Brand giants go green

28 October 2011

NEW YORK: A majority of brand owners are attempting to enhance their sustainability credentials, but many remain unsure about the potential payback from these activities.

McKinsey, the consultancy, polled 3,203 executives across the globe, and found that 62% of the represented organisations were cutting energy use, and that 51% were managing their "corporate reputation" in this and related areas.

Regulatory demands fuelled the response of 46% of firms, another 38% of which had adapted their portfolios to reflect emerging green trends. Providing funds to R&D tasked with creating greener goods was a strategy being pursued by 31% of the firms.

An additional 28% had leveraged the environmental strengths of their existing products to reach new customers. But just 18% of businesses have generated price or market share gains thanks to eco-friendly offerings thus far.

Exactly 33% of the panel agreed operational efficiencies and cost savings were among the main reasons for implementing environmentally-led initiatives, a 14 percentage point lift year on year.

As such, this benefit overtook improvements to corporate reputation, which had claimed top spot in a similar study from 2010, and was mentioned by 32% of participants in the latest round of analysis.

Meanwhile, 31% of the sample agreed sustainability fell in line with their company values, and 27% hoped to exploit untapped growth opportunities tied to this area, up ten percentage points year on year.

Overall, 67% of firms stated environmental matters had been integrated into their official "mission", standing at 60% for external communications, 59% for internal communications, 57% for strategic planning and 54% for marketing.

McKinsey suggested that the leading players in this space were more effectively utilising value-creation "levers" than the norm.

For example, 62% of early adopters financed eco-friendly R&D, 58% championed the green characteristics of their current goods to access new buyers, and 70% had modified their portfolios to meet shifts in demand, well above the average.

Less favourably, only 48% of the executives questioned believed corporate social responsibility efforts would help contribute to short-term shareholder value, and a third took a similar view when looking further into the future.

"These issues play out over the long term," McKinsey said. "It's easier for companies where they are core concerns to understand trends and make strategic bets in advance of consumer preferences, stakeholder pressure, or regulation."

Data sourced from McKinsey; additional content by Warc staff