Sustainability is getting more serious

Major CPG groups are currently in the news because of sustainability, whether that’s Unilever drawing back from lofty goals and focusing on material impact, or brands like Coca-Cola and Danone under fire for what have been called misleading green statements. 

Why changes in sustainability matter

Sustainability is getting a lot more serious, according to research for the Marketer’s Toolkit 2024, with recognised standards up by 12 percentage points year-on-year. This new seriousness is reflected in broader academic research that has also noted how sustainability is - in the most effective instances - moving away from PR territory and toward a navigational tool to make it through the trade-offs involved in major business transformations and complex stakeholder engagement.

CPGs under fire

Coca-Cola, Danone, and Nestle stand accused of misleading claims about their use of recycled materials and about how recyclable their packaging is.

"Using '100% recycled/recyclable' claims or displaying nature images and green visuals that insinuate that plastic is environmentally friendly is misleading consumers," said Ursula Pachl, deputy director general of BEUC, an organisation making the complaint to the European Commission, in comments to Sky News. 

It represents one of the risks of sustainability messaging when it comes to large companies under pressure to make changes and respond to consumer demands. 

Unilever changes track

Unilever, meanwhile, has shifted its ESG goals to be less aspirational and more tangible, with new CEO Hein Schumacher saying that the new regime will closely align sustainability goals to have a material impact. 

This is partly a reaction to the backlash of these issues, particularly in the US, where they are derided as “woke”, but it is also a tacit acknowledgement of a more realistic time in the sustainability conversation: that methods and timeframes are necessary. Ironically, it has been argued, a 2040 or 2050 target is less useful than a realistic target that can be achieved in the next few years or sooner. 

A new place for sustainability

CSOs might have some sympathy that their role is complex, multi-faceted, and poorly understood, while taking on responsibility for a vast and ever-evolving set of variables and tasks. 

“Expectations about the role [of the chief sustainability officer] are both incoherent and grandiose,” and often don’t include the power or authority to hit those expectations, note academics from the universities of Oxford and New York, writing in an HBR review about the evolution of the job. 

Effectively, CSOs aren’t useful for talking about the nice stuff in a CSR report. At their best, rather, they are experts in the ethical, technical, and operational trade-offs that are part of major business transformation and future-facing decisions. An example lies in the recent boom in electric vehicles, which on the surface appear far greener than petrol cars but involve rare materials often drawn from problematic sources. 

“Today’s CSOs need the skills to connect sustainability efforts with the company’s main goals, making sure that resources and actions are focused on creating long-lasting value,” say the authors in HBR. 

Based on extensive interviews with sustainability departments and investors, companies should consider three main shifts: 

• Give CSOs a say in strategy and capital spending decisions, based on the idea that strategy is as much about what not to do as it is about what to do. CSOs at top companies help to improve not only financial performance but also aid the organisation’s risk profile. 
• Engage more with investors. As ESG ideas have moved beyond investment firms’ specialist and often non-financial ESG groups, some companies are hearing from investor analysts that they want the CSO present during financial reporting events - both as an acknowledgement of the interest in these issues and of the company’s intent to address them.
• Establish measurement and rigour similar to that expected of the financial department; better still, these measurement and reporting standards should help C-suites and boardrooms understand the future in the same way that finance departments currently help them understand the here and now. 

Sourced from Green Biz, Sky News, Harvard Business Review, WARC