At SB’s latest Trend Watching event, experts across a variety of fields and industries offered insights into how purpose-driven brands can effectively activate on everything from marketing to effective leadership to climate justice in our post-pandemic world.
For many brands, 2020 was a year of reacting — to the pandemic, the racial justice protests, and the worst global economic crisis in at least a decade. As hope emerges that normalcy may be near, sustainable and ethical companies will have to once again be at the forefront of redefining growth — and ensuring that regenerative, equitable solutions are at the forefront.
That was a common theme during Sustainable Brands™ (SB)’ 2021 Trend Watching virtual event on Tuesday — with participants representing brands, civil society, and entrepreneurs from across the US sharing insights on a variety of timely topics.
The latest on purpose- and stakeholder-centric leadership
2020 was not exactly characterized by great news; however, in the wake of great challenges, some positive trends have emerged that give reason for optimism regarding positive purpose and stakeholder focus. In fact, according to Dimitar Vlahov, SB’s Sustainable Business & Brand Transformation Expert, reflections on last year’s crises may be leading up to what he referred to as the "Great Restart" or the "Great Reset." In a recent Harris poll, 85 percent reported an increase in empathy, 89 percent want companies to 'hit reset' and be more stakeholder-centric, and 84 percent 'will remember' how stakeholders were treated during the pandemic.
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So, with these optimistic trends, is regenerative thinking on the verge of going mainstream? Is this the tipping point we have been waiting for when companies are prepared to shift their mentality and practices towards true sustainability and positive purpose? According to VeraWorks founder and president Bea Boccalandro, we have a unique opportunity to do just that as the pandemic and other social and environmental crises have boosted empathy, awareness and desire to drive change. She further noted that responsibility and desire to drive change is now extending past the Chief Sustainability Officers — and making CSR champions out of CFOs, CMOs and beyond.
However, although the current momentum and trends may be changing the perspectives of a diversity of stakeholders, there is still much time-sensitive work to be done. It is imperative that we fully capitalize on and seize this moment, as people are more ready than ever to use their roles to drive change. In her new book, Do Good at Work, Boccalandro emphasizes how anybody in any position can integrate sustainability into their jobs and drive change.
HIP Investor CEO Paul Herman then described how the five crises of our time (health, wealth, earth, equality and trust) demand three main items to drive positive purpose: new metrics, innovative investing, and multi-sector solutions. There is a need for new, innovative metrics to help measure impact and stakeholder value creation, but also act as indicators of change or the gap between policy and impact. Next, we need innovative investing to not only help drive change, but also to drive better financial performance — as sustainable top performers have been proven to generate better earnings. Further, appetite for sustainable finance products is growing fast; ESG and SRI products have recently reached $40 trillion in assets under management, with no signs of slowing down. Finally, we need multi-sector solutions and to evolve past public-private partnerships to multi-sector partnerships, where diverse stakeholders collaborate to drive solutions that benefit society as a whole.
The search for truth, trust and wellbeing in our digital lives
With all the misinformation circulating these days, there seems to be a growing disconnect between narratives and reality, paired with a growing lack of public trust. Vlahov posed the question: How can brands gain and build trust in this ‘post-truth’ society?
Jason Burnham, founder of strategy firm Culture Design, pointed out that targeted advertising and algorithms that once sold products have evolved to sell ideologies, and may have diverged from reality in the process. To combat this divergence, we need a strong consensus of what the facts are, to align around common truth and science, and drive this at the educational level. Secondly, we need to broaden the scope of what it means to be a sustainable company to encompass truthfulness, the allocation of resources, and honest communication. For example, it should be the responsibility of companies to ensure that they are not investing in the spread of misinformation, and that all business decisions are in line with the values they communicate. Burnham emphasized that this will require both top-down and bottom-up approaches.
Wilhelms Consulting Group founder Pamela Wilhelms built on this, adding that becoming a more truthful and trusting society will require more than a shift in resource allocations — but a shift towards regenerative thinking and a deepening of core values. She explained that people are ready to change personal purpose and improve the integrity of our systems, and most are more motivated by hope than by negativity. She then added that these changes must occur at the cellular level; just as humans become sick and healthy at a cellular level, C-suite decisions often bend to pressure at local levels, and this can lead to larger systematic changes.
