A funny coincidence occurred just as the global financial crisis erupted in 2008: smartphones started to enter the mainstream. This communications channel may finally bring sustainability and corporate responsibility - policies originally promoted more than a generation ago on the pillars of transparency, collaboration and long-term strategy - right into the boardroom. Sustainability is now at the top of the marketing agenda.
Sportswear brand Puma is among the companies that have grasped this trend. In 2011, for instance, it published an environmental profit and loss account.
For its chairman, Jochen Zeitz, investigating the company's environmental footprint and communicating this is a business opportunity. The environmental footprint is calculated, then suitable product solutions in terms of recycled materials, water use and other sustainability considerations are found.
'Is it for companies to wait until the consumer demands something, or to find a (sustainable) solution and present the product to consumers?' asks Zeitz. 'We are underestimating the power businesses have to change consumer behaviour.'
The great green data deluge
Zeitz's approach is sensible, given consumers' increased curiosity about what is going on behind the business scenes - data that a decade ago might have been the exclusive concern of institutional investors or radical activists.
According to Reputation Institute, a consultancy that tracks how the public perceives the biggest, most visible companies worldwide, demand for this information has shot up the customer agenda.
'In 2006, when our survey began, transparency and openness barely featured as a key driver of corporate reputation. Now it is the second-most-important consideration,' points out Spencer Fox, the company's UK managing director.
Consumers, he notes, now consider a range of issues beyond a company's products and services, although these still come first. 'They are more savvy and in tune with how corporations are behaving,' adds Fox. 'Companies have to do the right thing on the wider societal issues.'
In response to these demands - and, perhaps, as a consequence of the prevailing economic situation - companies have flooded cyberspace with information about their responsibility programmes, not all of which is independently verified.
Corporate Register, an organisation that monitors corporate responsibility reporting, found 5700 companies produced separate reports for 2010, almost twice as many as for 2006. Black Sun, a corporate communications consultancy, reported in 2011 that 56% of FTSE 100 companies said they were integrating corporate responsibility into their group strategy, compared with 36% the previous year.
'We have entered a relatively new phase in the past couple of years, where being transparent creates a positive impact on consumer choice, driving supportive behaviour (buying and recommending). There's a very strong correlation between the (brand's) degree of openness and the consumer's willingness to buy,' says Fox.
Price and responsibility: the conflicted consumer
Nonetheless, throughout the recession, price has been the consumer's chief concern, at least in the FMCG sector.
'Given that people are keeping a tight hold of their purse strings right now, the biggest driver is the value equation,' says Hazel Detsiny, Unilever vice-president, marketing, foods, for the UK and Ireland. 'People have taken half a step back in terms of concern for a brand's green credentials compared with five years ago.'
Ipsos Mori tracker surveys confirm this, showing a decline in the proportion of the public who cite social responsibility as important to their purchase decisions (29% in 2011 versus 43% in 2008).
The underlying long-term trend, though, points to a greater consumer emphasis on sustainability. 'As the population gets more knowledgeable it gets more environmentally focused,' claims Detsiny.
This sentiment is echoed by Mike Barry, head of sustainable business at Marks & Spencer. 'Despite tough economic times, sustainability remains incredibly important to our customers,' he says.
Meanwhile, a study from supermarket Asda, published in October 2011, noted 'definite shifts' in customers' expectations of retailers and manufacturers on green issues and found that 'sustainability is the new normal' among its customers.
Moving beyond transparency
For Unilever, which published a respected sustainability plan in 2010, the response is to switch promotional communications in line with these fluctuating priorities.
'We are still as committed to selling more sustainable products, but now we highlight the financial benefits of sustainable living to consumers in our marketing, rather than lead with the sustainability message, which isn't a top priority at the moment,' explains Detsiny. 'For example, washing on shorter, cooler cycles is better for the environment, but also reduces energy costs. We prioritise the message we know will interest consumers most at the moment: the cost savings.'
Authenticity pays off now that the average consumer is equipped to undermine and boycott brands.
'There's an opportunity to build trust by being honest, not just by being good,' argues Solitaire Townsend, co-founder of Futerra Sustainability Communications. That cuts across the range of 'backstage' brand concerns, from price promotions to factory conditions, bonuses and carbon footprints.
Townsend urges brands to practise 'proactive transparency'. Companies need to own the 'reveal': 'If there is a leak and revelations, they get beaten by consumers,' she says.
As Fox points out: 'You can only draw from a reservoir of goodwill so many times before sales are hit.'
'Owning up' has become trendy for brands. It helps control reputational risk, gives honesty 'Brownie points' and generates product opportunities.
