What Brands Need to Know About Sustainability Moving into 2021
Sustainability is quickly becoming table-stakes for most, if not all, consumer-facing companies. Since the UN Sustainability goals were announced in 2015, there has been an uptick in sustainability awareness on both a brand and consumer level. At the end of 2019, McKinsey put the value of sustainable investment at $30 trillion, a 68% increase since 2014. A new study by Coyote Logistics has found that 81% of companies are more focused on sustainability today than they were three years ago. From initiatives designed to increase recycling or upcycling, to becoming carbon-neutral, brands are pledging ongoing dedication to sustainability.
As we have seen with a lot of trends over the past seven months, sustainability awareness has only accelerated during the COVID pandemic. This is due to the environmental and social factors that have been front and center on the global stage, showcasing the need for companies to emphasize long-term sustainability over short-term profits. As pollution dropped while people stayed at home, it demonstrated how much impact human activities really have on our environment. Supply chains were also suddenly thrust into the limelight as consumers started to pay more attention to how brands treated their workers and sourced their products. At the same time, COVID has tested how serious companies really are about their initiatives, and reinvigorated internal conversations about the benefits of implementing sustainable practices.
COVID-19 has offered brands, especially those previously hesitant about jumping on the bandwagon due to expense, the opportunity for a do-over to instill sustainability holistically throughout their company.
Why Sustainability Is Important for Brands
A good product is no longer enough to win over consumers; instead, consumers are increasingly looking for brands that align with their values. With Millennials and Gen Z expanding in both influence and spending power, brands have no choice but to incorporate their demands. These generations are driving the sustainability movement, demanding with their dollars that brands take sustainability seriously. A new Capgemini Report shows that 79% of consumers are changing their purchase preferences based on social responsibility, inclusiveness, or environmental impact shown by a brand.
Becoming sustainable isn’t an easy task for companies, but the huge growth opportunity it offers makes it a worthwhile pursuit. IRI found that sustainability-marketed products counted for 50% of CPG growth from 2013 to 2018 and grew 5.6 times faster than non-sustainable products. Moreso, the purchase motivation for a product grows threefold if its overall benefits are combined with sustainability benefits, and there is growing consensus that consumers are happy to pay more for a sustainable product or service which can offset the additional expense that sustainability adds.
While sustainability marketing may have been enough to get people to buy new products previously, that is no longer the case. Brand sustainability has to be authentic and actionable. Consumers have become increasingly aware of “green-washing” and are no longer content to take brands’ sustainability initiatives at face value. Instead, they want to see proof that products are not only made in a sustainable way but also what the company is doing to further their sustainable efforts, including how they are giving back to their communities and the earth. The Environmental Defense Fund (EDF) shows that 93% of CEOs believe that consumers will hold a business accountable for their sustainable impact, whether that be positive or negative. Sustainability needs to be embedded into the very heart of the brand and the way the business runs, and once it is, consumers will embrace them with open arms.
At the end of the day, sustainable brands make consumers feel justified in their purchase and create an emotional connection. This is the key to fortifying consumer loyalty, and opens up the door for brands to involve consumers in their sustainability initiatives. Per a 2020 Global Euromonitor report, 53% of people feel that they can make a difference in the world with their purchases, while 47% actively try to make a positive impact on their environment through everyday actions. If brands can help make this an easy reality for them, they will pay this forward through ongoing loyalty and support.
How Brands Can Showcase Their Sustainability Values
When brands adopt sustainability as a core strategic pillar, their actions (and PR pushes) drive organic marketing, as people want to be associated with brands that are doing good and making the world a better place. However, the most impactful sustainability messages go beyond commitments and pledge to integrate with media and experiences to help keep consumers informed, aware, and involved, and deepen the emotional connection between the brand, the environment and the consumer. To that end, there are some key areas and best practice examples that brands can leverage to create opportunities that deepen consumer connections while providing authenticity and accountability around their sustainability values.
Transparency is a game-changer in sustainability. As it has become clear that sustainability is the future for most, if not all brands, brands that are transparent with their targets and their processes will come out ahead due to increased consumer trust. This could be something as simple as making sure that all communications are upfront and any issues come with a plan of action, to as complex as creating a new supply chain tracking system.
New technology can enhance transparency by providing detailed information and tracking throughout the supply chain. To this end, Starbucks launched a Digital Traceability tool, which utilizes blockchain to trace the source of their coffee beans. Customers can see which farms the beans come from, the names of the farmers, and the price paid to each of them for the coffee by using visual search through the Starbucks app to scan the batch number, or by entering it directly onto the Starbucks website.
Kering, the owner of luxury fashion brands like Gucci and Alexander McQueen, has proactively created an Environmental Profit & Loss (EP&L) Account that measures carbon emissions, water consumption, air and water pollution, land use, and waste production along their supply chains for full transparency to all their stakeholders. Moreso, they have made their process of creating their EP&L freely available to encourage other brands to follow suit and have created an app that uses EP&L information to help consumers visualize the impact of their clothing choices and understand if a more climate-friendly option can be made via scenario modeling tools.
