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    Directions Supplement - June eyes on_the_prize_singles Directions Supplement - June eyes on_the_prize_singles Document Transcript

    • DIRECTIONS SUPPLEMENT JUNE 2010 Ey es Pa on th e prize th wa ys to crea ting s ustainable brands
    • Directions Supplement June 10 Is your brand sustainable? Nigel Salter First, it was the NGOs who were asking. Then it was consumers and salterbaxter 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 “Companies can reap profits from consumers’ demonstrate the pressure for smart social and environmental concerns and the sustainability thinking in brands is now understanding that resource scarcity will coming from across the full spectrum of result in a permanent change to business stakeholders. The first is from Goldman models. In our view, the third industrial Sachs Sustain: revolution will on one hand save the planet and on the other accommodate the consumer 1 Goldman Sachs, Global Investment “We are approaching a tipping point at explosion we expect in the coming decade.” Research, Change is coming: which these issues’ (environmental and A framework for climate change – social) importance to business performance Whilst the prize might be becoming a defining issue of the 21st century. and investors will escalate. The equity increasingly clear, the ways of reaching that market is only just beginning to reflect the prize are still being explored and uncovered. magnitude of change that lies ahead.” 1 In this Directions supplement, we highlight four companies who are already redefining 2 ING Equity Markets Research, The second example is from ING2, and one their brand and marketing strategies; we The third industrial revolution: of their Equity Markets research papers hear from Interface, one of the pioneers in Multi-committed company focusing on the Food, Beverages and HPC sustainability, on what they have learnt on (MCC) – the archetype to capture consumer loyalty. sector, with the telling title of ‘The Third the dos and don’ts of creating a sustainable Industrial Revolution’. The writers clearly brand; and we provide two different state that the eight interdependent crises perspectives on how consumer power that we face (demography, ethics, social- is influencing a change towards more economic, food, water, climate, energy and sustainable practices. We finish with a look political) will be the catalyst for the Third at the relationship between sustainability Industrial Revolution, which they define and innovation. The response to the as being real responsible and sustainable challenges we face requires innovation like growth. And they see companies which never before. There are no set rules and no redefine their business models to include easy formulae – but where would the fun be responsibility in their marketing and sourcing in that? as being in the position to pick up the prize of ‘hard’ business benefits of lower costs from supply chain synergies and higher sales. Approaches to creating a sustainable brand Olivia Sprinkel Each company’s approach to creating a sustainable brand will be salterbaxter 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, hands- on 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 3) Pepsi – hands-on involvement GE’s journey towards being a sustainable from consumers brand began in 2003, driven by customer Pepsi’s approach has been based on getting pressure to improve efficiencies and reduce consumers involved hands-on. A high profile emissions. GE’s response was to create a example of this is Project Refresh in the space for engagement and imagination US, which invites users to vote for community within the business, listening to stakeholders, projects that they would like to see funded. including customers, government and NGOs, Pepsi have diverted traditional television and challenging them to imagine what their advertising spend to this project, recognising world was going to look like in 2015 and that increasingly companies are going to be beyond. From this the ‘ecomagination’ finding other ways of building brand awareness strategy was born, and engagement has and loyalty, often with sustainability as a continued to be central to ongoing activity. central component. In April 2010, PepsiCo Lorraine Bolsinger, formerly vice president also launched the Dream Machines initiative, of ecomagination, said “We can’t put a stand together with Waste Management and Keep up once a year, run a few commercials, and America Beautiful. This project, which provides say ‘This is what we’re doing’. We have to be on-street recycling points, has the aim of diligent every month on bringing new stories increasing recycling rates in the US from to our colleagues, our customers, and NGOs. 34% to 50% by 2018. Whilst the project has That engagement is a huge ongoing issue”. been attracting criticism from some quarters In the last few years, online engagement for greenwashing, at the very least it is has been central to ecomagination’s success, raising awareness about recycling amongst with traffic and length of user visits to American consumers and encouraging them ecomagination.com outstripping that of other to take action. CSR websites such as Chevron’s ‘willyoujoinus. com’ and Coke’s ‘makeeverydropcount.com’. 4) Cadbury’s – the partnership approach And GE’s brand has benefited as well – an Cadbury’s, founded on Quaker principles, online video tracking survey showed brand has carried this partnership approach to favourability of 45% for non-viewers of the ethical business through to the present day. videos on ecomagination.com, rising to 75% Partnership is evident in both their actions for video viewers. Inspired by the success and in their tone of voice. Their current of ecomagination, GE have now launched advertising is focused on promoting the ‘healthymagination’, focused on creating partnership that they have with their suppliers. better health for more people. Engagement The Cadbury Cocoa Partnership was founded leads to stories, which in turn stimulates the in 2008 in partnership with the United Nations imagination – and the innovation for which Development Programme, local governments, ecomagination has become known. farmers and communities. It has the ambitious aim of securing the economic, environmental 2) E.ON – company as educator and social sustainability of approximately one There are no easy answers in the energy million cocoa farmers and their communities debate. Rather than shying away from this, in Ghana, India, Indonesia and the Caribbean. E.ON UK has recognised that they need to Companies are recognising that the issues take the lead in educating consumers about raised by sustainability demand a new approach the need to change energy consumption to doing business, one which is rooted in habits and building awareness about the collaboration and partnership, as the issues options for different sources of energy, an are too big for companies to tackle alone. 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.
