When Patagonia launched its Responsible Economy campaign last fall, VP of Environmental Initiatives Rick Ridgeway eloquently summed up the ‘elephant in the room’ of capitalism: Growth is not sustainable. Ridgeway accepts that evolving from our current economic system will be especially challenging for larger companies with insatiable IPOs, but I’d like to share some ways it not only can be done but is being done.
Corporate social responsibility has been a fantastic gateway for newcomers to sustainable business values, allowing a brand to better understand its impacts and act as a baseline to refer back to over time.
The good news for anyone looking to pitch CSR to their company is that there’s a clear ROI angle to be played. Reputation Institute’s 2013 Global CSR RepTrak® 100 study found that 73 percent of global consumers surveyed are willing to recommend companies that are perceived to be delivering on their social responsibility programs.
The Importance of Belonging in a Functional Future
Join us as TRU Colors Brewing's Khalilah Olokunola and Unilever's Tish Archie Oliver share lessons learned from two very different company journeys toward creating a culture of inclusion — Tuesday, Oct 18, at SB'22 San Diego.
If you have dabbled in CSR and have implemented some positive changes, seen positive feedback internally then the next natural step is to reach the industry standards and get some credit. In return you earn a badge of honor and a partner who can help you stay on track. We recently saw IKEA have their standard revoked and quickly reinstated by the Rainforest Alliance as an awkwardly public example of this type of relationship. As with any relationship worth having, there will be ups and downs but you will ultimately make each other stronger.
See what standards/labels/awards your competitors have and reach out to their certifiers. Find out what it would take to reach or surpass them. Take advantage of alliances/groups/initiatives in your industry to find out what is working well; if they don’t exist yet, you can work together to build your own — take this recent example from the auto industry.
- Start a spin-off
Some companies have found transforming their brand completely is too big a risk or unfeasible due to shareholder commitments and C-suite concerns. Creating a separate entity to lower the risk on brand perception and/or balance sheets can be a way forward.
BMW i is a fantastically ambitious case where the parent company invested $2 Billion into a sub brand to reimagine their cars and embed sustainable values into every aspect. This was in-part made possible by BMW remaining a private company and therefore more agile when green-lighting company shifts.
Ronald Schaich, CEO of Panera Bread, didn’t have this advantage and knew his board would be skeptical of his vision of “Pay what you can” restaurants so created a nonprofit spin-off from the Panera brand.
- Knead, fold and bake sustainability into your brand
Clarke had the leading share of the pest control market and could have comfortably continued scaling under the same business model but their CEO, John Lyell Clarke decided they could and should do better. He engaged his employees and board for their insights on the vision and execution, earned their trust and recreated their brand. He succeeded and has seen their market segment expand even further in the process while creating a happier workforce with a lower turnover rate.
Social enterprise is typically associated with startups, but these will be the brands of tomorrow. They have found a way to entwine profit with purpose so their success means success for others. TOMS Shoes, probably the best-known proponent of the "buy one give one" model, recently launched its Roasting Company, proceeds from which will help provide clean water to developing communities around the world. Models such as this that tie economic gain to social gain are worth percolating through your own brand. Another example would be ecofiltro, which is creating microeconomies in developing countries through local manufacture of its water filters.
- Collaborate rather than decimate
Business and economics in the Western world is almost always framed as a combative competition. Sun Tzu’s The Art of War is touted as a revered set of business guidelines, we revel in competitor failures and secrecy during internal innovation is of the utmost importance. Competitive goals can be shifted in a positive direction but a step beyond that is to become a pacifist and start working for mutual benefit. In 2012 USPS, the world’s largest postal service, and UPS, the worlds largest delivery company formed the Blue and Brown Sustainability Initiative. By sharing transportation to cut fuel costs both made significant financial savings, reduced their environmental impact and turned a supposed enemy into an ally.
Before you write me off as a hippie, let it be known this collaborative approach is working its way into macro-economics. Earlier this year Islamic Banking made its way into the Western financial markets when UK Prime Minister David Cameron announced an Islamic bond would be issued in the UK. Islamic banking integrates morals into investment decisions and collaboration in the execution. Instead of buying a loan from the bank, the bank buys equity in your investment and you share the spoils, you pay no interest on the loan and gain a useful partner. Islam comes into it as the banks will only invest in tangible assets in line with their religious values such as benefiting society and the environment. The relationship is a partnership for good based on mutual respect and co-success. Could your brand be working with someone rather than against? Groovy.
