15
March

Is Your Brand’s Sustainability Really Worth Talking About?

Once upon a time (until recently, actually), the sustainability story of an iconic cosmetics brand focused on contributing to reforestation – doing its bit for climate change, biodiversity and cleaner water.  This brand said little about what it was doing to reduce toxins in its products or source and manufacture those products more sustainably.  (Not that much, it turned out.)  This despite the fact that the overwhelming majority of most product companies’ environmental footprint is, of course, in the products themselves.  To savvier consumers, investors and employees, the reforestation story was the equivalent of a deflecting nervous laugh trying to divert attention from the brand’s core sustainability reality.

Over time, every company’s sustainability ROI boils down to just two things:  reality and perception.  From atop the growing mountain of evidence, we’ve already seen that sustainability reality, done right, reduces costs and risks while driving innovation and product appeal.  Meanwhile, each year sustainability perceptions have a larger impact on brand equity and its attendant revenue, pricing power, and customer and stakeholder loyalty.  Regardless of how you tell your sustainability story in an increasingly transparent world, whether brand impact will be positive or negative is utterly dependent on your sustainability reality.  So as communicators, every day we have to ask if our sustainability performance – not just professed values or stated corporate commitments  – is actually worth talking about.

Whose job is it, anyway?

It’s critical to get very clear on what part of achieving your brand’s desired sustainability perceptions is up to Marketing/Corporate Communications and what part is up to product development.   Is your sustainability reality weaker than the story you’re telling, or is it actually stronger?

If perceptions lag reality as they do for many brands (Dow, L’Oreal, Merck, Nokia, Shell among them), there is uncaptured ROI in unrealized brand equity.  That’s up to communicators to fix, staying current on the brand’s legitimate sustainability proof points and weaving them into an appropriate and powerful tapestry.  But when reality is weaker than the story (the more common scenario; you know who you are), reality is your ceiling for how compelling your sustainability communication can be without significant greenwashing exposure.  In product companies, it’s up to product development, supply chain, and product lifecycle managers to raise that ceiling.

In that context, the big problem is that CMO’s/corporate brand stewards seldom have a seat at the table when product design and development decisions are being made.  How can CMO’s be accountable for brand health when sustainability perceptions will be largely determined by product content, sourcing, manufacture, packaging, distribution, use, and disposal/re-use?

Yet that doesn’t mean just accepting the hand we’re dealt.  It means we must persistently and urgently ask the executives responsible for product development decisions  “What more can we do to ensure that sustainability criteria are systematically encountered when product ideas/improvements are being evaluated for development?”

This requires ensuring that product sustainability is not a segregated assessment, but that preliminary assessments are integrated with other non-sustainability criteria impacting customer appeal – and always occur early enough in the development decision cycle to prevent investments that diminish or even cripple your sustainability reality.

What’s a brand steward to do?

1.  Know where you stand.  In the absence of sustainability-focused primary research designed to assess where you are today on sustainability reality vs. perception, reports like those linked above (from Interbrand and BrandLogic) are useful inputs.  If your brand is not included in such reports, you may need to undertake primary research or at least piece together other secondary research with whatever you already have.

2.  Define communication objectives calibrated to what degree your sustainability reality is truly worth talking about.  If your reality is stronger than your perception, portray that reality aggressively and compellingly to meet those objectives.  If it’s weaker, urge your senior executive leadership team to keep up the pressure on reality with systematic, integrated sustainability assessments in your product development pipeline – before product development projects are approved.

3.  Ensure that your perception monitoring mechanisms do all they can to gauge whether your story is going far enough so that you don’t leave unrealized brand equity on the table, but not so far that it greenwashes.  Savvier customers are already punishing brands that selectively tout the good part of their story while burying the bad.  The transparency imperative will keep increasing the pressure on your reality.

Just to be clear, I think contributions to reforestation are great.  But when products companies give short shrift to the harder part, they can punish their brands (and brand communicators) as much as the environment.


Steven Cristol is founder of Strategic Harmony® Partners and has advised some of the world’s most innovative companies on brand strategy and product strategy. Article was written for Sustainable Life Media.

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6
March

Communicating a Change of Heart

Everything changes during the moment when you wake up, realize that things need to be better, and understand that you have a role to play in the story.  Companies that are implementing a sustainability strategy are doing so because somewhere in the organization, someone had what Ray Anderson called his “spear in the chest” moment, and realized life would never be the same.  Yes, there are some who only see this opportunistically and recognize sustainability’s power to reduce risk and costs while increasing efficiencies.  Yet as the revolution of real change unfolds, what happens is a change of heart for  entire organizations.

The communications implications for this are significant.  How the brand’s purpose is understood and expressed must now reflect a deeper purpose.  First, alignment around and commitment to   that purpose must be created.  The challenge is for businesses – who are facing a growing activist consumer – to clearly and credibly express a new dimension of their business. A dimension that is not held hostage to short term profitability but rather integrates service to greater good alongside financial well-being.

We as sustainability communicators understand the power of the narrative to help organizations’ achieve their goals.  After more than 25 years, I see the role that communications plays in five distinct co-creation areas and believe that this is the core of what we – the storytellers of commerce — are working toward:

1.  Establishing credibility. From branding initiatives to corporate reputation campaigns, brands are creating a new series of communications (CSR reports, ads, web sites, forums) that provide the detailed transparency for telling a complex sustainability story. Truth-telling and hero’s journey are the themes here.