Puma's Zeitz admits: 'Very few products are sustainable ... most of our products are not.' But transparency on the environment, if linked to corrective action, is likely to enhance the brand's top-end market positioning. 'We need to redefine quality. For some products, it may be right to call something green, but the approach itself needs to vary,' he says.
Green issues provide plenty of opportunities for product innovation, such as Levi's 'waterless jeans', Nike's planned use of waterless dying technology and Unilever's dry shampoo. Product development can also engage the public, as with Nike's open source Environmental Apparel Design Tool, which provides a practical way to score and compare designs in terms of waste generated and materials used.
The same is true of complaint management. US telecoms company AT&T lets customers handle other customers' complaints. This yields three major benefits: fewer customer-service staff; brand evangelists; and greater amounts of customer data. Choice editing by brands, using loyalty rewards or reducing the availability of less sustainable alternatives (such as with Sainsbury's' adoption of Fairtrade bananas only and Marks & Spencer's similar policy regarding its sale, and use in food products, of free-range eggs) may also improve their competitive position.
All disclosure needs to be accurate and drive corporate change. Yet, according to Fox: 'Very few organisations are using (sustainability) in their business strategy; a lot are still paying lip service to it.'
That is because many are still trying to gauge how important the issue is to their downturn-weary audience.
Business in the Community
Only 15 brands achieved the top 'platinum plus' ranking in Business in the Community's 2011 Corporate Responsibility Index, a voluntary benchmark:
- Anglian Water
- EDF Energy
- Heineken UK
- Marks & Spencer
- Northumbrian Water
- The Co-operative Bank
- Tata Consultancy Services
- United Utilities
Sustainable Apparel Coalition This organisation, founded in 2011, is to launch its apparel index rating tool to help companies understand what goes into their products and the effect of their supply chains. The aim is to help the clothing industry develop more sustainable strategies and tools to measure sustainability performance.
Jeans Summary rating
*GoodGuide.com provides information on the impact of consumer products.
The rating, for which 10 is the highest score, is compiled from three
sub-scores addressing health, environment and society.
GoodGuide notes 'Buy from brands that are transparent about their supply
chain, press for improved working conditions at their suppliers, and are
taking steps to reduce the environmental impact of their operations ...
Look for evidence a brand leads the pack in performance in these areas.'
CONSUMER INSIGHT: A NEW GREEN AGENDA
- Three-quarters of consumers globally think it is important that companies take responsible actions such as using environmentally friendly ingredients. This is a growing trend, according to the GfK Roper Consulting Green Gauge Global 2011 survey.
- The same survey found that two-fifths of UK consumers are cynical about, sceptical of and have largely rejected the 'green movement' (some may even be hostile toward it), while 17% show very high concern and 14% use 'green' as a status symbol and will display a green 'badge of honour'.
- Choice-editing is in. Mike Barry, head of sustainable business at Marks & Spencer, says: 'When it comes to difficult, complicated issues, (customers) want us to do the heavy lifting behind the scenes and not overburden them with information.'
- Consumers accept a well-placed nudge. When M&S introduced a 5p charge for plastic carrier bags, research by Ipsos Mori Social Research Institute found the charge not only increased the re-use of bags by customers at its own stores, but also encouraged their re-use of bags at other retailers where there was no charge.
- Consumers want clear signposts, for instance via traffic-light style labels or retailer guidelines. According to Asda, most customers want big banners in store aisles and labelling signs on each shelf. Nearly half want 'clear pathways showing me where the green products are'.
M&S has drawn similar conclusions: 'On sustainability, our customers tell us they want simple information that is relevant to them - for example, labels such as Fairtrade, MSC fish and Organic ... simple, relevant information is best delivered through clear on-pack labelling and in stores,' says Barry.
- Use of social media to check out brands is increasing. For M&S, the biggest change in sustainability and customer information since its launch of 'Plan A' in 2007 has been the rise of social media and new channels of communication, according to Barry. 'Plan A now plays a big role in our social-media presence ... M&S now has more than half a million Facebook fans and Plan A is a regular topic of conversation,' he says.
- On the high street, product carbon-footprint labels are, seemingly, a flop. After a trial, Tesco said in January it will phase them out.
- Corporate sustainability labels are in. GoodGuide, an information source available online and as an app, evaluates and rates brands according to social, environmental and health rankings - see tinyurl.com/GoodGuideinfo.
- Ogilvy Earth finds a disconnection between green beliefs and behaviour - 30 points between the two among US consumers in April 2011 (14 points among Chinese consumers).