    • Directions Supplement June 10 InterfaceFLOR’s six dos and don’ts for creating a sustainable brand Ramon Arratia A sustainable brand cannot be achieved with a marketing agency Sustainability Director EMEAI, InterfaceFLOR 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 we have been lucky as many business leaders Zero, was conceived in 1994 and we have genuinely try to start the change towards learned many important lessons in our journey sustainability, but lack the commitment and to embed sustainability into our organisation, longevity in office to succeed. our products and our people. Mission Zero has been so effective in defining our brand Don’t: Think you can ease sustainability in that Interface tops the Globescan survey of from the bottom-up. over 1,500 opinion formers in 90 countries. We receive more unprompted mentions as 4. Do: Shout about the business case a sustainability leader than any other We made sure our people could clearly see company, including many that dwarf us in how sustainability would benefit Interface’s size and profile. business. Results came quickly. As we worked towards Mission Zero, costs went down not Here are our six dos and don’ts for creating up, exposing the myth of a choice between a sustainable brand: environment and profits. 1. Do: Set seriously ambitious goals And the business case soon became Mission Zero’s strength lies in its boldness. stronger as our customers increasingly In 1994, this radical long-term vision wanted to buy more sustainable products. immediately attracted attention. At the time We became the sole carpet supplier for some people told us it was naïve to think government buildings in a country where zero environmental impact achievable. But 60% of the points were awarded for it has inspired fundamental changes in the sustainability criteria, for example. way people work at InterfaceFLOR precisely Don’t: Rely on doing good as your argument. because it is so challenging. Profit is essential. Don’t: Set your sights too low with unchallenging short-term targets. 5. Do: Make sustainability personal – Sustainability transformation requires one mind at a time disruptive innovations. An engineer is turned on by machines. Give them a technical challenge. A sales person is 2. Do: Address the elephant in the room turned on by sales. Give them a sound sales InterfaceFLOR’s sustainability strategy argument. Sustainability communications gained credibility because it addresses our must be segmented. material issues, even the biggest challenges that aren’t easy to solve. In our case it was Don’t: Have top down, celebratory, positive, cutting the umbilical cord to oil, with one of biased, non-segmented internal comms. our main raw materials – nylon yarn. 6. Do: Use sustainability as a source Don’t: Focus only on easy wins or non-core of innovation business issues like philanthropy. Putting sustainability at the centre of everything we do has helped us come up 3. Do: Sign up your CEO with ground-breaking innovations such as High visibility leadership and commitment Tactiles™, our adhesive-free installation from the top of the company have been vital system. Sustainability has helped our in demonstrating that Interface is serious business expand into new markets and about sustainability. Founder and Chairman, create a competitive edge. Ray Anderson, has relentlessly engaged employees and external stakeholders for Don’t: View sustainability solely in terms of fifteen years on the subject, believing he must corporate behaviour. Product performance is convince people ‘one mind at a time’. In this where the real new market opportunities are.
