What Sustainability Means—For Businesses and Their Brands
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What Sustainability Means—For Businesses and Their Brands
(A six-minute read)
Sustainability is not optional
Whether or not the majority of CEOs privately worry about climate change, over 90 percent say that commitment to sustainability is essential to their company’s success. The competitive advantages are many, and have little to do with politics.
Sustainable brands are magnetic—to consumers, employees, and investors
Photo by ThisisEngineering RAEng on Unsplash
Consumers want to buy from sustainable companies. Unilever’s “sustainable living” brands—including Ben & Jerry’s Dove and Knorr—have outgrown the rest of the business since 2015, and by 2021 their growth was doubling that of the company’s other brands. The U.S. Chamber of Commerce says U.S. shoppers were on track to spend close to $150 billion on sustainable products in 2021.
Recruiting and hiring top talent is a critical indicator of future success; it impacts everything from innovation and productivity to company culture and retention. “Most millennials would take a pay cut to work at a[n] environmentally responsible company.” These employees are also likely to contribute to your corporate sustainability initiatives and participate in proper recycling and efficiency practices. Not to mention that employees working at companies invested in sustainability were found to be 16% more productive.
More and more investors are moving their portfolios to sustainable or ESG investing. Read on for more about ESG below. Morgan Stanley and S&P Global Market Intelligence reported that ESG investments outperformed their traditional counterparts during the pandemic. The Motley Fool, a popular source of consumer investing advice, reports that in 2021, over one-fifth of institutional investors considered ESG factors in the majority of their portfolios after saying they would not be a future consideration at all only two years prior.
Sustainability is a win-win for the environment and the bottom line
Increased energy efficiency initiatives that also happen to lower utility bills can be as simple as switching to LED lights, using motion sensors, or investing in more efficient manufacturing equipment, computers, and break room appliances.
Cost-saving water conservation measures include low-flow toilets, leak detection technology, rainwater harvesting, water reuse, and recovery.
Reducing waste not only puts less garbage into landfills; it cuts down on waste disposal fees. Look for ways to reduce and reuse, like designing new products from waste or using waste material as fuel.
While creating closed-loop supply chains is a highly complicated task, reducing delivery trips is a simple example of sustainable supply chain management that also saves money.
There’s also evidence that sustainable brands are more protected during recessions, economic downturns, and times of crisis—especially for long-term business continuity.
Sustainability isn’t only about the environment
Defining ESG and why it matters
Sustainability no longer refers exclusively to environmental issues. In March of 2022, the SEC proposed requiring publicly traded companies to include some form of environmental, social, and governance (ESG) disclosure in annual reports. As the Harvard Law School Forum on Corporate Governance spells out in, Navigating ESG Disclosure Regulation for US Public Companies,
“‘Sustainability’ encompasses the full range of initiatives designed to promote the long-term welfare of a company, its multiple stakeholders, society at large, and the environment.”
Common ESG priorities include:
Environmental sustainability encompasses greenhouse gas (GHG) emissions, energy efficiency and energy mix (what percentage comes from low carbon sources), water scarcity and conservation, pollution, and waste generation management.
Social impact considers the well-being of all stakeholders via labor standards (fair wages, no child labor, worker safety), supply chain management, workplace diversity, product safety and usefulness, and community impact. When choosing a framework for measuring social impact, companies can look at existing frameworks like B Impact Assessment, Sustainable Development Goals (designed by the United Nations), or the Global Reporting Initiative (GRI) Standards.
Corporate Governance relates to CEO and executive compensation, diversity, equity, and inclusion (DEI) metrics for a company’s executives and board of advisors, the structure and transparency of the board, political contributions, lobbying, and corruption oversight, as well as data security and customer privacy.
There’s tremendous pressure in today’s business environment to manage ESG risks. ESG ratings purport to measure a company’s ability to weather those risks. Yet there is no single framework or rating system. A growing pool of third-party firms like Bloomberg, Deloitte, Dow Jones, Morningstar, MSCI, Sustainalytics, and Thomson Reuters evaluate and rate companies on ESG performance for investors and financial advisors. Still, each uses different frameworks, making it impossible to comply with all of them.
Internal audits may also be useful to show where a company is starting from and identify where improvements can be made.
Greenwashing and the importance of a non-fiction sustainability story
The public has access to a wealth of information at their fingertips. Savvy designers and consumers have become wary (and weary) of greenwashing, defined by Merriam-Webster as,
“the act or practice of making a product, policy, activity, etc. appear to be more environmentally friendly or less environmentally damaging than it really is.”
One commonly shared warning sign of greenwashing is the use of natural imagery. This is a tough one, because it’s not unusual (or out of line) for a forest products company to use images of trees. Companies should use imagery to communicate real initiatives they can back up with evidence and not superficial images of the natural environment that have nothing to do with the business.
Five “shouldn'ts” to help avoid the perception of greenwashing suspicions and what to do instead:
Photo by Toa Heftiba on Unsplash (edited)
Companies shouldn’t:
Use vague, unregulated terms like natural or sustainable without defining how they apply to the business or products.
Use superficial feel-good images of nature or images of diversity without a valid reason.
Make unsubstantiated claims.
Make irrelevant claims like claiming a product is free of a substance that has already been banned for decades.
Misdirect attention as when a company points to a reduced carbon footprint in the US while increasing emissions in other countries of operation.
Companies should:
Explain what they mean by terms like “recycled,” “carbon-neutral,” “climate positive,” or “sustainable,” as well as how they reached that conclusion about their products or manufacturing processes.
Use relevant images of raw materials, environmental initiatives, real employees, and workplace programs, and avoid tokenizing employees of color in company marketing materials.
When possible, point to regulated certifications like LEED, B Corp, or Energy Star, and/or share evidence of the claims being made.
Talk about relevant and current initiatives that really do set the product or company apart from its competitors.
Build a genuine sense of trust and shared goals through transparency and honesty.
Transparency, authenticity, and stakeholder engagement protect against claims of greenwashing
It’s not worth hedging on sharing dirty details or overstating sustainability claims. The next social media or PR disaster is only a disgruntled employee or reporter away. But it is worth remembering that no company is perfect. With its glowing reputation as a sustainable company, even Patagonia hasn’t achieved ESG perfection and shows up on guilty lists of greenwashing sins.
As in all relationships, customers, employees, and supply chain partners will appreciate being included in an open dialogue—about where a company has been, where it stands right now, where it’s headed, and how it wants to move forward for the planet, and all of us, together.
“It’s a journey, and we’re all stakeholders.”
—Kenn Busch, founder, Material Intelligence LLC and ClimatePositiveNOW.org
Developed by Material Intelligence, ClimatePositiveNOW.org is a sustainable materials education project inspired by a combination of Kenn Busch’s research into the properties of wood-based architectural materials, and his two decades of experience delivering educational content to interior designers and architects.