2.  Removing barriers. There is a range of stakeholders whose buy-in is essential in successful sustainability implementation.  Employees, supply chain, distribution partners, governments and NGOs, local communities must all become part of the team and be persuaded to set aside self-serving agendas and biases.  A call to community is at the heart of this effort.

3.  Accelerating acceptance. Clarity can speed goal attainment when players in the system understand how their contribution and connection contributes to success.  Participation in a greater goal that is a both-and proposition is the key theme.

4.  Building consensus.  In today’s always-on world, successful communications must not only break through the cacophony but be designed to create cohesion among disparate groups.  This is really about helping orchestrate a theme amongst varied voices.

5.  Empowering advocates. Businesses now rely on a host of advocates who share the narrative – they tweet, post, like, share and rate.    Everywhere you can read about how business as we know it has changed – that social media and the new connected customer require a new way of doing business.  This means creating narratives that are distinct, sharable messages designed so that others can say-it-forward.

Co-created communications with stakeholders can only come from a strategic approach and the realization that it must be carefully constructed for every transaction.  Sustainability communication is there to give people on all sides of the revolution a voice.  And that beautifully expresses a change of heart.

Article written for Sustainable Life Media by Sandy Skees, CEO, Communications4Good.


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28
February

Canadian ‘B Corps’ Put Their Money Where Their Branding Is On Social Causes

For-profit companies that trumpet a commitment to social and environmental causes often struggle to prove to investors and customers that their dedication to betterment runs deeper than a clever green-washing campaign.

But that has begun to change.

A growing number of Canadian companies are now becoming certified as “B Corps,” a new designation that seeks to distinguish firms that are committed to improving more than their bottom line.

Jay Coen Gilbert, Founder of B Corps shares his vision to harness the power of business to solve society’s problems through B Corporations — a new standard labeling socially and environmentally responsible companies. B Corps will help corporations be profitable while solving society’s problems.

The aim, says Dermot Hikisch of B Lab, a Pennsylvania-based non-profit that has certified more than 500 B Corporations in the U.S. since 2007, is to do the same thing for companies serious about addressing social and environmental issues as Fair Trade certification has done for firms dedicated to ethical labour practices.

“Consumers, investors and even employees aren’t necessarily believing what a company says until they have a third party seal of approval on it,” Hikisch told The Huffington Post. “B Lab acts as that third party standard to make sure these companies are as good as they say they are.”

Since 2009, 39 Canadian companies — ranging from engineering firms to coffee retailers — have become designated B Corps, with 27 new companies certifying in the past year.

As Hikisch explains, achieving certification is “no small measure.” In addition to passing a social and environmental “impact assessment,” companies must articulate their commitment to these values directly into their articles of incorporation.

“You have to have a board meeting to really walk through [it] with your board and your shareholders [and] say, ‘I’m going to make this amendment to my documentation to say that we shall consider stakeholders within our business,’” he says. “They’ve baked it right into their company.”

Altering the company bylaws is intended to prevent these values from being abandoned in the event of a big corporate shake-up, such as a merger or acquisition.

Tim Masson, executive vice-president of The Ian Martin Group, an Oakville, Ont.-based employment consulting firm, didn’t mind the added paperwork.

“We became a B Corp to help clarify, define, and articulate our purpose as an organization,” he said in a press release. “We hope to learn from other B Corps, improve our impacts, measure our progress, and become more transparent and accountable to that purpose.”

Some of the allure no doubt stems from a desire to attract capital from the burgeoning impact investing industry, which seeks to put its money on precisely the kind of firms that B Lab certifies.

As Bill Young, founder of Toronto-based Social Capital Partners, a non-profit social finance organization, explains, “A certification process on social business helps an investor who wants to do that kind of thing, but doesn’t have the time themselves or the means to really test the legitimacy of the social purpose. It’s a valuable service to know that someone has done that.”

Impact investor Joel Solomon concurs.

He says it’s “still too early to expect that [all companies] would be aware of the designation,” but he has begun to take notice when a company has achieved B Corp certification.

“B Corp certifications add a layer of confidence and are a signal of a level of commitment and values by an entrepreneur or company,” Solomon, who is chairman of Vancouver-based Renewal2 investment fund, said in an e-mail.

The B Corp movement has had to overcome several hiccups in the U.S., where corporations that make decisions that prioritize environmental or social goals over profits can face legal action, and some states prohibit corporations from making changes to their bylaws.

To address this, B Lab spearheaded legislation, which has been adopted in seven states since 2010, to create a different class of company. Among other commitments, so-called “benefit corporations” are required by law to make “a material positive impact on society.”

California-based outdoor clothing retailer Patagonia Inc. is among the corporations that have made use of the new legislation, and ice cream icon Ben & Jerry’s plans to incorporate as a benefit corporation in the state of Vermont in the coming months.

According to Allyson Hewitt, director of social entrepreneurship at the Toronto-based MaRS Discovery District, which has been at the forefront of the Canadian B Corp movement, it’s somewhat easier for Canadian corporations to become B Corps.

As she explains, corporations on this side of the border must already “consider other stakeholder interests besides shareholders,” and are required by law to abide by some of B Lab’s standards, such as offering relatively generous (at least compared to the U.S.) maternity leave benefits.

