Acting Like a Leader

Acting like a leader:The art of sustainable sustainability

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Acting like a leader:the art of sustainable sustainability

Sustainability and brand: commonalitiesThese days, the word “sustainability” is overused and applied to anything from cars to economics to agriculture. It is everywhere—in magazines, newspapers, corporate brochures, and on the front and back of consumer packaging. And yet, while most of us would associate sustainability with the green movement and being environmentally virtuous, many would have a hard time coming up with a definitive definition for the word.

“Sustainability” and “brand” have a lot in common. For instance, careful examination of the two concepts reveals that, like brand, sustainability is centered on the notion of building and maintaining value. Brands build value and contribute to a business’s economic growth by influencing and driving consumer choice. Sustainability also builds and maintains value—namely that of the earth’s resources, although, as we have seen over the last years, it is increasingly associated with building value for a business. Brands and sustainability have something else in common: a unique relationship with

behavior. When sustainability first entered the lexicon in 1987, with the publication of the report titled “Our Common Future” by the United Nations World Commission on Environment and Development, it was defined as “…development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” In other words, behave fairly, don’t take more than your share, and put back what you use. This is easier said than done. As consumers, we are used to making day-to-day choices based on what we want and need at that moment. Sustainability is a complex notion that demands we radically change our behavior in a real and meaningful way, to consider our individual actions as part of a sustainable whole.

Brands are also directly related to behavior. Rather than ask consumers to change their behavior, brands influence behavior through informing the choices we make through both rational and emotional means. This is how they derive their value. By providing specific contributions to purchase decisions, brands can influence choice and secure ongoing customer demand. Brands contribute to the

sustainability movement—however we define it—in a visible and demonstrative way, by creating demand for products and services that people need and that are also responsible. Therefore, through brands, marketers have a unique mechanism to create lasting change, affecting both attitudes and behaviors.

Marketers should not only see brands’ unique role in influencing sustainable behavior as an opportunity, but also as a necessity. Data from the National Environmental Education Foundation Business and Environment Program published in “The Engaged Organization,” March 2009, shows that for most companies, there is no single entity/department that is entrusted with sustainability education/implementation. As a result, many businesses’ initiatives are proving to be ineffective. For example, a Fresh Marketing 2008 study shows that only one in 10 employees who participates in these programs feels completely prepared to tackle sustainability head on. The majority wants more education and resources on corporate sustainability. The

by Jez Frampton

Acting like a leader: the art of sustainable sustainability Interbrand | Pg. 3

lack of preparation is translating to shoppers as well. While 95 percent of shoppers say they would consider buying a green product, 47 percent of shoppers said they saw them but didn’t purchase them.

As marketers and caretakers of our brands, we need to take the initiative. It is our job to sift through the noise and redefine what sustainability means to our business. That’s because sustainability, as it is defined for most businesses today, is not sustainable. This does not mean it is going away. Quite the opposite, actually. Just as the definition of brand in its infancy was broad, nebulous, and crude, our understanding of sustainability is still in its early stages. It needs to evolve with the shifting landscape. And while many companies understand the moral payoff of devising a smart sustainability strategy that goes beyond the surface, what they may not realize is that incorporating sustainability as a business practice will also increase brand value and guarantee a long life for the business.

Sustainability and brand value: a changing landscapeSustainability is not just another trend. A number of factors are contributing to a changing landscape in which sustainability figures prominently.

The first factor is the increased pressure on individuals to “do good.” This was perhaps best distilled by new U.S. President Barack Obama when he hailed this era the “new age of responsibility” and hit a nerve with the general public—not just in the U.S. but globally as well. He echoed this message in his early speeches, saying, “We can longer afford indifference to the suffering that

occurs outside our borders. Nor can we consume the world’s resources without regard to the effect.”

Although the recession has forced consumers to purchase the cheapest products rather than the most sustainable products, it is still clear that awareness is on the rise. While purchase decisions may not yet reflect this, consumers are thinking about the excesses that led to today’s economic situation and are actively beginning to seek out a “less is more” lifestyle.

Perhaps even more than raised awareness, regulatory pressure is forcing more businesses to conduct business in a sustainable way. As a result of these regulations, sustainability is even becoming a cost of entry to doing business.

This is evident in Europe, where, 14 years ago, the 94/62CE directive proposed new restrictions on manufacturers, including reduced packaging weight, diminished tenure in heavy metals, and an increased use of recycled materials. Despite a continuous growth of packaging units in the European market, the ADEME confirms that package waste is now decreasing as a result of this measure. The ADEME also shows that a major part of the manufacturers’ investment is dedicated to recycling.

