Brand owners heighten focus on sustainability

23 June 2010

NEW YORK: An increasing number of major brand owners are putting sustainability at the heart of their overall strategies, according to a report.

The United Nations Global Compact, which brings together leading companies, NGOs and pressure groups to address environmental issues, partnered with Accenture to survey 750 chief executives.

Some 96% agreed this area should be "fully integrated" into corporate goals, while 93% thought dealing with matters like climate change would be of vital importance to future business success.

Unilever, the FMCG giant, has previously been recognised for its work in this field, such as by forming a tie-up with the Rainforest Alliance to farm black tea in an eco-friendly way.

"The financial community is increasingly looking at companies and rewarding those that think smartly about their use of resources," Paul Polman, chief executive of Unilever, argued.

Another organisation that has derived meaningful returns from this approach is Siemens, which generated €23bn in revenue from its range of energy-efficient goods and services in 2009.

This marked an uptick of 11% year-on-year and reduced the emissions of its customers by 210 million tonnes, the same amount as created by Berlin, London, Munich, New York and Tokyo each year.

Natura, the Brazilian cosmetics firm, secures 80% of the materials for its products from renewable sources, and will provide staff with 100 hours of relevant training this year to improve levels of knowledge throughout its workforce.

Alongside building a bond with its target audience, Natura's sales have climbed by nearly 40% in the last three years, well ahead of its peers in the beauty industry.

This is in keeping with the views of the 72% of the contributors to the UN/Accenture study who said "strengthening brand, trust and reputation" was the strongest motivation for heightening their green credentials.

"Sustainability is essential to building our brand and our trust with consumers," Didier Lombard, chairman of France Telecom, said.

Changing popular perceptions commanded particular attention, as 58% of respondents to the poll agreed shoppers were the most important stakeholders when it came to shaping the environmental agenda.

"Sustainability started as a moral obligation, but has now become a key differentiator for consumers," said Sung-joo Kim, ceo of South Korean fashion and luxury retailer Sungjoo Group.

In terms of implementation, 91% of participants expected to use new technology like social media to achieve their objectives related to corporate social responsibility in the next five years.

Nestlé has recently faced a backlash on sites like Facebook and YouTube after Greenpeace alleged it had been sourcing palm oil from questionable sources.

However, Nestlé has attempted employ this same channel to engage its customers, for example through holding Q&A sessions on its Creating Shared Value forum on Facebook.

"Consumers are asking who is behind the brand, so we have to make it visible," Paul Bulcke, CEO of Nestlé, suggested.

GlaxoSmithKline has adapted its model to suit individual markets, such as by cutting the price of cancer drug by Cervarix by 60% in the Philippines, improving popular perceptions and boosting sales by 600%.

The healthcare group is now rolling out a Regional and General Manager Trust Framework to produce more of these mutually beneficial solutions.

"To be a successful and sustainable business, we must fulfil our social responsibilities and build trust with our stakeholders," said Andrew Witty, GSK's chief executive.

Some 88% of ceos were of the opinion that a greater scrutiny of supply chains would be imperative going forward, while sharing best practice guidelines was another area of emphasis.

Data sourced from Accenture; additional content by Warc staff