Still, Hewitt’s team is investigating the possibility of drafting benefit corporation legislation in Canada, which she says may strengthen the designation. Their findings will be released in a white paper in the next few months.

As Hikisch sees it, there is significant “upside” potential for the movement in Canada, which is now home to the second-highest number of B Corporations after the U.S.

“Canada is one of those places [where] business owners do believe and know that they can be a big part of the solution, and not have to wait for … governments to act or the consumers or anyone else to do the job for them,” he says. “I have no doubt that there [are] over 500 to 1,000 potential B Corporations in Canada.”

6 CANADIAN B CORPS THAT ARE MAKING A DIFFERENCE:

        • DIRTT, which stands for “doing it right this time,” designs and builds custom, sustainable office interiors. Among its offerings are floors that house telecom and electrical cables, and “living walls” that turn room dividers into hanging gardens. Headquartered in Calgary, DIRTT now has offices across Canada and the U.S., including in New York, Chicago and L.A. The company employs 580 people.
        • British Columbia-based Salt Spring Coffeecelebrated its 15th anniversary of selling fair trade coffee in 2011. The company boasts it “pays above market rates to farmer-owned coffee co-operatives that do not harm the environment with their production methods.” The company reports $10 million in sales annually and employs 60
        • Founded in 1994 by Carol Newell and Joel Solomon, Renewal 2 is a social venture fund that aims to turn a profit by investing in socially conscious enterprises. The fund says it has placed “$7million of equity investments” and also placed “$20 million in conservation financing, social purpose non-profit real estate, social enterprise business lending, education, convening, capacity enhancing shared services for charities, and the building of financial services for philanthropists.” Among the companies in its portfolio are Better Energy Systems and Sensible Organics.
        • Vancouver-based Ethical Bean has been selling fair trade coffee since 2003. One dollar of every unit of coffee sold at the retailer goes to charities helping children in Guatemala. The company has 26 employees.
        • Fairware provides custom-branded products to companies and organizations that want to increase their brand exposure with promotional product lines. The company is involved directly with causes, providing products that can be used as prizes for charity raffles, for instance. Among its clients are Aveda, BC Hydro and Amnesty International.
        • Vancouver-based Lunapads offers reusable cloth sanitary napkins, as well as a line of women’s underwear. The company describes itself as a “women-owned and operated social mission-based business.” It has been in business since 1993.

Story run by Huffington Post, February 3, 2012

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9
February

50 Fastest Growing Brands Serve a ‘Higher Purpose’

New research on the world’s 50 fastest growing brands found a cause-and-effect relationship between a brand’s ability to serve a higher purpose and its financial performance.

Brand consultants Millward Brown and former Proctor & Gamble marketing officer Jim Stengel developed the list of 50 brands, which they say built the deepest relationships with customers while achieving the greatest financial growth from 2001-2011. Furthermore, investment in these companies – the Stengel 50 – over the past decade would have been 400% more profitable than an investment in the S&P 500.

The list includes numerous brands with strong reputations for sustainability, such as Method, Seventh Generation, Stonyfield Farm and Chipotle.

The study forms the backbone of Stengel’s book GROW: How Ideals Power Growth and Profit at the World’s Greatest Companies (Crown Business; December 27, 2011).

“We wanted to uncover which brands grew the most over the past decade, both in terms of customer bonding and shareholder value,” said Millward Brown Optimor VP Benoit Garbe, who led the study. “Once we identified these brands, our burning question was what, if any, were the common principles that sparked and sustained their growth.”

To arrive at the Stengel 50, Millward Brown Optimor valued thousands of brands across 30+ countries. The list included both B2B and B2C businesses in 28 categories ranging in size from $100 million in revenues to well over $100 billion:

Ideals – The Ultimate Growth Driver

A research team – comprising Millward Brown Optimor brand strategists, Jim Stengel, Professor Sanjay Sood and MBA students at UCLA Anderson Graduate School of Management – uncovered that the most successful brands were built on an ideal of improving lives in some way, irrespective of size and category.

“We define ideal as the higher-order benefit a brand or a business gives to the world,” said Stengel. “Some companies are very explicit about their ideals, like Zappos – their ideal of delivering happiness is on their boxes, all over their offices, even on t-shirts employees wear. Other brands, like Louis Vuitton, are more implicit about it. But all their actions – throughout their products, stores and communications – amplify their ideal to luxuriously accentuate the journey of life.”

Added Garbe, “We found that this ideal is both a source of inspiration externally among customers, as well as a compass for internal decision making. So whether it’s Red Bull which seeks to Uplift Mind and Body or Pampers which is all about Caring for Happy Healthy Development of Babies, an ideal influences all facets of the business from HR and Marketing to R&D and Finance.”

Through case studies, GROW demonstrates how brand ideals aren’t simply about altruism or corporate social responsibility but a fundamental human value that is authentic to the brand and ultimately a driver for extraordinary growth. In fact, Millward Brown Optimor’s analysis discovered that those who centered their businesses on ideals had a growth rate triple that of competitors in their categories.

