Sustainability: The search for a clearer footprint

Sustainability is high on the corporate agenda, and with consumers demanding transparency, fostering understanding of brands' carbon emissions is crucial, writes Elisabeth Jeffries.

If the Fairtrade Foundation label cut through the fog of commodities trading, a similar idea could do the same for corporate carbon emissions. Greeenstar, a young company formed by a team of dedicated environmentalists, is creating such a set of carbon rankings, which award up to five 'stars' to brands. They want consumers to be able to look up the carbon credentials of brands online in a range of sectors, perhaps downloading an app or scanning a bar code to access the information.

'Companies will be able to use the stars at point of purchase, but it has to be at brand level - the entire operation has to be behind the stars,' says Zoe Crookes, operations director at Greeenstar. 'It is more carrot than stick. It won't show companies that have fewer than three stars, because they're below average. So the brand will be strengthened by the fact that it cares.'

The company argues that loyalty, board accountability, and major positive actions happen at brand level, rather than product level.

Corporate campaign

Much of the data used for Greeenstar's ratings, due to be launched in early 2012, is sourced from a remarkably successful corporate campaign aimed at investors, the Carbon Disclosure Project (CDP).

It acts as a form of peer group pressure, challenging brands to disclose their emissions, and actions they may have taken to cut them, and then ranking them according to quality of disclosure.

If successful, Greeenstar's ratings will, for the first time, open a window for consumers on brands' overall carbon performance. A few companies have already tried something akin to this, labelling some products with carbon footprints, but it hasn't yet taken off.

'It allows a company to get the complete picture in a value chain but in terms of giving consumers the message they can understand, it is confusing; no one has any idea what it means,' says Chris Sherwin, sustainability consultant at brand consultancy Dragon Rouge.

Most consumers have not taken much notice of the various carbon footprint measurements. Do they care any more about a company's overall carbon performance? Sherwin thinks not.

'To assume it is relevant to the consumer would be a mistake,' he argues, alluding to the technical nature of carbon emissions calculations.

Nonetheless, more brands are taking carbon disclosure seriously, as the growth in CDP participants (from just a handful in 2001 to 3500 this year) suggests. Shoppers have not been queuing up for this information, but companies want to provide it anyway, to preserve their brand reputation.

This is certainly the view of Robert Metzke, senior director for electronics manufacturer Philips' environmental action programme, Ecovision.

'Consumers recognise the company's efforts and attribute them to the brand quality of Philips. By providing a feeling that they can trust us, that contributes to the brand value of the company,' he says.

Adrian Northover Smith, head of corporate public affairs at Sony UK, takes much the same line. He says that information about carbon emissions 'gives customers a sense of satisfaction and contentment'. He adds: 'It is important that customers can see, through the entire chain of production, manufacturing and delivery, that environmental concern is something we take seriously.' That said, most of that corporate level concern is communicated indirectly, through information and education relating only to the product.

Prior to the introduction of a fresh EU energy-efficiency TV rating scheme due to come into force at the end of 2011, the company produced its own voluntary ranking. 'We don't know yet how much of a factor it is in their purchasing decision, but we are giving customers as much point-of-sale information as possible,' says Northover Smith. 'We want our customers to buy a product they will have a joy in using, and if it does that in a sustainable way, so much the better.

Feel-good factor

It provides a feel-good factor, but sustainability and running costs are, frankly, quite low down their list compared with price, appearance, picture and sound quality.'

Sherwin makes a similar point. 'People are using green marketing to support other primary benefits to consumers,' he says. However, he adds that 'they are more willing to turn to big brands that show good performance, and to drop brands that show bad performance'.

Northover Smith has no doubt as to where things are heading, claiming UK buyers are a few years behind Germany, where green credentials 'are a key point consumers want to understand'. Metzke adds: 'Companies are making the link more explicitly, and consumers are increasingly asking for transparency. We expect that this will become stronger in the coming years.'

The position taken by these experts is probably defensive, and maybe a wise one, given public opinion. Polls show that public trust in companies is low. A global Ipsos MORI survey conducted in April demonstrates widespread public scepticism, with 66% disagreeing that chief executives of big companies can generally be trusted to tell the truth when they make statements about their company or industry.

A plethora of consumer research shows growing public concern: in 1985, 10% of Britons put honesty and integrity in the top three things they wanted to know about a company to judge its reputation; 25 years on, that figure has more than doubled to 26%, though it peaked in 2008, at 36%. Carbon disclosure is about brand trust; many brands will target consumers, whether they are interested or not.

As Sherwin puts it: 'The CDP or reduced emissions is a disqualifier - you are in trouble if you don't do it - rather than a qualifier, where you benefit if you do. People tend to favour something where it is over and above what they expect a company should do.'

Buyers can relate easily to energy rankings on household products such as televisions and refrigerators. That could make them more receptive to similar problems experienced by companies, particularly when energy bills rise, though this varies by sector.

Consumers may be able to relate directly to the impact of a mining company or drinks producer on water availability, but will find the link harder to make in the case of financial services.

Carol Griffiths, director of Corporate Responsibility Consulting, indicates this issue has proved a turning point in the corporate responsibility agenda that has a knock-on effect on brand marketing.

'For some organisations, acting responsibly is integral to their DNA, and thus feeds directly into their brands and into product development; for others, corporate responsibility is an aspect of PR and reputation management,' she says.

Reputation management

However, Griffiths has identified a general shift in corporate responsibility over the past couple of years. 'We see it morphing,' she explains. 'What used to be corporate responsibility was fluffy philanthropy issues in the mid-90s, then reputation management driven by regulations. Now externalities are much more about resources and that is driving corporate responsibility into the business. Companies may have more trouble getting their paws on raw materials with volatile prices,' she argues, suggesting that this broadens the issue across the company.

'That is the pressure that brings it right into the company; the electricity bill is larger, there are government penalties. That sharpens the mind and gets it into operations and production, whereas when it is just about reputation, it is just for public relations.'

While more companies are revealing their emissions, they are plagued by a major weakness that could mean every one of them could be guilty of greenwash: data quality. Disclosure is voluntary, though the UK government is considering making it mandatory. With a few exceptions, there is no across the board requirement to audit the data. That is one reason why so many companies are shy of advertising their efforts. 'If you make claims, they have to be cast-iron. It is risky to claim too much,' says Griffiths.

Even during the recession, when green issues dropped down the agenda, most brand leaders have not let up. Corporate social responsibility has moved from window-dressing to a business imperative. One that consumers, and brands, should not be kept in the dark about.

Key findings from CDP's Global 500 report

  • The majority of respondents (93%) reported board or senior executive oversight for climate change (up from 85% in 2010), demonstrating the importance of climate change as a management issue.
  • More than 30 new companies targeted by CDP's Carbon Action request have now set reduction targets, implying growing recognition by companies of the commercial benefits of emissions target setting.
  • Utilities is the sector with the best average climate change performance (band B).
  • Telecommunications is the only sector not represented in the Carbon Performance Leadership Index (CPLI) this year; a surprising finding, given expectation that this sector will support emissions-reduction activities.
  • The energy sector lags other sectors with the lowest proportion of companies setting targets (55%) and under-representation in both the Carbon Disclosure Leadership Index and CPLI.

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