According to Boston Consulting Group research, companies that embrace total social impact have on average 12% higher operating margins. Is it because consumers are willing to pay a small price premium for brands whose values align with their own? Perhaps there is some price elasticity benefit. It may also be that improvements in hiring, retention, and employee engagement impact operating margins directly. Clearly many companies reduce risks when they embrace the 17 UN Sustainable Development Goals, which were created in 2015 to eliminate poverty and protect our home planet.
In an effort to better understand how brands can embrace sustainability principles, I spoke with Alex Lassiter, founder and CEO of GreenPlaces.
How is environmental justice important to win inside and outside for brands today?
Sustainability is moving from a nice-to-have to a matter of compliance for many companies. It’s becoming a way to create a meaningful brand difference for companies playing offense as opposed to defense. In almost every industry, customers, employees, investors, and regulators are starting to ask hard, important questions about what a company is doing for sustainability. Within the next few years, every brand will be judged, at least in part, by its commitment to sustainability.
Customers — both individuals and businesses — are expecting more transparency from the companies that serve them. On the consumer side, you see this trend in everything from food and fashion to travel and daily life. When a company builds sustainability into its brand and product, consumers love it. A great example of this is bartaco, a carbon-neutral business with a clear sustainability strategy that they communicate to their customers. This strategy pays off, as Forbes reported that consumers are willing to pay up to 10% more for a product that is made sustainably.
This happens often in the business-to-business space, too. Large companies like Salesforce, Volvo, and AT&T are setting their own climate goals. And since a large part of these companies’ carbon footprints are made up of what their vendors and suppliers do, asking vendors to report on emissions is an easy first step to tackling their footprint. They’re asking for this information from all kinds of companies, including those that have obvious environmental impacts (like manufacturers) and those that are less obvious emitters (like software providers.) So a business that knows its carbon footprint and can quickly report the statistics is more likely to win customers. A great example here is Pendo, which measured its carbon footprint, became carbon neutral, and built a sustainability plan that they share with their employees and customers whenever asked.
What are some best-in-class examples of brands acting on their sustainability strategy?
When sustainability is well done, it is 50% math and science, and 50% communication. Math and science is always the first step. A company needs to know its carbon footprint, adhere to an international standard in its measurement, and get as much accurate data as possible. But communication is key, too. Communication can mean marketing to customers, exciting your employees, and reporting on progress to investors. Educating your employees about how they can live more sustainability and teaching them about your own carbon accounting efforts is what some of the best brands do well in sustainability.
A company that did a great job here is Siebert Williams, a New York-based financial services institution. After understanding its carbon footprint, they decided to get their employees involved in a project to make a difference in their own community. When Siebert Williams learned about heat islands (areas in urban, low-income communities with fewer trees and higher-than-average temperatures), they sought out a project to make a difference. They worked with a local non-profit, Trees NY, which identified heat islands in largely minority neighborhoods in the Bronx. With the help of Trees NY, Siebert Williams employees came together and planted 15-foot tall shade trees in targeted areas aimed at reducing temperatures in parks, playgrounds, and near schools. This got employees excited about their company’s sustainability efforts, made a real difference for the local community’s environment, and gave the Siebert Williams brand a story their customers care about.
A brand that manages sustainability well is also engaging its customers. A hospitality brand doing this better than most is 1 Hotels. Their sustainability website is full of real actions they are taking to reduce their emissions and build a more sustainable, carbon-neutral business. Throughout a customer’s stay at any of their hotels, customers learn about ways to be more environmentally friendly in travel and daily life. 1Hotels is doing the hard work to build sustainability into every part of their customer experience, and it pays off with customers.
How will carbon management impact marketing strategy for larger brands in 2023 and beyond?
With carbon management moving from a nice-to-have into compliance over the next few years, brands need to gain visibility into their carbon emissions and build strategies to reduce them over time. Every single industry will need to find a way to do the math and science of sustainability (accurately measure their carbon footprint and build strategies to reduce it) and communicate their progress. Employees, customers, and investors have made this essential — and if marketers want to reach today’s evolving customer base, they are going to have to speak confidentially about what they are doing to track and reduce their footprint.
The best brands in the world will be those who lead their industry, be it restaurants or hotels or software or manufacturing, in sustainable practices and investments. They’ll take on huge challenges, like bringing international supply chains closer to their customers, and find ways to leverage yet-unperfected technologies like Direct Air Capture and bio-jet fuels to reduce their emissions. And they’ll be the best at telling these stories to inspire action from all of their stakeholders.
We believe there is a world where businesses and the planet can thrive at the same time — and our goal is to help make that a reality.
What are a few best practices CMOs should pay attention to?
First, it’s important that CMOs base their marketing in solid math and science. Getting carbon accounting right, adhering to a known standard like the GHG protocol, and being honest about important areas of improvement before marketing yourself as a sustainable business.
CMOs should also be aware of the importance of third-party certifications. Sustainability can be difficult, and it’s a science. Having third-party certifications, whether from frameworks like CDP and TCFD or companies like GreenPlaces, can add validity to your statements.
Lastly, one of the best things a company can do is educate constituents about sustainability. So think about your marketing in terms of helping others reach their sustainability goals, more than bragging about your own accomplishments. If you’ve done something great with regard to sustainability, you should talk about it. But try to use it as an opportunity to teach others — customers, partners, vendors — about the work it took to get there and how they can accomplish the same thing.