How Ideals Impact the Consumer Mind

Millward Brown’s team also determined that the 50 brands touch on five fundamental human values:

  • Eliciting Joy: Activating experiences of happiness, wonder, and limitless possibility
  • Enabling Connection: Enhancing the ability of people to connect with each other and the world in meaningful ways
  • Inspiring Exploration: Helping people explore new horizons and new experiences
  • Evoking Pride: Giving people increased confidence, strength, security, and vitality
  • Impacting Society: Affecting society broadly, from challenging the status quo to redefining categories

The list of companies is as follows:

Accenture, management and enterprise consulting services

Airtel, mobile communications

Amazon.com, e-commerce

Apple, personal computing technology and mobile devices

Aquarel, bottled water

BlackBerry, mobile communications

Calvin Klein, luxury apparel and accessories

Chipotle, fast food

Coca-Cola, soft drinks

Diesel, youth- targeted fashion apparel and accessories

Discovery Communications, media

Dove, personal care

Emirates, air travel

FedEx, delivery services

Google, Internet information

Heineken, beer

Hennessy, spirits

Hermès, luxury apparel and leather goods

HP, information technology products and services

Hugo Boss, luxury apparel and accessories

IBM, information technology products and services

Innocent, food and beverages

Jack Daniel’s, spirits

Johnnie Walker, spirits

L’Occitane, personal care

Lindt, chocolate

Louis Vuitton, luxury apparel and leather goods

MasterCard, electronic payments

Mercedes-Benz, automobiles

Method, household cleaners and personal care

Moët & Chandon, champagne

Natura, personal care

Pampers, baby care

Petrobras, energy

Rakuten Ichiba, e-commerce

Red Bull, energy drinks

Royal Canin, pet food

Samsung, electronics

Sedmoy Kontinent (“Seventh Continent”), retail grocery

Sensodyne, oral care

Seventh Generation, household cleaners and personal care

Snow, beer

Starbucks, coffee and fast food retailer

Stonyfield Farm, organic dairy products

Tsingtao, beer

Vente-Privee.com, e-commerce

Visa, electronic payments

Wegmans, retail grocery

Zappos, e-commerce

Zara, affordable apparel

Bart King is regulat contributor to Sustainable Life Media and a PR consultant at Cleantech Communications

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31
January

Can The iPad Revolutionize Rural Agriculture?

The high-tech gadget is finding fans in an unlikely place: rural farms, where it can be used for everything from training to creating a connection between the farmers and customers in the developed world.

The iPad is a luxury toy. It’s also a powerful, adaptable tool. That much has become obvious over the past two years as the device has made its way into classrooms, cockpits, and hospitals.

The iPad’s fairly steep price, however, has kept it firmly entrenched in the developed world. That’s starting to change, as evidenced by efforts from Exprima Media and coffee importer Sustainable Harvest to bring the iPad to coffee co-ops and farmers in East Africa, Mexico, and South America.

Over the past two years, Exprima and Sustainable Harvest have unveiled a suite of efficiency and traceability iPad apps–the Relationship Information Tracking System (RITS) suite–for coffee farmers in the developing world. The companies don’t market directly to farmers; instead, they sell to coffee co-ops, which either purchase the iPads themselves or seek out third-party-funded grants.

The RITS Ed app, piloted this year, features over two hours of training videos in a variety of languages related to everything from agronomy best practices to growing protein-rich mushrooms out of coffee production waste. “The people we work with have limited infrastructure, and dialing up YouTube is not a reality,” says Debra Rosenthal, Director of Technology Development for Sustainable Harvest. “The training videos featuring industry experts, so we’re putting experts in the hands of trainers that work for those co-ops.” In 2011, seven Tanzanian farmers used the app to train their fellow local farmers. They were able to train an incredible 106 farmers in a month.

The RITS Producer app, a supply chain management program that has been used in Tanzania since 2010, allows producers to track the coffee they process–how much is produced, how it’s milled, payments received, and where its final destination is located. This past year, Sustainable Harvest sold some raw coffee beans to Allegro Coffee (the Whole Foods coffee brand) for sampling. The company stuck a QR code on the back, so that when the quality control manager at Allegro received it, he could see scan the bag and see all the coffee roasters involved, the ratings of various coffees that came from the co-op, and more. “It’s an unprecedented level of transparency in what has historically been an opaque supply chain,” says Rosenthal.

This replaces what used to be a suitcase of papers on the back of an agronomist’s motorcycle.”

Finally, the RITS Metrics app, first piloted in Tanzania this year, allows agronomists or other coffee co-op leaders to speed up the third-party certification process by storing surveys from members offline. When the farmers return to a place that has an Internet connection (the coffee co-op headquarters, for example) the information is uploaded to a cloud server. “This replaces what used to be a suitcase of papers on the back of an agronomist’s motorcycle,” explains Rosenthal.

There’s a reason that these apps haven’t been customized for cheaper netbooks instead of the pricey iPad: The learning curve to master the iPad is much shorter than that of traditional computers because the device is so intuitive. It’s also proving to be an attractive tool to keep the younger generation interested in farming–the iPad is easy to use as a training tool and it’s hard to deny the “cool” factor. “We went to Peru and introduced the RITS app to co-op employees. The president of the co-op got emotional and started talking about how he saw this as way of engaging children and women to keep them in agriculture,” says Corey Pressman, president of Exprima Media. Score another point for the iPad: the gadget that’s preserving agricultural traditions.

This article was written by Ariel Schwartz and published in Sustainable Life Media. She is an Assistant Editor at FastCompany.com.  She has also contributed to SF Weekly, Popular Science, Inhabitat, Greenbiz, NBC Bay Area, GOOD …plus many more.