Meanwhile, in July 1998 in India, the Supreme Court ordered the Delhi government to implement CNG or LPG (Autogas) fuel for all autos and for the entire bus fleet in and around the city. Delhi observed a dramatic improvement in the quality of air with the switch to CNG. While initially auto rickshaw drivers in Delhi had

to wait in long queues to get their CNG cylinders refilled, the situation improved when filling stations realized that demand required that they sell CNG. Pakistan and Sri Lanka have seen similar results since they each passed a similar CNG law.

In addition to regulation and the increased pressure to do good, incentivization is also changing today’s landscape. In Switzerland, the government has imposed strictly enforced recycling and anti-littering regulations. Further, citizens are given a financial incentive to recycle as much as possible, since recycling is free. Due to these incentivizations, Switzerland has become one the top recyclers in the world—66 percent to 96 percent of its recyclable materials are recycled. The incentivizations have reinforced good behavior as well. As suggested in a 2005 national report for a Seminar on Environmental Services and Financing for the Protection and Sustainable Use of Ecosystems, the recycling program has led Swiss citizens to take an active interest in the environment. Citizens have even voted for even more environmental regulations.

Change is also being motivated by profit. For example, Energy Star, the joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy, helps save money and protect the environment through energy-efficient products and practices. Businesses have jumped on board because of both the cost-saving benefits and prestige.

Sustainability is not just another trend. A number of factors are contributing to a changing landscape in which sustainability figures prominently.


Lead, don’t follow the pack: how to create the right sustainability practice for your brandRegulation, incentivization, profit, raised awareness, and an obligation to do social good are changing the landscape and prove that sustainability isn’t just another trend. In the end, all are working together to create real, lasting change. That’s why businesses need to act now to create a sustainability initiative catered to their business.

Unfortunately, many businesses do not know where to begin when creating a sustainability practice. For businesses, the pressure to create ethical products has not only come from consumers, but also from peers. Already, in recent years, a few leaders have taken charge, incorporating sustainability into the fabric of their brands. Today, as a result of these leaders, we’re beginning to create more awareness in the consumer’s mind about the need for businesses to be sustainable.

The increased awareness has caused many to implement CSR programs and sustainability initiatives without fully understanding their meaning and value. Right now some companies are getting away with small measures, but as awareness increases, more businesses will be held accountable by public expectations and government regulations. A line between those who are sustainable and those who are not will become very clear. Businesses that have simply “greenwashed”—said but not done—will be identified immediately and cast out, not just by environmental groups, but by the general public as well. We’ll increasingly see sustainability becoming a table stake rather than a differentiator. It will become ingrained in the fabric of how all companies do business; they will not be able to do without it.

That’s why it is so important to craft a distinctive, relevant, and lasting sustainable proposition that will differentiate your brand. Do the right thing and do it right. It is not about saying that you are going to build a proposition that separates you from the rest; it’s about building a proposition that is right for your brand and relevant to your industry.

Sustainability through the lens of brandIf you look at any of the brands on our Best Global Brands 2008 list, you’ll see that the top brands create value by generating demand, reducing risk, and securing future earnings for their business. They do this by translating to customers what is relevant in today’s world and influencing buying behavior. Due to distinct offerings, they develop a strong relationship with customers, and this leads to repeated purchasing. We need to begin to view sustainability with the same lens.

If we can combine the rigor of branding with the necessary aspirations of sustainability, we can begin creating long-lasting impact that is not only necessary, but also inevitable. Real change—the kind we’ve seen brands influence—will come about when we see corporations start actively integrating and managing sustainability as part of their business strategy and delivering it through the brand strategy.

This does not mean just reporting carbon emissions and showing transparency. While these are great steps, they do not contribute to changing behavior. On the other hand, if businesses begin intercepting consumers’ lives, approaching sustainability as they do brand, making their products and services the vehicles to deliver the message, they will create change. Indeed, the brands that have the most successful sustainability initiatives are changing and innovating their products and services to support the message.

Where to start?Making “the medium the message” may be easy for brands that have developed their brands around the idea of sustainability—brands like TOMS, Method, and Aveda. But what about businesses that have to evolve their strategy after the conception of their brands? Where do these businesses start? [Read more about brands like TOMS, Method, and Aveda in the endnotes.]

While no formula will be the same for every business, three essential points should be taken into consideration.

1.Set the highest standard for your industry. While there’s no one-size-fits-all formula and there will never be a 100 percent sustainable oil company, you can plan and execute against the realities of the business that you are in. Your goal should be to actively and consistently uphold the highest standards in your industry and continue to outperform your success. This is the definition for sustainability that’s sustainable.

2. Measure the impact of your actions.This is no small task, particularly in this economic climate when market values are fluctuating. However, you can measure the effectiveness of your sustainability efforts through the impact your brand has on influencing behavior. This is where you will derive the most value.

3. Communicate your platform appropriately. Communicate your platform appropriately so that you are always “saying what you do and doing what you say.” Today’s socially conscious consumer is increasingly holding brands accountable. A balanced message that communicates your aspirations but acknowledges reality is the right approach.