    • The technology that is making sustainability transparent Nigel Salter Imagine a world in which consumers can scan the barcode of and Olivia Sprinkel salterbaxter 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 A choice for companies iPhone application in the US and the Barcoo So there is a choice for companies to make. iPhone app in Germany does just that. The They can let consumers seek out information Good Guide, available online as well as an app about their products online, via their mobile (www.goodguide.com), contains ratings for or from information provided by the retailer. over 65,000 products, from food to toys to Or companies can be proactive in starting a personal care and household products. It conversation with the consumer and provides health/nutrition, environmental and encouraging them to find out more about social ratings, with the ratings compiled from where the products come from and what they a series of databases. are made of, guiding them through the product journey, helping them to make a Shopping by values positive choice to buy the product and to feel But will anybody use it? According to the good about doing so. In this way, sustainability Co-operative Bank’s Ethical Consumerism can be integrated into the brand experience. Report 2009, 64% of UK adults say that For example, Coca-Cola in the UK have an they have avoided a product because of a application on their website, where you can 52% company’s behaviour, 52% of UK adults claim type in the first two letters of a code on the to have a bought a product primarily because can or bottle, and this will tell you where the of ethical reasons and 39% of people have Coke began its journey to you. This provides actively sought information on a company’s a neat way in to engaging you with the rest of UK adults have bought behaviour or policies. These figures suggest of the product journey and what Coca-Cola a product primarily for that people are increasingly taking into is doing to minimise impact, from ingredients ethical reasons account a company’s behaviour as part of to distribution. their purchasing decision, and if it as easy as scanning a product in a shop, the number Of course, this approach is dependent on of people who actively seek out information having the performance to support such will surely only increase. The advent of such transparency – but if consumers are applications means that increasingly there demanding it and purchasing decisions are will be no place left to hide for companies – increasingly dependent on it, then companies consumers won’t have to dig deep into CR will need to up their performance accordingly. 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 64% 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’, of UK adults have avoided some retailers are talking to Good Guide about a product because of a putting its product ratings next to price tags company’s behaviour 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.
    • Directions Supplement June 10 Ethical business – why it’s not just the suppliers who benefit Michael Gidney Leading businesses ignore human rights, environmental and pay Deputy Executive Director, Fairtrade and conditions issues at their peril. Failure to abide by the spirit Foundation 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 True, the UK’s overall grocery sales top sector, this rockets to more than two-thirds £120 billion, but against all market predictions who say they always or often punish that Fairtrade would only be a temporary companies for not being socially responsible. fad the sector year-on-year posts sales growth that far outstrips the conventional That’s the stick. market. Furthermore, Fairtrade has become a gateway – a point of difference – for major The carrot comes in the shape of huge brands in a way that sees huge financial and brand loyalty for companies who make a reputational benefits. point of doing the right thing. In fact nearly a third of consumers, according to a poll of Incredibly when asked to spontaneously 1,500 consumers undertaken by Globescan, name any ethical product label, one in three are likely to reward companies for being “The carrot socially responsible. shoppers cited the Fairtrade mark – 20% above other labels. comes in the It’s proof that placing importance on sustainability – whether it is paying a fair Within the Fairtrade movement, we see shape of huge price to farmers in the developing world for growing evidence that companies and brands that become Fairtrade certified more often brand loyalty commodities or reducing a firm’s environmental footprint – pays huge dividends. than not see sales and reputational uplifts. It may explain why Starbucks, on the receiving for companies Look at how the Co-op and Sainsbury’s end of some unfavourable press in recent years, markedly increased its Fairtrade coffee who make a supermarkets have fared since scaling up their work with Fairtrade. The Co-op was the first offer last year. point of doing UK retailer to sell Cafedirect coffee, Fairtrade Marks & Spencer, the UK’s biggest clothing the right bananas and wine. Its strategic decision to sell as many Fairtrade products as possible is by retailer, has committed to sourcing Fairtrade cotton and food goods as part of its Plan A thing” no means a direct reason for it becoming a fifth force in British supermarket retailing. mission aimed at reducing its carbon footprint and becoming a fairer business partner with But its Fairtrade shift has played a part by its suppliers. It is a policy born out of tapping into UK shoppers’ sense of justice enlightened self-interest. Consumers want for producers in the developing world. competitively priced goods but not at any price. It is clear shoppers are concerned that Likewise Sainsbury’s, under the leadership workers in developing countries receive a fair of Justin King, has shifted all its own brand wage. And Fairtrade is undoubtedly seen as a bananas, sugar and tea to Fairtrade. Not only way of guaranteeing they benefit. did the move transform the fortunes of communities in some of the world’s poorest Consumers know what they want. So countries but it coincided with Sainsbury’s businesses these days cannot afford to come sales growth through a recession. And, in up short. And when you think about it, that’s bananas, Sainsbury’s shift to Fairtrade saw fair enough. 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
