The 2019 COP25 climate summit kicked-off in Madrid with plenty of noise from major Oil & Gas companies about their commitment to sustainability. The event was sponsored by major extraction firms, with slick PR teams welcoming politicians at stands explaining their plans for a sustainable future. There is fierce competition in the sector to be perceived as the leader of the pack on sustainability. But with limited budget assigned to green endeavours, their promises could be seen by some as rather empty.
Consumers care about sustainability, so brands can gain a competitive advantage by working on their green credentials. Starbucks’ CEO Kevin Johnson sees a sustainability strategy as “fundamental to our brand relevance and, therefore, our overall business results.” And in the post-pandemic world, consumers have seen that overnight, systemic change is possible.
If you’re in the Oil & Gas business it’s tough to convince consumers and governments that environmental concerns are a priority, given the nature of the products. But it’s not mission impossible. Shell is linking executive pay to short-term sustainability targets, showing some brands are already walking the talk. Shell’s next challenge is to assess whether this new vision is permeating through to consumer perceptions.
So, how do you build a sustainability strategy that is credible, and avoid being accused of ‘greenwashing’? Here are five challenging but effective steps inspired by leading brands that have managed to transform public understanding of their sustainability credentials.
1. Put your money where your mouth is. Ikea made its name through well-designed yet cheap, mass-produced home products. The company is now applying its innovative spirit to its environmental impact and implementing a circular economy model. Their ambition is to turn into a “People and Planet Positive” business, a “green promise” backed by facts, solid KPIs and the active involvement of the leadership team. This systemic investment makes their promise credible and is a great example of how sustainability should be holistic with business strategy. It means Ikea has achieved recognition as a leader in sustainability.
2. Think long-term. The word ‘sustainable’ implies longevity. In order to remain credible, brands need to fulfil their promise in the long-term, no matter how challenging the situation may be. A good example is Tesla, which has remained true to its sustainable strategy from inception, despite facing many challenges. This is one of the reasons why the brand – which has never had a profitable year – has earned a stock market valuation in the same bracket as Ford, with a 115 year history as a profitable business. A brand thinking about the long-term future of consumer expectations can attract investors looking for long-term plays.
3. Use a brand-led approach. Purpose-driven brands are often popular with customers and can benefit from a price premium. 90% of managers agree that having a sustainability strategy is important to their business. But in order to account for a competitive advantage, it needs to be embedded in the brand strategy. Unilever has become an example of best practice, reaping the rewards of embedding sustainability into their overarching brand strategy. In 2013, then CMO Keith Weed integrated Unilever’s CSR department - in charge of sustainability - into Marketing. Seven years later, sustainable brands have become the fastest-growing in the business.
4. Build a compelling story. Dig into your brand essence and craft a story that your customers connect with. Sell it internally so your team activate the vision in their respective functions. Explain why sustainability matters, so it’s easy for people to support. Make being sustainable important and compelling. Nike’s stance on Sustainability is clear and urgent: “If there is no planet, there is no sport. It is this understanding that drives the urgency of our commitment to sustainability”, according to President and CEO John Donahoe.
5. Clean your ecosystem. With a direction set, ensure you have the partners to meet your goals. Be rigorous with your supply chain and partnerships. People will judge your brand by the company it keeps. Patagonia, arguably one of the world’s top brands in the Sustainability space, knows this very well. They have progressively toughened cobranding policies and restricted this source of business to “like-minded and brand aligned areas”. This will keep your activity unpolluted by wayward partnerships who may dent your precious brand equity.
Once your brand owns a coherent strategy and consistent story that resonates with consumers, the rewards are numerous. Sustainability costs will be seen as an investment. Customers will value your role in society. Talent will look to your brand as a trusted employer. And finally, a new breed of stakeholders will recognise the value of the new kind of dividend your brand will be generating.
By Strategist Jorge Müller.
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