By Helio Mattar, President & CEO, Akatu Institute for Conscious Consumption
Expectation by most companies is that more sustainable versions of their products should be valued by consumers and hence be immediately preferred over the less sustainable versions of competing ones.
That expectation is especially important in the process of choosing where a company is going to invest. In general, the shorter-term returns are, of course, sought after. The question is: are investments in the sustainability attributes of a company or its products providing short-term returns?
Consumers’ opinion polls indicate that consumers value sustainability attributes and that preference would be given to products with those attributes. The findings of the 2015 Cone Communications / Ebiquity Global CSR study confirm that. Here are some of the conclusions of that study undertaken globally:
- “9 in 10 consumers unequivocally believe companies must operate responsibly to address social and environmental issues;”
- “9 in 10 consumers would like to see more responsible products and services offered from companies;”
- “80% would buy a product from an unknown brand with stronger social or environmental commitments;”
- “71% would pay more for a responsible product to address social and environmental issues;”
- “57% would purchase a product with lesser quality if it was better for the environment and society.”
Despite that context, some companies argue that consumers are not sensitive enough to sustainability, given that they do not change their immediate preference in terms of their buying behavior.
However, in analyzing the possibility of such an immediate and positive response of consumers, it is important to remember the context in which messages, in general, and the sustainability attributes of products, in particular, reach consumers. Consumers are exposed to a myriad of information and messages on an infinite number of themes and issues, all competing for their attention. In this scenario, it is extraordinarily difficult to succeed in immediately changing consumers’ perception of any specific subject.
In the long term, consumers envision sustainability attributes as belonging to a brand. In order to meet this consumer expectation, a company’s brand must be aligned with the sustainability status of its products. For that to happen, the company must disseminate the “right” information on its products, using the right tone and the right language, to convey information on its sustainability practices.
More importantly, an enormous mass and frequency of messages would be necessary for this new brand identity to fully resonate with consumers. In other words, a critical mass of messages is needed to strongly impact consumers and change their perception of the sustainability of a specific brand.
Given the influx of messages attempting to attract consumers’ attention, the existence of such critical mass of communication for a long enough period of time, with the right frequency and mass, is essential to lead consumers to eventually change their outlook on the reputation of a brand and associate it with sustainability attributes. Only then, will they start giving preference to those products and acting as multipliers of this newly acquired outlook to other consumers.
This implies the allocation of an enormous advertising budget and communications effort to that specific brand for a very long period of time, in a consistent and persistent way. That is extraordinarily difficult to achieve on a specific product brand of a corporation that owns and uses many other brands. There is ferocious competition among brands in a corporation for advertising and communications budgets.
Given the number of brands in the market, a strong effort will be needed to solidify sustainability as an important characteristic of a brand’s identity. It is much easier to do that by limiting the effort to one brand. The allocation of the communication and advertising budget to serve several brands leads to a fragmentation, which may not be a problem when maintaining the known attributes of established brands. But it is certainly a problem when one is aiming to change such attributes or embed sustainability into the brand identity.
In my view, this is the reason why some corporations, engaged in sustainability, are choosing to communicate their corporate brand as the “sustainable one.” Then, they lend its sustainability reputation to the portfolio of brands. In this way, I suggest focusing a significant portion of the advertising and communication budget on the corporate brand and then associating the corporate brand umbrella with each and every product brand of the corporation. This helps create a consistent, sustainable identity across a corporation’s brand portfolio.
Of course, this reasoning assumes that there are common sustainability attributes across several product brands of a corporation. In this way, the corporate brand can be the subject of focused communication and advertising on sustainability attributes and then lend that reputation to the specific product brands of the corporation.
Naturally, this would be much easier to do when the corporate brand existed before the product brands. A good example, in Brazil, is that of Natura, a cosmetic company that was able to build a sustainability reputation of this one brand and much later on apply it as an umbrella to specific product brands. In this way, Natura was able to differentiate itself and command a bigger price than its competitors for a period of more than 30 years, while also using door to door sale as its only distribution channel and important way to emotionally link consumers to the sales people and the brand.
As the Cone / Equity study showed, CSR “is more than just a consideration in the shopping aisle. It is now woven into the very fabric of how global consumers lead their lives.” Difficulty is that, with the exception of a lucky strike, it will take time for investments in sustainability to return, unless they are directed towards risk reduction whose financial returns are calculated based on the avoidance of a loss.
On the other hand, how do you build a sustainability reputation in the long term if the investments are not started in the short term? Well, and I quote again the Cone / Equity study, “today’s global consumers see companies as more than just profit-making entities – they think companies have the responsibility and opportunity to make effective social and environmental change.” And, of course, positive change is what consumers expect. Should one run the risk of not catering to such a demand?
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Mr. Mattar has 22 years of experience in national and multinational companies and is currently the CEO of Akatu Institute. In his previous position, he was President of GE Appliances Brazil. In addition, he served as the Secretary for Development of the Ministry of Development of Production, Industry and Foreign Trade. He was a founder of the Ethos Institute for Corporate Social Responsibility, and now serves as Associate Curator. He is a member of several Boards and Committees of enterprises and social organizations, including the Board of Directors of OSESP Foundation, the Sustainable Development Committee of the GPA, the Unilever Sustainable Living Plan Council, and the Sustainability External Advisory Council of Dow Chemical. Mr. Mattar is also a member of the Multi-stakeholder Advisory Council of Consumer Information Programs (CIP) and Sustainable Lifestyles and Education (SLE) UNEP – United Nations Environmental Program. Twitter: @institutoakatu.