Developing a Sustainability Brand and WHY IT MATTERS to CORPORATIONS
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AVREAFOSTER GUIDE Developing a Sustainability Brand AND WHY IT MATTERS TO CORPORATIONS This guide addresses the growing demand for corporate sustainability and provides three steps for developing a meaningful and enduring sustainability brand. Note: Given the subject matter, we would be remiss if we didn’t remind you to think before you print this guide. No matter your industry, you’re in the business of sustainability. When it comes to corporate sustainability, we’ve come a long way. In this guide, we’ll address why corporate sustainability matters, However, if the latest demands from investors are any indication, examine its rise over the past several years and provide three key we still have a long way to go. Even in these challenging economic steps to developing and implementing a sustainability brand into times, BlackRock, the world’s largest asset manager, issued a letter your current corporate communications strategies. Bonus: An to shareholders at the end of March that essentially double downed index guide of the most relevant trends and terms is included for on an earlier communication that the firm would no longer invest your reference. in companies that weren’t meeting stringent environmental, social and governance (ESG) standards. The net net: If a global pandemic The pandemic we’re experiencing now and economic recession doesn’t shake investors’ expectations for highlights the fragility of the globalized businesses, nothing will. Your company is officially in the business “ world and the value of sustainable portfolios. of sustainability for the foreseeable future. We’ve seen sustainable portfolios deliver stronger performance than traditional portfolios during this period. LARRY FINK, CEO, BLACKROCK ” © AvreaFoster 2020 | avreafoster.com | page 02 Corporate Sustainability: A Brief History What began as a social contract between businesses and society in the 18th and 19th centuries reached critical mass in 1987 when the United Nations published Our Common Future, also known as the Brundtland Report. The report mandated a balance between economy and ecology, stating that mankind had a moral obligation not to overuse resources so future generations would have equitable living standards. The publication of Our Common Future laid the groundwork for many important milestones in corporate sustainability, including the establishment of the U.N.’s Commission on Sustainable Development. 1987 — The U.N. publishes Our Common Future, encouraging 1997 — The Global Reporting Initiative is established, a nonprofit countries to work together on sustainable development. focused on helping organizations understand and measure their sustainability. 1992 — The U.N. establishes the Commission on Sustainable Development (CSD), replaced in 2013 by the High-level 2000 — The Carbon Disclosure Project is formed, focused on Political Forum on Sustainable Development (HLPF). making environmental reporting a business norm. 1993 — Businesses use their environmental focus as a selling 2001 — The International Accounting Standards Board is formed, point, launching the rise of green brands. standard-setting body for the International Financial Reporting Standards Foundation, or IFRS. 1995 — The World Business Council for Sustainable Development is founded, a CEO-led organization working to help 2004 — The U.N. Global Compact launches, the largest companies be more successful through sustainability. sustainability corporate initiative in the world. 2005 — The term ESG was first coined in a landmark study 2016 — Paris Agreement is signed with the goal to combat entitled “Who Cares Wins.” climate change. The Workforce Disclosure Initiative is formed to support businesses struggling to access data 2006 — The U.N.-backed Principles for Responsible on their workforce internally and throughout the Investment (PRI) launches. supply chain. 2007 — B Corp is established, a certifying body for for-profit 2017 — TFCD makes its first recommendations for reporting companies that meet its high standards of social and on climate change. environmental performance. The Climate Disclosure Standards Board is founded, 2019 — Sustainability Accounting Standards Board (SASB) and encompassing a consortium of businesses and the Climate Disclosure Standards Board (CDSB) issue environmental NGOs. an implementation guide for TCFD, designed to help companies address demand for data about their 2010 — In response to the 2008 financial crisis, the Dodd-Frank exposure to climate-related financial risks. Act is enacted. 