    • Sustainability: the key driver of innovation and brand value Elisabeth Laville In the future, only companies that make sustainability a strategic Founder and chief entrepreneur of Paris-based goal, rethinking their business models as well as their products, consultancy Utopies technologies and brand promise, will achieve competitive advantage. The days of the traditional corporate social In this post-Copenhagen world, the most responsibility (CSR) approach are over. advanced businesses are developing an Focused on industrial practices and internal innovative approach to innovation itself, in processes, it was put in place mostly out of order to solve environmental and social a defensive approach – aimed at anticipating problems that governments too often fail to new regulations, preventing image crisis, address. They offer dematerialised services reducing costs and preserving the company’s as an alternative to resource-intensive and licence to operate. But in most cases the waste-generating products: Apple has passed business model remained unchanged and Wal-Mart to become the biggest music retailer unchallenged. Even if ‘green’ or ‘responsible’ in the US. They see nature as a teacher, not products were launched, they were not as a supplier, developing nature-inspired seriously promoted, thus accounting for less innovations: take the example of a biomimetic than 1% of their market (see fairtrade coffee, air-conditioning free building, inspired by sustainable tourism, organic food, ethical termite mounds. They choose open-source investments, etc.). And CSR fell short in approaches to innovation rather than solving the social and ecological challenges, confidential and secret-driven ones – can one because corporate practices only affect a tiny seriously think about patenting a cosmetic share of a business’ global impact: no matter ingredient created using a plant that Indians how great a car manufacturer is doing in have used for centuries in South America? deploying ISO certification on its industrial And they develop a collaborative approach sites, and reducing the CO2 emissions of its to innovation. This might be by creating new factories, factories only account for 12% of partnerships with NGOs: concrete-giant the global CO2 emissions of the industry, while Cemex has efficiently addressed the market cars account for 80% of its climate impact. of low-income do-it-yourself homebuilders by So if we do not shift technology portfolios partnering with micro-lending organizations. used for mobility (whether electric, hybrid, etc.), if we do not think of alternative mobility Business models, product innovation and solutions more sustainable than individual consumption are now at the heart of the cars, for example public transportation or sustainability challenge: the brands that will car sharing, and, above all, if we do not be prospering in a decade are those that succeed in mainstreaming these throughout are radically committed to becoming more the world, then we will fail in addressing the sustainable. Not for 1% or 10% of their climate challenge. activities. But for 30%, 50% or 100%. Essentially, a strong brand is an exciting This is our challenge for the years to come: journey shared with consumers: at last, this we need a new CSR revolution, one that will is one journey worth the effort. go beyond risk management so as to seize the potential for innovation and brand differentiation brought by sustainability “We need a new CSR when it is placed at the heart of the business model. Because this is what is needed if we revolution… to seize the are serious about leaving a better world to our children and making this a real business potential for innovation opportunity. The English retailer Marks & and brand differentiation” 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.
    • About us Contact: Nigel Salter Salterbaxter advise companies nsalter@salterbaxter.com Tel +44 (0)20 7229 5720 on strategy, branding, corporate communications and design – providing creative communications The Directions Supplements support our main Directions report. The main report is published each year and is now regarded as the UK’s for big business issues. most comprehensive analysis of the trends and issues in We work on a wide variety of corporate communications assignments CR communications. If you for our clients including brand strategy and implementation, annual want a copy, call us on the reports, digital communications and employee engagement. But we are number below or email increasingly being seen as one of Europe’s leading sustainability directions@salterbaxter.com 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 – Social media strategy brand sustainability strategies and programmes – Stakeholder engagement – Writing – Reporting – Workshops and training – Single issue campaigns – Gap analysis 202 Kensington Church Street – Internal communications/ – Research London W8 4DP employee engagement Tel +44 (0)20 7229 5720 – Events Fax +44 (0)20 7229 5721 www.salterbaxter.com Clients Our sustainability clients are the leading corporations in multiple sectors across the whole of Europe. Latest ones include: UK EUROPE The carbon impact of this paper ArcelorMittal adidas Group has been measured and balanced through the World Land Trust, an AXA UK Carlsberg Group ecological charity Bacardi E.ON Group BAE Systems Fortum Camelot H&M Coca-Cola GB & CCE ING Group E.ON UK LEGO Morrisons Marine Harvest This supplement is printed on 02 UK Millicom International Think Bright and is supplied by Rolls-Royce Nokia Howard Smith. It is an FSC (Forest Stewardship Council) certified Tullow Oil Orkla material and is 100% recyclable. Vodafone Telefónica 02 Europe www.hspg.com Printed by Fulmar, an ISO 14001 certified and FSC accredited company. www.fulmarcolour.com