Brands impacts, and missed opportunities, for fostering consumer behavior change
Etienne White, VP of SB’s Brands for Good initiative, presented key insights from its 2020 Socio-Cultural Trend Tracker survey — which surveyed 1,000 consumers from the US regarding their attitudes towards sustainability, and their opinions on what brands are doing to help them achieve their personal sustainability goals. Key findings included:
71 percent of consumers responded that social and environmental issues are equally important.
There is bipartisan preference for sustainable products; 79 percent of responding consumers — 89 percent of liberals and 74 percent of conservatives — agree that they would switch to a more sustainable brands if all other attributes were equal.
Most consumers could not name a brand that is going above and beyond on sustainability issues; and, when specific brands were called out, companies such as Patagonia and Nike had significantly fewer mentions than Amazon, despite their strong environmental and social messaging.
For certain issues, there seems to be a gap between consumers who are willing to change their behavior and those who feel that brands are helping them achieve their aspirations. For example, while 67 percent of consumers said that they would be willing to eat less meat, only 33 percent responded that brands and companies are helping them do that.
When asked about the most common barrier to sustainable living, the most common response (43 percent) was that it’s too expensive.
The findings point to a variety of potentially missed opportunities for brands to influence more sustainable consumer habits and lifestyles. White invited attendees to download the report or reach out to her directly to learn more.
2020 changed marketing forever: Marketing to Gen Z
Jeff Fromm, president of FutureCast and partner at Barkley, literally wrote the book on marketing to Gen Z. At Trend Watching, he offered some key insights into the matter — and how 2020 has forever changed the perspectives of this critical consumer group. He began with a brief characterization of generations and the major events that shaped their identity: While Boomers were heavily influenced by events including the Vietnam War, Woodstock, and the civil rights movement; Gen Z is influenced by things such as COVID-19, marriage equality, and the rise of populism. He then went on to explain that while generations are far from homogeneous cohorts, Gen Z can be characterized as having a tremendous appetite for social justice, old souls with complex worldviews, and a strong focus on the future. Further, they intentionally train algorithms like puppies to retrieve what they desire; however, they are more reluctant to share data with brands they don’t trust.
To effectively market to Gen Z, transparency is the price of admission and social neutrality is a failing brand stance. While Gen Z gets a reputation for being disloyal, they are far from it. They are in fact discerning, and they "day trade" up strong brands that address the issues they care about, and they pay premiums for the brands that reflect their values.
Fromm then introduced the concept of the “Purpose-Profit Cycle,” which is being implemented by the best-in-class brands that resonate with Gen Z:
Lasting consumer behavior change remains a holy grail for brands
Despite the daunting challenges ahead, many participants expressed hope for the future. One key driver is the aforementioned emergence of millennials and Gen Z, whose purchasing decisions are driven by authenticity and sustainability. As examined earlier in the day, the choices they make — and how companies respond — will shape not only companies' longevity but societal health.
Take, for example, shifting our food system from one that is wasteful and input-intensive to one that is sustainable and local. This is often cited as necessary for planetary and human health, but changing diets and habits is tough — though there is evidence that younger generations are leading.
“Millennials are parenting completely differently when it comes to climate sustainability. Food is a great example ... The younger you are, the more plant-based you eat,” said Jessica Appelgren, VP of Communications at Impossible Foods. “Changing the food system is going to take a generation to manifest.”
Effective approaches to meaningful goal-setting
In another session, participants dug into how goal-setting can help brands make actionable, measurable plans when it comes to critical environmental thresholds. Taking a science-based approach can help companies scale up action, said Kevin Moss, the Global Director of the Center for Sustainable Business at the World Resources Institute.
“Knowing what a company needs to do to meet science-based targets often leads to a conclusion that incremental improvement will not be sufficient, and innovation is going to be needed,” Moss said.
One area that needs more attention — and funding — is oceans. The plastic crisis has garnered a lot of attention over the past few years; but thus far, not enough is being done to stem the production or flow of single-use plastics into waterways. According to Lina Constantinovici, founder of Innovation 4.4, this is part of a larger gap when it comes to ocean health overall — as UN Sustainable Development Goal 14, which focuses on Life Below Water, is next-to-last when it comes to funding.