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25
January

Five Principles of a Sustainable Business Model

Do most shareholders believe they make enough money? Probably not. With Exxon’s 2010 profits at $41B, shareholders are still clamoring for more. And, the easiest way to grow profits is to grow the business.

Yet, the natural environmental cannot accommodate more industrial growth. Our natural resources are being extracted and disposed of faster than they can be renewed. Nowhere is this more evident than with fossil fuels. The more fossil fuels we extract, the more that ends up in our air, water and landfills as either carbon emissions or as byproducts and waste.

The fact that the natural environment is not on the minds of most managers is not entirely surprising. Many business professors still teach the 1970’s doctrine of Milton Friedman: “The social responsibility of business is to increase its profits”. Growth, therefore, is at the heart of the business model. But the foundation of this model was developed at a time when we didn’t comprehend the natural limits to growth.

Business sustainability tackles these issues head on. Many business advocates translate business sustainability into the triple bottom line: firms are expected to manage the social, environmental and financial implications of their actions. The triple bottom line encourages firms to seek win-wins, where they search for profitable activities that benefit society and the environment.

But, most managers recognize that such win-wins are elusive, especially in the short-term. And as shareholder scrutiny intensifies, managers are under even greater pressure to show consistently high and growing profits each quarter. What’s more, the triple bottom line advises firms what to measure, but not how to manage. It does not tell managers how to organize their business and how to make important tradeoffs. The triple bottom line is still grounded in the short term and in the existing business model.

I believe part of the answer is in recasting business sustainability as resilience. Resilience not only recognizes the importance of profits, but also values longevity and bouncing back from shocks. It shifts the paradigm from business-centric to recognizing that businesses are part of a wider system – a resilient business requires resilient relationships.

Based in systems theory, approaching sustainability as resilience reveals some important insights into organizational forms, some of which I describe below.

  1. Diversity.

    The firm needs a diverse set of resources, people and investments to be resilient. While diverse investments are seen to draw on resources and absorb managerial attention, a single line of business, single sources of revenues, or people with similar mindsets can expose the firm to greater risks. Firms can no longer simply ‘stick to the knitting’.

  2. Modularity.

    Matrixed organizations are often seen as facilitating knowledge flows. However, such organizations are not only resource intensive, they expose the whole organization to shocks as they reverberate through the organization. Organizations need to be less interdependent, and focus on modularity, so they can be insulated from shocks.

  3. Openness.

    Resilient firms must know what’s going on outside their boundaries. These firms can sense issues on the horizon. They are constantly monitoring the external environment, and drawing scenarios of possible futures. They expect not only to react to those potential futures, but also help to shape them. The link between the organization and the external business and natural environment is vital, permeable, and malleable.

  4. Slack resources.

    In an era of just-in-time production, slack resources are often seen as costly and wasteful. However, innovation and adaptation requires both financial and creative investments, and the space to change direction. Firms that can ride storms must allow for a little more time to accommodate new ideas, scenarios, and shifts in thinking.

  5. Matching cycles.

    Firms often think about optimizing performance and getting more from less. But, this thinking puts firms on a treadmill, doing the same thing faster every day—and, it has them bumping up against resource constraints. Resilient businesses think, not about constant growth, but rather about cyclical processes: cycles of growth and contraction, cycles of production, and cycles of consumer purchase patterns. Understanding the rhythms of business and the environment will allow the firm to synchronize with them meaningfully, and not overreact to what is likely just a cycle.

These ideas need to developed and tested. But, they offer a starting place for dialogue for a 21st century business model based on sustainability.

This article was written by Tima Bansal for the Network for Business Sustainability, December 2011.

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17
January

A Vision of Real Corporate Leadership on Sustainability

The basics of sustainability excellence are fairly well known by now:  reduce your footprint, create products and services that help customers do the same, drive employee engagement, think value chain, track data and enable transparency, and on and on.   But real leaders will go further and address the scale of the sustainability challenges we face by fundamentally remaking their companies.  Here’s what  is envisioned in a few key areas:

Science-Based Goals

Footprint reduction targets are important, but if the goals are not based on what scientists tell us – i.e., we need an 80% reduction in absolute greenhouse gas emissions – they’re not good enough.  Sony and a few others have targeted zero impact by 2050.  This level of commitment needs to become the norm, and then a few brave souls can go beyond reducing harm (even to zero) and set goals to build restorative enterprises.

Policy

While uncommon today, the basic level of performance on policy should be to make lobbying efforts consistent with core business strategy and public messaging (for example, are you proudly launching products that use less energy, yet lobbying hard against higher efficiency standards?).  Real leaders go much further and lobby for stricter standards and aggressive action on climate.  CEOs can demonstrate their external leadership by promoting this agenda with corporate peers and government leaders.  Some companies are on track, committing to the recent “2 Degree Challenge Communiqué” or joining groups like BICEP (led by Ceres, Nike, and others) which demand strong climate policy action.

Product and Service Innovation

Reducing the customer’s footprint will need to be the core aim of all innovation efforts and all product lines (not just a sliver of the portfolio as it is today).  Sustainability innovators will open up their creativity process, inviting customers and partners to offer innovative solutions (GE’s Ecomagination Challenge is a good example).  Innovators will embrace disruption and heresy (which I’ve written about before) by helping customers use less of their products. For a glimpse of the future, see Unilever’s campaigns to get customers to reduce water use and Patagonia’s Common Threads, which offers a grand bargain: “We make useful gear that lasts a long time…You don’t buy what you don’t need.”