2013 — Conscious Capitalism is popularized by Whole Foods co-founder John Mackey. Sustainable development is development 2014 — First convening of the Corporate Reporting Dialogue, that meets the needs of the present without a nonprofit focused on creating consistency across “ compromising the ability of future different reporting frameworks. generations to meet their own needs. 2015 — U.N. General Assembly publishes Sustainable EXCERPT FROM THE COMMON GOOD ” Development Goals to be achieved by 2030. The Task Force for Climate-Related Financial Disclosures (TFCD) is established with the goal of developing a set of standards that can be voluntarily adopted by companies. Brand management is sustainability management is risk management If you are a branding or marketing communications professional, considering your stakeholder audience before executing any business strategy is nothing new. For better or worse, they have a great deal of say in whether your company will be successful in its endeavors. As you consider development of a corporate sustainability strategy and accompanying brand, take into account how consumers (current and prospective), employees and investors will measure your company’s efforts. Each matters, but for different reasons. Climate change is the No. 1 issue facing corporate brands in 2020. Sustainability issues overall have jumped year over year, comprising 6 of the 1 1 2020 Brand Pressure Index, High Lantern Group, published January 2020. top 20 business challenges. * CONSUMERS CARE AND SO SHOULD YOU Amazon.com founder and CEO Jeff Bezos once famously said, The social pressure generated by organizing efforts online or in “Branding is what people say about you when you’re not in the the streets can dramatically shift purchasing power. This isn’t your room.” Nowhere is that more evident than in relation to corporate parents’ boycott. It’s brand perception and it’s driving a new market. sustainability. Although, today, people don’t wait for the brand Over the past few years, consumers have led campaigns against to leave the room. They seek a direct audience — and some single-use plastics, fast fashion, automobile emissions and more. serious change. While this has forced some brands to pivot strategies, it has also given a boost to those brands that proactively put ESG concerns at the forefront. Unilever, a global consumer goods company, is an example of that. Unilever’s sustainable living brands, which account for about half of the company’s top 40 brands, are growing 50% faster than the others and are generating more than 60% of the company’s profits. It’s important to note that consumer power is not limited to environmental concerns. Social good is a significant focus, especially in the current environment — and the definition of social good has 60% of consumers say they gravitate greatly expanded from the standard elements of diversity, equal toward businesses committed to opportunity and proper pay. Today, it includes all the aspects environmental good. That’s according of good citizenship you might imagine, from #OccupyWallStreet to #MeToo to #BlackLivesMatter. Where there is social unrest, to an online survey of nearly consumers will not hesitate to take the media wheel, driving many 2 30,000 people across 35 countries. businesses to a tipping point. 2 To Affinity and Beyond: From me to we, the rise of the purpose-led brand, Accenture Strategy, published January 2019 © AvreaFoster 2020 | avreafoster.com | page 06 * EMPLOYEES ARE CONSUMERS OF YOUR BRAND TOO Just as information has been democratized for consumers, driving — 34% said they’ve given more time and effort to a job demand for transparency and action, employees are also seeing because of their employer’s sustainability agenda. (and hearing) the environmental and social impact of their — 30% said they’ve left a job in the past because of employers. It may come as little surprise that younger generations the company’s lack of a sustainability plan. are particularly principled, with some studies suggesting they care more about purpose than pay. For example, one millennial 3 employee study revealed: Businesses with a commitment to — 75% would take a pay cut to work for a socially sustainability could responsible company. see productivity — 76% consider a company’s social and environmental commitments before deciding where to work. increases by 13% and — 64% won’t take a job if a potential employer doesn’t turnover reductions have strong corporate responsibility practices. by up to 50%.5 A company’s sustainability program (or lack thereof) can also have a positive or adverse effect on employee engagement. Read: working Employees wants to be an active participant in driving global harder versus working elsewhere. A more recent survey from Fast systemic change. That requires they work for a company that shares Company confirmed this:4 their commitment to meeting social and environmental standards. Just like consumers, your employees want to be proud of the — 69% of respondents said