Offer Educational Engagement
Consumers are clamoring for education that explains exactly what a company’s values and initiatives are. They want to make the best choices that support the companies creating real change, and to do that, companies need to educate them on what they are doing and how they are contributing to make the world a better place.
A classic way to offer easily digestible educational sources is through video series, which has even higher potential since the pandemic sent the streaming audiences soaring. Levi’s recently created a docu-series, “The 2020 Project,” in collaboration with VICE, to demonstrate what causes they rally behind. From climate and politics, to gender equality and representation, the series tells the stories of extraordinary youths that are fighting for change. This series allows Levi’s to directly communicate to their audience about what Levi’s stands for, while providing education around these causes, encouraging their audience to get involved.
Advances in fintech have created the perfect opportunity to involve and educate consumers about their own sustainable footprint as they consume. Swedish fintech company Doconomy, recently launched their credit cards, DO, and DO Black. Both cards show consumers the carbon footprint of their shopping while DO Black goes the extra mile of capping spend based on carbon consumption limit rather than a monetary value. These cards allow consumers to become more educated about how their day-to-day decisions can impact everyday climate action.
Activate with Participatory Experiences
An effective way for brands to showcase their commitment to sustainability is by offering participatory experiences that allow consumers to get directly involved in the issues that they care about. Especially for Millenials, who want and value an experience when engaging with a brand, this can be the potential sweet spot for brands to engage with consumers and sustainability. These experiences should be linked directly to causes or movements that the brand supports with a tangible end goal and link back to their own initiatives.
Adidas has made it its mission to clean up plastic from the ocean. In partnership with environmental ocean clean-up group, Parley, they make shoes out of recycled ocean plastic. In 2019 alone, they made 11 million pairs of shoes,however, that is only one part of their initiative. Since 2018, Adidas has hosted a “Run For The Oceans” for their global running community to help raise awareness and money for ocean cleanup. Adidas donates one dollar for every kilometer (for the first million kilometers) logged through its running app on the week of the run and uses their owned channels and sponsored athletes to create buzz and encourage participation. This tie in with Adidas apps, products, and sustainability goals increase consumer awareness of their initiatives while inviting them to be part of the solution.
Brands can also tie their experiences directly to their everyday operations, making it easy for consumers to actively engage with sustainability messaging and offerings. Patagonia launched the Worn Wear Tour, a traveling pop-up where consumers could go to repair, recycle, and extend the life of their Patagonia products. The Worn Wear tour offers tips for making clothes last longer and helps people consume less. By bringing a crucial element of the online store directly to consumers, Patagonia builds their community and spreads awareness about recycling and reusing across the U.S.
Where Sustainability is Headed
Sustainability has become non-negotiable across all businesses and categories. Venture capital and private equity firms invested $9 billion last year in sustainable technologies. Brands that don’t shape up will never be able to catch up, especially as technology developments lower the price of sustainable products and increase the transparency of corporate sustainability efforts. COVID-19 has cemented the shift from “me to we”, giving brands an opportunity to pivot and embed sustainability across their company and offerings, from supply chain to products and services.
As we head towards 2021, we expect to see new technologies accelerate the sustainability capabilities of companies, and economic incentives will continue to make sustainability a necessary investment. Electric vehicles, increased battery capabilities,renewable energy, carbon capture technology, advanced analytics and predictive technologies, the Internet of Things, and blockchain will all play essential roles in embedding sustainable models and infrastructures throughout a company. As companies recover from COVID-19, they will be able to reinvigorate sustainability goals and use the time to embed sustainability into their core. Meanwhile, new media technologies like VR, AR, visual search, and the metaverse are likely to come to the forefront of sustainability communications and consumer experiences.
As consumers continue to scrutinize brands’ efforts, we will likely continue to see a rise in aggregation platforms that act as third-party certifiers to hold brands accountable to their sustainability goals. This will enable people to worry less about brands that are prone to greenwashing and increase trust. Many of these platforms will create their own requirements for participation, and are likely to focus on different elements (e.g. transparency vs. action vs. B-Corp listed). These platforms will help aid discovery and increase understanding of sustainability efforts.
Sustainability is the future of the business world. In 2019, 184 CEOs of major U.S. corporations signed a “stakeholder capitalism” pledge to generate a more sustainable world. Harvard Business School released an “Impact-Weighted Accounts Initiative” this year that showcases the “true profitability of companies” by factoring their environmental impacts (and as of next year their employment and product impacts as well) into their profits,which in some cases, reduced overall profits to zero. We can expect to see many more initiatives to come, not just from individual brands but from collections of companies as we rush to right our quickly tipping world.