Valuation and Investments: Financial and Operational Metrics

Leaders such as P&G and GE have set aggressive revenue targets for their greener products.  A few companies put a price on carbon for internal capital allocation decisions or, like DuPont and Owens Corning, set aside a percentage of capex for eco-efficiency investments.  These actions help correct the inherent flaws of ROI decision-making by valuing sustainability more explicitly.  The next step is fully incorporating intangible value – employee engagement, customer loyalty, brand value, and the like – as well as measuring and including all externalized costs in investment decisions.  Two trendsetters, Puma and Dow, have begun this important journey.

Investor Relations

I believe that the relentless pursuit of short-term, quarterly profit goals to please Wall Street analysts is bad for companies – great enterprises very rarely seek profit alone – and certainly isn’t good for the planet.  Like Unilever’s CEO Paul Polman, the real leaders will stop providing quarterly guidance and ask managers to focus on the real measures of success: making great products, serving customer needs, creating good jobs, and driving both cash flow and long-term profitability.  The most sustainable companies will become “benefit companies” or “B Corps”, with a broader charter than just pursuing shareholder value.  Seek greatness and sustainability, and the money will follow.

Resources Dedicated

Most companies give their sustainability execs woefully inadequate resources to do their stated jobs, let alone transform their companies.  A truly committed organization will allocate resources equal to the challenge and will give the sustainability function real power.   I suggest creating a “skunk works” team run by sustainability, along with perhaps corporate strategy and R&D, to question everything and challenge the core business model (e.g., What if the product were a service? What if we used no fossil fuels?).  This is how companies can systematize heretical innovation.

Employee Engagement

Educating all employees on sustainability principles and creating green teams are good first steps.  Tying all executive compensation directly, and substantially, to sustainability goals is even better.  But real leaders should work to convince those hostile to change throughout the organization…or eliminate them.  In the words of Jim Collins in Good to Great, “get the right people on (and off) the bus.”  Leaders will also help employees pursue sustainability in their own lives and communities and provide an outlet for organizing campaigns, such as the awareness-raising “climate ride” conducted by apparel company Eileen Fisher.  If the workplace is appropriate for United Way drives, why not for climate action?

In short, I’m imagining a very different kind of company. The overwhelming challenges we face demand profound shifts.  Of course, much more than I’ve mentioned will need to change – on the social side of the equation for sure – so please let me know what you would add to my vision of true leadership.


Andrew Winston, founder of Winston Eco-Strategies, is the author of Green Recovery, a strategic plan for using environmental thinking to survive hard economic times. He is also the co-author of Green to Gold, the best-selling guide to what works – and what doesn’t – when companies go green. Andrew is a globally recognized expert on green business, appearing regularly in major media such as The Wall Street Journal, Time, BusinessWeek, New York Times, and CNBC. Andrew is dedicated to helping companies both large and small use environmental strategy to grow, create enduring value, and build stronger relationships with employees, and customers.

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11
January

Defining and Developing Personal and Brand Leadership

We begin 2012 with an inquiry into how personal and brand leadership is evolving to serve both thriving businesses and a flourishing world. The question of what leadership really looks like is vital; it’s getting clearer that tomorrow’s winners will require the skills for both creating profits and nourishing human and natural systems.

A December 14, 2011 opinion piece in the Wall Street Journal by Al Gore and David Blood notes that “businesses cannot be asked to do the job of governments, but companies and investors will ultimately mobilize most of the capital needed to overcome the unprecedented challenges we now face.”

A long line of thought leaders from Peter Drucker to Michael Porter tell us business is moving in this direction; and a growing number of corporations are leading the way, from IBM and GE in the U.S. to Unilever, Puma, Munich RE and Santander abroad.

So what is changing in the task of leadership? We believe that businesses in every sector are on the cusp of a new paradigm of sustainable value creation (which we have explored elsewhere), one that calls for a different type of leadership. In this opening piece, we attempt to quickly outline some of our ideas on the topic, as a framing exercise for the month ahead.

The broad thrust of the leadership change is toward more integration and broader thinking, serving not only shareholders but all stakeholders in ways that are value creating.  We’re moving beyond the basic business case for sustainability – creating value in a range of ways from cutting costs and mitigating risk to driving revenues and brand value – to include a personal and organizational commitment to leaving the world a better place. While the move toward systems thinking in management has been around at least since Peter Senge’s The Fifth Discipline, we see a qualitative change in the making, one that is best described as a shift to holistic thinking.

One pivotal change is the gradual merging of the outer dimension of leadership – focused on the external market forces that condition a company’s opportunities for profit and growth – with the inner dimension of leadership based on meaning, purpose, values and spirit. Another pivotal change is the gradual merging of personal leadership with organizational leadership, in other words, the individual leader’s beliefs and behaviors are becoming more integrated with the organization’s identity, strategy, and culture. As a result the proverbial need to “check in your values at the door” on the way to work is lessening as people work for companies that are committed to doing well and doing good (the point being, these two are not at odds).