Brands getting it right: GETake GE’s “ecomagination.” GE has a very defined sustainability agenda that directly relates to its brand, business, and industry. GE’s agenda, when it came to us, was clear: It wanted to drive growth across its business. We helped GE create ecomagination to do this. It ultimately reflects GE’s commitment to invest in a future that creates innovative solutions to environmental challenges and delivers valuable products and services to customers while generating profitable growth for the company. The initiative was tied to GE’s business strategy, products and services, effective communication, and employee engagement. For example, on an employee engagement level, GE found huge success with its “Energy Treasure Hunt”—also executed by other companies like Toyota—in which employees are split into teams on a Sunday afternoon when an operation is

“sleeping” and trained to identify energy used needlessly in the facility. In the words of one of GE’s employees, “By the time teams return to the central location in the early evening, you can sense the buzz: Employees have seen opportunities for improvement, and are realizing how this whole process makes sense for the organization as a whole” (“How GE’s ‘Treasure Hunts’ Discovered More Than $110M in Energy Savings.” Gretchen Hancock. Reuters. www.reuters.com/article/gwmBuildings/idUS395203173020090513).

In perhaps its biggest project yet, GE is also partnering with Abu Dhabi to build Masdar City, the world’s first carbon-neutral, zero-waste city completely powered by renewable energy, and has plans to build an Ecomagination Center devoted to the development of new and innovative technologies—an actual, tangible manifestation of its ecomagination message. This is not only the right thing to do, but also the smartest financial move GE could make. When the Middle East runs out of oil, GE has smartly positioned itself as the first to provide alternatives.

By tying it in and making it tangible on every level, ecomagination has propelled GE’s 25 percent rise in brand value—a measurable change. As GE proves, the best sustainable practices are the ones that are consistent with a brand’s positioning and create value for companies by creating more value for its brands. When you do the right thing and do it right, it adds value to your brand. [Read more about the sustainability practices of other

energy/utilities brands in the endnotes.]

Brands getting it right: ToyotaToyota is another example of a brand that has set the highest standards for its industry, is measuring the impact of its actions, and is communicating its message effectively. Its message, “harmony with people, society, and the environment,” and its goal to be “a good corporate citizen with the aim for stable, long-term growth” are made tangible on every level. The fact that it remains completely transparent about its initiatives to reduce fuel consumption and water consumption (which have so far proved successful) helps the company as well.

Perhaps its most impactful message—and most measurable success—has come in the form of the Prius, America’s sixth bestselling passenger car as of May 2007, despite projections that it only had a 5 percent chance of success before its release in 1993. Even with Toyota’s large contribution to the domestic pickup truck and SUV market, the Prius is what people think of when they think of Toyota. It is such a hit that consumers interchange the word ”Prius“ with ”hybrid“ in the same way that they ask for a Kleenex.

The Prius has stolen 80 percent of the hybrid market’s share, even though Honda’s was technically the first hybrid car to be released. The Prius has had such a dramatic halo effect that consumers now associate the technology with Toyota’s entire lineup. Hybrid Camrys are currently outselling hybrid Civics by 50 percent. Today the Prius is a full-fledged four-wheeled corporate emblem.

And Toyota has announced a family of Prius, including a station wagon and a smaller city car. Toyota took a huge gamble with the Prius. It’s paid off at the bottom line and looks set to do so for many years to come. [Read more about the sustainability practices of other automobile brands in the endnotes.]

Brands getting it right: McDonald’sWhile McDonald’s is not immediately associated with sustainability, over the last years, it has taken a stance, set goals it can measure, and is now leading its category.

Despite being the leading fast food chain in terms of animal welfare, McDonald’s is always going to struggle with its carbon footprint due to the fact that its offer is so strongly linked to meat. However, it has made moves to offset its footprint by incorporating sustainability in a way that is more in keeping with its brand promise.

It has moved to target the most visible issue with its brand—litter—by using recycled packaging. It is also working with Greenpeace to make sure its supply chain does not contribute to deforestation via soy used to feed chickens or used in products. While competitors like KFC ignored Greenpeace’s criticism of litter, McDonald’s took action, and its moves have served it well. McDonald’s is also working hard on sustainable coffee in its stores. In the UK, McDonald’s is converting all its delivery vehicles to run on biodiesel, using the firm’s

By tying it in and making it tangible on every level, ecomagination has propelled GE’s 25 percent rise in brand value.


supply of cooking oil. It also has a store model that is energy efficient and has plans to build more models soon. [Read more about the sustainability practices of other fast food brands in the endnotes.]

Brands getting it right: NokiaNokia is also working to change and innovate its products and services to support its sustainability message. And yet, because it is in an earlier stage of the process than Toyota and GE, it is still facing challenges in communicating its actions.

