Sustainability is not just good business, it is smart business. Leading companies recognize this, but do they achieve the best possible results for both the planet and their brand?
Traditionally, environmental practices have been viewed as a way to increase profitability – to reduce material usage, for example, or improve energy efficiency. Mitigating risk has also pushed sustainability up on the corporate agenda. For global enterprises this could involve anticipating regulatory changes or ensuring the long-term viability of production facilities. More recently it has become clear that green thinking is central to driving innovation and can positively impact sales.
Brand owners, however, need to widen their horizons and look beyond straightforward business benefits. There are other potential benefits to the brand that often go ignored. Brands that do not adequately communicate their environmental achievements are failing to maximize their investment in sustainability.
Interbrand's global Corporate Citizenship Study showed that good deeds, including green activities, play a significant role in increasing favorability, contributing between 13% and 17% to positive impressions of a brand. The benefits do not stop there. For selected audiences, the impact can be even greater. Internally, people feel more motivated working for a company that is perceived to be doing good, making it easier to attract and retain top talent. Externally, investors and business customers are placing increased emphasis on sustainability as they look for long-term security and partners to help them achieve their own environmental goals. This means that any brand engaged in green activities should be taking the time to tell the public what they are doing.
The 2012 Best Global Green Brands study suggests that many leading companies fail to recognize the full potential of green branding. The report looked at both actual environmental actions and market perceptions of the world's best corporate brands. Among the fifty companies ranked, around thirty have a positive gap, meaning they are not being fully credited for their activities and so are missing the opportunity to build stronger relationships with stakeholders.
Perhaps the most striking examples can be found in the electronics industry. Eleven of the twelve leading global brands from the category recorded an above-average assessment of their environmental activities. However, only Apple received public recognition in line with actual achievements.
To address a positive perception gap, brands need to create differentiated green communications by finding original, credible territories where they can claim leadership. Given the complexity of environmental issues, it is important that this should be a tangible activity, or an easy-to-understand concept that is relevant to the audience.
Any green communication strategy needs to take into account the complexity of differing local views of environmental issues as well as the need to cut through the clutter of green badges and conflicting claims with a simple set of global messages backed by proof points.
A word of caution – credibility is critical with a topic as emotive as the environment. Actions should always precede words. If people believe the brand is doing more for the planet than it actually is, there is a potential risk.
However, before condemning any brand as a “green washer,” we should pause to consider several potential factors behind a negative gap. In addition to high-profile brands that enjoy a positive halo from being well-known and well-liked, there are examples of pioneering brands that are assumed to be top performers because of their thought leadership. It would be simplistic to criticize these brands without recognizing the impact they have pushing the green agenda to the forefront as a serious business topic.
Nevertheless, there are risks for brands that do not live up to their public pronouncements. Brands need to ensure that they are delivering on their core promises as well as managing public expectations. In the age of social media, people expect transparency even if it means admitting to weaknesses or imperfections. This should not discourage brands from engaging in dialog about complex issues.
For meaningful change to occur in our relationship with the planet, information on sustainability has to be communicated to everyone and options for green lifestyles have to be made available to all. With their prestige and immense resources, global brands are well-positioned to realize this through their words, actions, and leadership.
Alex Murray is a Strategy Director at Interbrand Tokyo.