.
Sustainability: the key driver of innovation
and brand value
Elisabeth Laville
Founder and chief
entrepreneur of Paris-based
consultancy Utopies
In the future, only companies that make sustainability a strategic
goal, rethinking their business models as well as their products,
technologies and brand promise, will achieve competitive advantage.
The days of the traditional corporate social
responsibility (CSR) approach are over.
Focused on industrial practices and internal
processes, it was put in place mostly out of
a defensive approach – aimed at anticipating
new regulations, preventing image crisis,
reducing costs and preserving the company’s
licence to operate. But in most cases the
business model remained unchanged and
unchallenged. Even if ‘green’ or ‘responsible’
products were launched, they were not
seriously promoted, thus accounting for less
than 1% of their market (see fairtrade coffee,
sustainable tourism, organic food, ethical
investments, etc.). And CSR fell short in
solving the social and ecological challenges,
because corporate practices only affect a tiny
share of a business’ global impact: no matter
how great a car manufacturer is doing in
deploying ISO certification on its industrial
sites, and reducing the CO2 emissions of its
factories, factories only account for 12% of
the global CO2 emissions of the industry, while
cars account for 80% of its climate impact.
So if we do not shift technology portfolios
used for mobility (whether electric, hybrid,
etc.), if we do not think of alternative mobility
solutions more sustainable than individual
cars, for example public transportation or
car sharing, and, above all, if we do not
succeed in mainstreaming these throughout
the world, then we will fail in addressing the
climate challenge.
This is our challenge for the years to come:
we need a new CSR revolution, one that will
go beyond risk management so as to seize
the potential for innovation and brand
differentiation brought by sustainability
when it is placed at the heart of the business
model. Because this is what is needed if we
are serious about leaving a better world to
our children and making this a real business
opportunity. The English retailer Marks &
Spencer launched its 5-year Plan A in 2007
and is now committed to having 50% of its
products with a green credential in 2015 and
100% in 2020. In a like-minded approach,
Philips committed in 2007 to have 30% of its
turnover related to green products by 2012,
thus shifting the whole company’s approach
to innovation and the brand’s reputation.
In this post-Copenhagen world, the most
advanced businesses are developing an
innovative approach to innovation itself, in
order to solve environmental and social
problems that governments too often fail to
address. They offer dematerialised services
as an alternative to resource-intensive and
waste-generating products: Apple has passed
Wal-Mart to become the biggest music retailer
in the US. They see nature as a teacher, not
as a supplier, developing nature-inspired
innovations: take the example of a biomimetic
air-conditioning free building, inspired by
termite mounds. They choose open-source
approaches to innovation rather than
confidential and secret-driven ones – can one
seriously think about patenting a cosmetic
ingredient created using a plant that Indians
have used for centuries in South America?
And they develop a collaborative approach
to innovation. This might be by creating new
partnerships with NGOs: concrete-giant
Cemex has efficiently addressed the market
of low-income do-it-yourself homebuilders by
partnering with micro-lending organizations.
Business models, product innovation and
consumption are now at the heart of the
sustainability challenge: the brands that will
be prospering in a decade are those that
are radically committed to becoming more
sustainable. Not for 1% or 10% of their
activities. But for 30%, 50% or 100%.
Essentially, a strong brand is an exciting
journey shared with consumers: at last, this
is one journey worth the effort.
“We need a new CSR
revolution… to seize the
potential for innovation
and brand differentiation”
About us
Contact:
Nigel Salter
nsalter@salterbaxter.com
Tel +44 (0)20 7229 5720
The Directions Supplements
support our main Directions
report. The main report is
published each year and is
now regarded as the UK’s
most comprehensive analysis
of the trends and issues in
CR communications. If you
want a copy, call us on the
number below or email
directions@salterbaxter.com
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Tel +44 (0)20 7229 5720
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Salterbaxter advise companies
on strategy, branding, corporate
communications and design –
providing creative communications
for big business issues.
We work on a wide variety of corporate communications assignments
for our clients including brand strategy and implementation, annual
reports, digital communications and employee engagement. But we are
increasingly being seen as one of Europe’s leading sustainability
communications consultancies, with an unrivalled breadth and depth of
experience across multiple sectors and multiple countries. We offer a full
range of corporate responsibility and sustainability communications
services – from board level strategy consulting to the design, writing and
delivery of printed and online communications. And everything in between.
Our team of sustainability consultants is basically designed to be able to
help major corporations tackle every aspect of the sustainability agenda:
– Development of corporate and
brand sustainability strategies
– Social media strategy
and programmes
– Stakeholder engagement
– Writing
– Reporting
– Workshops and training
– Single issue campaigns
– Gap analysis
– Internal communications/
employee engagement
– Research
– Events
Clients
Our sustainability clients are the leading corporations in multiple sectors
across the whole of Europe. Latest ones include:
UK
ArcelorMittal
AXA UK
Bacardi
BAE Systems
Camelot
Coca-Cola GB & CCE
E.ON UK
Morrisons
02 UK
Rolls-Royce
Tullow Oil
Vodafone
EUROPE
adidas Group
Carlsberg Group
E.ON Group
Fortum
H&M
ING Group
LEGO
Marine Harvest
Millicom International
Nokia
Orkla
Telefónica 02 Europe