We visually map this evolution to greater integration in Figure 1 (hey, as consultants we need a good 2 x 2 matrix to tell our story).  We’ll each post a piece on what external (Andrew) and internal (Chris) leadership looks like, but we want to lay out the core components here. The point is not that leadership tomorrow is about choosing one level or dimension over another. Instead, it is about playing in all four quadrants. Good leaders and strong brands embed sustainability for business advantage in terms that respond to external pressures and consider the full value chain of their impacts, risks, and opportunities and convey to external partners and customers a clear vision.  These leaders also develop internal capabilities, such as culture, mission, and values at both the personal and organizational levels. The holy grail of consistency across all these levels we call holistic leadership.

Figure 1

To understand how fragmented have been past leadership approaches, consider where the work of the following authors maps onto Figure 1. Jim Collins’ Level 5 Leadership, described in his best seller Good to Great, is primarily at the external-facing personal level (lower left). Michael Porter’s Shared Value idea is primarily at the organizational level and external dimension (upper left) with its focus on market forces and strategic response. Our own works – Sustainable Value/Embedded Sustainability (Laszlo) and Green to Gold/Green Recovery (Winston) have largely focused on the microeconomic and organizational levels in the top half of Figure 1. Meanwhile, a growing strand of spiritual leadership authors such as L.W. Fry (“Toward a Theory of Spiritual Leadership”, The Leadership Quarterly, 2003) and Otto Scharmer (“Uncovering the Blind Spot of Leadership”, Leader to Leader, Winter 2008) have focused on the personal level and internal dimension (bottom right).

It is our contention that few thinkers and even fewer practitioners effectively operate in all four quadrants. The shift from systemic to holistic thinking may sound like just another conceptual distinction but, we believe a new kind of personal and brand leadership is in the works.  This shift will be at the heart of tomorrow’s sustainable business success.

¹ By mega-forces (in Figure 1), we are referring to increased resource constraints, climate-induced weather pressures, transparency demands, higher expectations of stakeholders along the end-to-end value chain, and tougher environmental and social regulation.


Andrew Winston, founder of Winston Eco-Strategies, is the author of Green Recovery, a strategic plan for using environmental thinking to survive hard economic times. He is also the co-author of Green to Gold, the best-selling guide to what works – and what doesn’t – when companies go green. Andrew is a globally recognized expert on green business, appearing regularly in major media such as The Wall Street Journal, Time, BusinessWeek, New York Times, and CNBC. Andrew is dedicated to helping companies both large and small use environmental strategy to grow, create enduring value, and build stronger relationships with employees, customers, and other stakeholders. His clients have included Bank of America, Bayer, HP, Pepsi, Boeing, and IKEA.


Chris Laszlo, Ph.D., is the author of Sustainable Value: How the World’s Leading Companies Are Doing Well by Doing Good (2008), Greenleaf Publishing and Stanford University Press, and The Sustainable Company (2003, paperback 2005), Island Press. He is an Associate Professor at Case Western Reserve University’s Weatherhead School of Management, where he is the Faculty Research Director at the Fowler Center for Sustainable Value. Chris is also the co-founder and Managing Partner of Sustainable Value Partners, LLC, an advisory services firm specialized in sustainability for business advantage.

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9
January

Five Trends Shaping Sustainable Brands in 2012

A few weeks ago, Raphael Bemporad, Principal of BBMG of NYC had the opportunity to grab lunch with a good friend, and renowned business guru Bob Bloom, to seek his advice as we looked ahead to the New Year.

“Looking ahead is useless,” he said in his typically wonderful, challenging way. In the context of market volatility, transformational new technologies and the exponential velocity of change, we have to instead “look around the corner.”

For Bob, success requires letting go of yesterday’s financials, five-point plans and outdated business models to bravely seize opportunities that are fiercely focused on leading innovation to create shared value.

It’s great advice. And, in the spirit of looking around the corner, we wanted to offer five trends that we believe will shape sustainable brands in 2012.

1. The Ubiquity of C2C

In 2012, we will experience a fundamental paradigm shift from a business-to-consumer (B2C) marketplace to a consumer-to-business (C2B) and consumer-to-consumer (C2C) marketplace—where creating, buying, selling and sharing products and services will increasingly be driven by consumers themselves.

This is happening in the context of radical personalization, collaborative consumption and co-creativity, where brand purchases and experiences are dis-intermediated by traditional brands and retailers and unleashed via new technologies and platforms (from Good Guide to Etsy to Getaround) that firmly place more power in the hands of consumers.

Success now means rethinking sales channels toward more direct interaction and inviting consumers in to imagine, create and extend how our brands live in the world.

Figure 1. Etsy’s explosive growth has been fueled by an increasing consumer appetite for radical personalization and co-creativity.

2. The Rise of Generation “Why?”

The rise of the C2C marketplace is driven in part by the influence of values-aspirational, practically minded New Consumers looking for brands that deliver total value: products that work well, cost less, last longer and do some good.

Youthful, educated, wired and mostly female, this New Consumer is asking “why” they should care about brands; and, if they can’t find what they’re looking for, “why not” just create the solutions themselves? New Consumers are more practical and more purposeful, and they’re not willing to wait.

And, with billions of these New Consumers entering the marketplace in developing economies, the key question will be whether brands can reach and delight them—beyond just more consumption—to inspire responsible purchases and deeper participation with health, happiness and sustainability in mind.

Figure 2. A favorite among New Consumers, Warby Parker delivers total value: stylish, practical, reasonably priced eyeglasses that also provide societal benefit.