Nokia’s environmental work is based on life-cycle thinking. This means that it aims to minimize the environmental impact of its products throughout its operations, beginning with the extraction of raw materials and ending with recycling, treatment of waste, and recovery of used materials. It achieves this by better product design, close control of the production processes, and greater material reuse and recycling.

Nokia won the 2008 Green Awards Grand Prix for communicating sustainability in an impactful way. Through the “We” campaign, Nokia has engaged its employees to become champions of the environment. As a result, 73 percent of worldwide employees are aware of its environmental initiatives, over 1,200 environmental champions have come forward to help organize local events/eco actions, employees have made over 4,000 pledges on their own actions with the number growing every day, and the recycling rate of used phones and accessories among Nokia employees has increased 600 percent compared to previous efforts.

Nokia recognizes that with one billion people using its products, there are a lot of small things that can help make a big difference—like recycling, for instance. Greenpeace’s research shows that globally, 74 percent of consumers said they don’t think about recycling their phones, despite the fact that around the same number, 72 percent, think recycling makes a difference to the environment. Nearly half of those surveyed added that they were unaware that it was even possible to recycle a mobile phone.

Keeping this in mind, Nokia has made sure that between 63 and 80 percent of its devices can be recycled. Plastics that can’t be recycled are burned to provide energy for the recycling process, and other materials are ground up into chips and used as construction materials or for building roads. In this way, nothing has to go to landfills. And while this alone was great, they’ve also partnered with IBM, Sony, and Pitney Bowes in offering the rights to environmentally friendly technologies for free. Called the Eco-Patent Commons, this is a first-of-its-kind effort to help the environment, making dozens of innovative, environmentally responsible patents available free of charge. Nokia will go a long way in effecting cell phone recycling behavior by donating a patent that shows how to reuse the computing power from unwanted mobile phones and transform these into other electronic items such as data monitoring devices, cameras, or other electronic items that do not have cellular capability.

Across the board, the company has shown it is committed to its promise, using recycled PET for carpet at last year’s Consumer Electronics Show 2009, allowing only steel water canteens instead of plastic water bottles at its booth, and attempting to offset the carbon emissions of visitors’ travel by noting where they flew in from. While offsets aren’t an answer, Nokia is doing much more than most of its competitors.

Nokia’s next challenge will be to communicate the work it has done. It needs to begin to strategize a better way to get its message relayed to consumers. This is particularly pressing considering that, despite a Greenpeace ranking of 164—top in its category—consumers don’t recognize Nokia as green, ranking it a low 41 in a Greenfactor study. Further, only 4.34 percent of global consumers recognize Nokia for its green efforts. Despite worse Greenpeace ratings, consumers perceive Apple, HP, Intel, and Motorola all to be more sustainable. So while Nokia has set the standard for its industry and is

measuring the impact of its actions, it is not generating the value it could through better communicating its efforts. [Read more about the sustainability practices of other telecommunication brands in the endnotes.]

ConclusionAs 95 percent of shoppers have shown us, the demand for green products exists. However, if 47 percent of shoppers are going into a store, seeing the green products and then choosing not to buy them, it is clear that we are not doing enough as marketers. We need to push forward the right products, set high standards, and communicate our message clearly and convincingly.

It is time to take a more intelligent approach to creating the brands that will quite literally change the world. The landscape is evolving, and it would be a mistake not to evolve with it. Businesses need to seize the opportune moment to begin creating better products, in turn creating lasting change—or else suffer the consequences later, when sustainability becomes a table stake.

A good model for comparison is the Internet of a decade ago. Many dismissed it initially, but the few that had the perseverance and foresight to stay with it are recognized not only as the leaders of the effort today, but also as the overall leading brands. The same can be said for those at the forefront of sustainability—if brands begin leading the sustainability movement now, they’ll be remembered as the leaders and innovators in the future.■


Endnote 1Brands leading sustainability: TOMS, Aveda, Method“The medium is the message”

Endnote 2Energy and utilitiesMake sure you walk the talk before you communicate

Endnotes


Endnote 3The automotive industryThe hybrid car race

Despite the fact that Honda’s Insight hybrid was first to the market in 1999, the Prius has become synonymous with “hybrid car.”


Endnote 4Fast food industryThe fight on litter

Endnote 5Technology brandsPerceptions versus reality

Although customers do not perceive Samsung to be an extraordinarily sustainable brand, Greenpeace ranks it second place to Nokia at 5.7.


Creating and managing brand valueTMinterbrand.com

Jez Frampton

Jez Frampton is Global Chief Executive of Interbrand. Jez is responsible for managing the firm’s worldwide interests and enhancing its strategic and creative offerings. Jez is a member of the Marketing Society, the Chartered Institute of Marketing, the Market Research Society, the Design Business Association, and the Institute of Directors. He is a frequent lecturer on the subject of branding.

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Acting Like a Leader