There are two explanations for the shift to consumer facing, brand-led sustainability initiatives.
First, most corporate contribution programs in the past were disconnected from their brands, products and customers. As a result, they were diffused, unfocused and low impact. Rather than being tied to well-thought-out business objectives, contributions often reflected the personal beliefs and values of individual executives or employees. And unfortunately, because corporate philanthropy is by its very nature not part of the business model, it is not appropriate use of shareholder funds or sustainable.
The second explanation is the rise, greatly enabled by technology, of social intrapreneurs who have reached out to multinational corporations and shown them how their brands can help develop and promote practical solutions to social and environmental challenges.
Luckily the business world, for the most part, understands the issue. The main question for most executives is not whether, but how to do it? Here we see a major shift as companies start to see the value of engaging consumers in the sustainability movement. This profound shift in the interaction between the state, the individual and the market is driving corporate responsibility, perhaps nowhere more than amongst fast-moving consumer goods marketers.
Research shows that for these marketers it is generally the consumer, not manufacturers or retailers, that have the biggest impact on the environmental footprint of a product. Across a portfolio of products, we can estimate that between 70% and 80% of the carbon footprint, 30% to 50% of the water footprint, and more than 90% of the waste footprint is determined by consumer behavior.
Therefore, from the data, marketers clearly cannot meet their commitments to sustainability through their operations alone. To unlock the economic value they must speak with their customers and establish new platforms that enable behavioral change via innovative communications and services.
For the companies who get it and innovate, the rewards will be high because they are riding a wave of rapidly-changing global consumer attitudes.
Consumers are calling on companies to take responsibility for addressing the environmental and social impact of their products and services. To back this up, research shows that 79% of consumers would rather buy from companies who are doing their best to reduce their impact on the environment. And 74% of consumers believe that they can actively contribute to solving climate change. Interestingly, developing countries index higher than the developed ones – implying an even greater urgency for multinationals to step-up their engagement of customers in both North America and Europe.
Only by involving the consumer can the sustainability agenda get to where it needs to be. However, companies will need to resist the temptation to greenwash--they'll just get caught out--and instead become more open and inclusive to get their customers and consumers directly involved in their efforts.
From our work, the best way to achieve this is to embed social and environmental sustainability in the brand, product and service experience. That way sustainability is core to the business model and its impact can be measured along with the triple bottom-line of people, planet and profit.
Fortunately multinationals are starting to see the economic potential of integrating sustainability systemically into their businesses. By doing so, they will leverage the hundreds of millions of interactions they enjoy everyday with people all over the world enabling them to make a difference and bring about positive change. It is an opportunity that cannot be missed, although most companies are just starting to scratch the surface of the potential for business models and applications that can contribute to a profitable and sustainable future.
Daryl Arnold is the CEO of Newton Circus in Singapore. Previously, he was based in Shanghai, where he founded the digital communications agency Profero and served as its group CEO.
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