“Healthy oceans are a pre-competitive condition that are necessary for both addressing climate change and enabling commerce and economic prosperity,” Constantinovici said. This will require scaling up collaboration between competitors. “All oceans issues must be addressed collectively.”
Avoiding contradictions between branding, CSO and government affairs
Increasingly, sustainable brand leaders recognize that effective public policy will be critical in establishing "rules of the game" that foster sustainability at scale. Yet, historically, CMO, CSO and Government Affairs functions have operated independently — and, too often, in silos. Recent reports show that many leaders are not fully aware of their company’s public policy activities, and do not have mechanisms to ensure they are aligned. In an environment of increased public scrutiny and distrust, how can organizations avoid costly and embarrassing contradictions between their political activities and their stated brand promises or CSR/ESG commitments? How can they address the challenges of supporting the public policy needed for the transition to long-term sustainability at scale?
Elizabeth Doty — Director of the Corporate Political Responsibility Taskforce at the University of Michigan’s Erb Institute for Global Sustainable Enterprise — described this issue as today's "blind spot in brand thinking," similar to how supply chain risks used to be for brands. While it is no easy task to be completely consistent among competing business interests and imperfect internal communications, contradicting your CSR commitments with political alignments is a major source of mistrust and damage to reputation. Further, an otherwise-stellar track record of adhering to brand values can be called into question with one inconsistent misstep. Climate Voice founder and ED Bill Weihl described how climate contradictions are one of the most common forms of such risks. For example, during the recent election, many companies emphasized the need for strong climate policy, while funding candidates who were climate deniers.
So, how can brands avoid appearing hypocritical in these complex modern times of increased political and environmental awareness? Doty says that CSR needs CPR (Corporate Political Responsibility). This will require participation for government stakeholders and a clear mandate attached to CSR commitments. Further, companies need to change their scope of materiality to include their sustainability agenda, and foster better internal communication — and most importantly, they need to change their systems thinking to form a clear view of the holistic value they bring to society (their license to operate), and act accordingly and consistently.
Brands can implement CPR through:
Transparency: Do we disclose political activities to relevant stakeholders?
Accountability: Are our political activities aligned our values, purpose, and commitment to all stakeholders?
Responsibility: Do our political activities support the system on which markets, society, and life depend?
When it comes to climate issues, Weihl emphasizes that companies need to recognize and adopt the perspective that climate change is an existential threat to their business, and act accordingly. This is especially important as their employees increasingly see it as threat to their own futures.
The path to ‘stakeholder capitalism,’ social justice and equity
Customers are important to brands; but 2020 also raised awareness of the importance of being proactive when it comes to ensuring their employees, especially those who work far from corporate headquarters, are compensated fairly. That, according to Lorraine Wilson, Managing Director Investment Products at JUST Capital — a nonprofit that measures and ranks companies on the issues Americans care about most — has thus far been lacking.
“Too often, workers are seen as a cost center, and not as this valuable group that is supporting the company,” Wilson said. “Almost 50 percent of workers at Russell 1000 companies are not able to make ends meet — 10 million American workers.”
The pandemic, which came alongside a massive shift in wealth towards the richest, only accentuates the need for companies to directly address the livelihood gap. Wilson emphasized that there needs to be a shift in thinking, in which companies recognize the value of workers, and that there are win-win solutions.
“Companies can address all of their stakeholders' needs, and still remain profitable,” she added.
Another critical challenge will be the climate and environmental crisis. 2020 was expected to be a year of progress, but with COVID-19 causing both COP26 and the UN Summit on Biodiversity to both be canceled, that was not to be. Still, the horrific fires, powerful cyclones, and historic flooding demonstrated that climate solutions are needed now.
While introducing B Lab’s Climate Justice Playbook for Business, Ellonda L. Williams — the organization’s Director of Justice, Equity, Diversity and Inclusion — emphasized the oversized role that businesses play as the world’s primary source of greenhouse gases; and therefore implicit in how the climate crisis disproportionately affects black, indigenous, and people of the color the most.
“This resource calls on the global business community to make a fundamental mind shift from exploitative approaches that perpetuate climate injustice, to equitable and regenerative ones,” Williams said.
2020 was a watershed year for human health, climate, and justice; and saw an unprecedented rise in corporate commitments and pledges. Now, it’ll be up to brands to act and ensure their words lead to real action towards a more equitable, sustainable future for everyone.