3. The Race to Relationship

Thanks to Groupon and its countless competitors, 2011’s year of the deal saw virtually every brand category join an unfortunate race to the lowest-price bottom that is destroying brand value, reducing consumers to commodities and undermining our shared, long-term success.

Sure, we dig deals and we always will. Yet by focusing so relentlessly on unsustainable price discounts, we undermine the very potential for our brands to do more and mean more for our customers.

Instead, we believe 2012 will see a race to relationship, where the most successful brands will break free of the lowest-price trap and deliver more value by empowering consumers with better products and experiences and championing their success. ­Patagonia’s disruptive Don’t Buy This Jacket campaign highlights this commitment to creating enduring products and relationships by promising to make “useful gear that lasts a long time” and inviting us to reduce, repair, reuse, recycle and reimagine how and what we consume together.

As one of our favorite clients says, “We don’t want a one-night-stand with our customers. We want long-term love affairs.”

Figure 3. Patagonia’s brave Cyber Monday campaign focused on long-term impact instead of a quick sales bump.

4. The Imperative of Sustainable Brand Innovation

Whether it’s reducing resource risks in supply chains, driving efficiencies into workflows or reaping the rewards of increased transparency and corporate reputation, we believe sustainable brand innovation offers unmatched opportunity for exponential value creation for business, consumers, society and our planet.

In 2012, sustainable brands large and small will increasingly connect consumers, brand teams, suppliers and subject-matter experts in the innovation process to embed sustainability and social purpose into every business strategy, product design and stakeholder relationship.

Creating better brands, products, packaging and platforms, the highest performing companies will integrate practical, environmental and tribal benefits in every new offering—therefore becoming agents of change at a faster speed and larger scale than ever before.

Figure 4. The Neutrogena Naturals brand embraces innovation through partnerships with the Linus Paling Institute, technology scouts and experts in various health and science fields.

5: The Evolution from Occupy to Engage

If the most emblematic word of 2011 was “occupy,” we believe the word of 2012 will be “engage.”

With an existential howl against the status quo, the global Occupy movement represents a deep yearning for a new way of doing business that replaces short-term, transactional, profit-only thinking with a more responsible, transparent and equitable economy that creates more value for more people in more ways.

In 2012, there is good reason to believe that sustainable brands can lead the way.

In states from California to Maryland to New York, B Corporations are engaging policymakers to pass legislation that recognizes (and incentivizes) corporate accountability to all stakeholders: investors, consumers, employees, community members and the environment.

The Harvard Business Review hails the benefits of “The Good Company” that combines financial and social logic into its operations by engaging employees, partners and community institutions in building enduring value and success.

Meanwhile, pioneering brands from Levi’s to Coca Cola to Nike are engaging consumers so they spend less, enjoy more and take action on issues that improve our shared future—from protecting safe drinking water to preserving endangered habitats to creating more opportunities for the producers of their products around the world.

 

Figure 5. Brand as movement: Levi’s Water<Less jeans go beyond a disruptive manufacturing process to a cause partnership with Water.org and tips helping consumers save water.

As we enter a new year and look around the corner, we believe the most successful brands will meet the needs, hopes and aspirations of New Consumers; build more respectful, collaborative and enduring relationships with all stakeholders; and unleash our collective co-creativity to bring better, smarter and more impactful ideas to life in ways that create shared value for all.

An article written by Raphael Bemporad, Principal at BBMG of NYC for Sustainable Life Media

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5
January

Green Mountain Coffee To Test Waste-To-Energy Technology

 

Green Mountain Coffee Roasters – known for its Keurig brand of individual coffee cups – may soon be able to turn its waste stream into a source of power for its Vermont operations.

The Energy & Environmental Research Center (EERC) at the University of North Dakota is working with Wynntryst, LLC, an energy solutions company based in South Burlington, Vermont, to develop a gasification power system for the company.

The project specifically focuses on converting Green Mountain’s coffee residues, plastic packaging, paper, cloth or burlap, and plastic cups into an energy source.

“This project is an extension of work performed by the EERC for NASA, which explored the conversion of waste from a space station and future Martian and lunar bases into heat and power,” says EERC Deputy Associate Director for Research Chris Zygarlicke. “This project will similarly utilize a mostly renewable and bio-based waste and convert it into electricity for the coffee industry.”

“The first step of the project is to demonstrate that we can gasify the complex mixture of waste and produce clean synthetic gas, or syngas, by utilizing the EERC’s novel advanced fixed-bed gasifier (AFBG) system on the biomass–residue mixture,” says Project Manager and Research Scientist, Nikhil Patel.

The syngas will then either be utilized in an internal combustion engine or a fuel cell for efficient production of electricity and heat or be converted to high-value biofuels or chemicals. The pilot-scale tests will evaluate the quality of syngas that can be produced from the Green Mountain waste.

“Over the years, the EERC has developed and tested numerous small gasifier systems like this on a variety of biomass feedstocks,” Zygarlicke said. “The EERC system has already produced power by gasifying forest residues, railroad tie chips, turkey litter, and other biomass feedstocks and burning the produced syngas in an on-site engine generator. The coffee industry residues will be similarly tested.”

The EERC will use the outcome of the pilot-scale efforts to propose a full-scale commercial demonstration system for installation at various Green Mountain sites.

 

Bart King is a PR consultant and principal at Cleantech Communications, and a regular contributor to Sustainable Life Media.

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