Open Innovation is gaining momentum e.g. AksoNobel's work in transportation. Future500’s Bill Shireman specialises in mediating between rivals. Watch his 2013 talk on how to bridge divides; see Unilever's Gail Klintworth discuss Leading for the And; hear Terracycle CEO Tom Szaky describe how his company is successfully partnering with brands to turn their trash into treasure.
- Profit collectively
Post Growth Institute's Donnie Maclurcan spoke at our New Metrics conference last year about the emerging Not-For-Profit Economy. There is the common misconception that not-for-profit means no profit when really it just means smarter investment. There are already strategic advantages to being a not-for-profit such as lower taxes and employee turnover, but as society’s thirst for purpose with profit continues to rise these brands will acquire a larger market share as well.
In the wealthy economies, thanks to abundance of choice, the longing to be more connected to our purchases is steadily being revealed and not-for-profit service/product providers have the edge. This is most evident in the food industry where Organic, Free Range, Fairtrade, Locally Sourced, GMO Free, Zero Trans-Fat have all been added to the public vernacular and shaken up the industry. The auto industry is shifting to hybrid or electric mobility; white goods are competing based on efficiency; reclaimed material demand is increasing and this interconnected, social world we now live in has made raising awareness much easier and greenwash much riskier.
We’re seeing plenty of large companies partnering with NGOs and charities so a natural next evolutionary step is that they converge. Those who know how to make money responsibly merged with those who know how to put money to good use would be a potent concoction.
Listen to Maclurcan’s SB talk on the emerging Not-For-Profit Economy to understand the benefits of being a not-for-profit brand. Get some great data supporting the customer trends from Chip Walker’s SB talk about the rise of “mindful purchases.”
- Change the game
Pepsi and Coke, McDonald's and Burger King, Nike and adidas are well-known brand rivalries. The punches thrown are typically market share, resources amassed and share price but more recently a new battle ground has been emerging — the Good Market. My favorite example of this is Nike releasing their Better World initiative and adidas revealing their Better Place initiative at roughly the same time in 2011/2012. Both were trying to claim the crown of the most consciously positive brand in their industry. These are both companies with vast reach and influence competing to be recognized as the better for people and planet instead of on product performance. This race-to-the-high-ground trend has incredible potential by refocusing talent on doing more good in the world rather than trying to out-squeeze their profit margins or out-shout each other.
Imagine a marketing plan that involved replanting the most rainforest, completely wiping out a disease or building vast community gardens. It could reconnect brands with people with authentic engagement that actually improves lives. Make positive impact a regular consequence of your work and you transform your competitive landscape into a healthy place to be. Cause Marketing has been around for a long time but if you make doing good part of your brand proposition then it can become just good ol’ pure Marketing.
Hear Chipotle's Christopher Arnold describe bringing ethical farming into the fast food industry and Nike's Dave Cobban describe Nike’s Better World vision in their SB '12 talks.
- Flip Icarus the Bird
It’s easy to divide opinion on how or if to regulate the “free market” but I’d argue with the premise. I’m free to eat as much chocolate as I want right now; I eat as much as I want and I self-regulate how much should be in each portion (admittedly some weeks better than others). There’s not a condition that each time I eat a portion it needs to be larger than the previous — I’d be dead in a month! Public corporations in the US are bound by law and culture to perpetually increase gains for their shareholders. To me, this isn’t freedom — it is voluntary enslavement. Going public can open many doors for ambitious companies but it’s ultimately chocolate suicide. You can’t expand forever without losing product/service integrity or ethical integrity or both — you will sugar crash eventually.
Patagonia’s aforementioned Responsible Economy campaign aims to, in the company’s words, “...confront the ‘elephant in the room’ — growth-dependent capitalism.” Patagonia first raised eyebrows with its "Don’t Buy This Jacket” ads and has even mapped out where it thinks its peak profitability should be in the future. What will its staff KPIs be then? A fascinating prospect. Such bold ambitions are only possible because Patagonia understands its core brand values extremely well and embraces peering inward to better itself. Create a brand with a pure heart and it will become much easier for sustainable values to proliferate through all of your business practices.
I see the first seven steps as stepping stones for business to slow and curb runaway capitalism so it can bend into a sustainable economy. An economy in which people, planet and profit form a mutually respectful, consciously interdependent relationship that can lead to prosperity for all. Whether you’re part of a brand making step 1 or 7, take pride in your contribution to this shift and keep pushing to get to the next one.
Let us know which step you are working on now and any advice you have for taking them in the comments below. I'll be eating chocolate in the mean time.