How Top Companies Are Creating Sustainable Brands
This article is sponsored by Procter & Gamble.
As interest in purchasing sustainable products becomes more mainstream among consumers, corporations are increasingly invested in creating sustainable brands, and spending on product sustainability initiatives is expected to accelerate, according to a study from Verdantix.
The report found that 69 percent of sustainability executives say it is important or very important to improve performance on sustainable product innovation in the next 12 months. Thirteen percent of respondents anticipate increasing the percentage of their spend on product sustainability by the double-digits and 32 percent plan single-digit increases.
Creating Sustainable Brands
Research from Procter & Gamble shows that consumer spending on sustainable products has significant potential. In 2007, when exploring sustainability as an opportunity to grow the business, the company began looking at existing products that claimed to be “green.” At the time, sustainable products seemed to have a small share, sold mostly in specialty stores. They were focused on high-end consumers, because the lion’s share of sustainable products were made by smaller companies, in smaller batches, and with no economy of scale (per US News and World Report).
P&G wanted to understand how consumers looked at sustainability to see if it could reach the mainstream. The company did its first consumer sustainability study, and found that there are three general groups of consumers. P&G has conducted the study several times and has found the results to remain consistent. The most recent study, P&G Sustainability LOHAS Consumer Sustainability Data, was conducted in June of 2013. It found that:
— “Green niche” consumers believe strongly in the environmental movement and are willing to accept trade-offs – such as higher prices and a decrease in performance — for buying sustainable brands. These comprise about 15 percent of consumers.
— “Basic living” consumers do not consider sustainable products at all. These comprise about 10 to 15 percent of consumers.
— “Sustainable mainstream” consumers are interested in sustainability but are not willing to accept tradeoffs. If a product meets all their needs in terms of value and price, and is also sustainable, they will purchase that product. These consumers make up the vast majority, at nearly 70 percent.
“We came to the conclusion that, if we want a meaningful impact on sustainability, we would have to target that 70 percent, those who would be sustainable if there was no tradeoff in cost and performance,” says Len Sauers, vice president of global sustainability for P&G.
The Verdantix research indicates this is a smart move. Consumer products firms like Adidas and Danone that target improvements in brand trust mitigate risks from supply shortages and differentiate products in the eyes of retailers, according to the report.
This rising sentiment for “greener”products is a clear message, forcing product-focused companies to be more innovative with the products they take to market, the materials that go into the product, and the materials and substances that are used in the manufacturing process. “In other words, the concept of product sustainability is moving from ‘nice to have’ to ‘need to have,’” says Kraig Haberer, CEO of
Haberer adds that the return on product sustainability programs can be significant when considering the holistic perspective of not just the compliance risk avoidance, but also the value of risk mitigation and the gained competitive advantage of producing zero-footprint or near zero-footprint products.
In order to reach the sustainable mainstream, P&G began looking at the total energy of all its product lines, including paper towels, appliances, shampoos, and cosmetics, quantifying the total energy that is involved with the use of the products. The company found that P&G’s main environmental footprint when its products are used, at a whopping 80 percent, was the energy used to heat water for laundry.
With that in mind, the company invested in two years of development to create Tide Coldwater, designed specifically to allow users to wash in cold water without a tradeoff in performance. “If we can get everyone in the US who is washing in hot or warm water to move to cold water washing, we can remove four percent of energy used,” says Sauers. “That essentially saves greenhouse gas emissions equivalent to four to five million households, a meaningful improvement.”
P&G hopes to convert 70% of all washing machine loads to cold water by 2020. Since 2010, educational outreach has helped increase the percentage of global washing machine loads washed in cold water from 38% to 50%, the company says.
Retailers, too, are increasingly making sustainable products an economical choice for consumers.
Earlier this month, Walmart announced that it is teaming up with Wild Oats to make its organic food items more affordable for its low-income customers. The company says the line is at least 25 percent cheaper than the national organic brands it carries and is in line with the prices of its branded non-organic alternatives. Over the next several months, Walmart will introduce nearly 100 products in the line. The company says internal research found that 91 percent of Walmart shoppers would consider purchasing products from an affordable organic brand at the retailer.
Transparency Is Key to Sustainable Brands’ Success
But it’s no longer enough to create sustainable products and slap “green” statements or Fair-Trade Certified labels on the packaging, according to an article in the Center for Association Leadership’s Association Now publication. Consumers want specifics. Was the product made using child labor? How were the animals raised?
“Information technologies such as social media now let the public keep an eye on everything businesses do, and businesses should invite this scrutiny,” says Jeffrey Hollender, co-founder of the American Sustainable Business Council. “Publicly sharing all our activities preempts the critics, and more eyes on the company’s activities means more advocates and friends.”
Natural and organic foods retailer Whole Foods believes in transparency and attributes its success to finding ways to engage and connect with consumers, said Walter Robb, Whole Foods co-CEO, at this month’s Global Retailing Conference (via the Arizona Daily Star). “Customers know how animals are raised and where their foods come from. We’re building trust and loyalty,” he said.
Patagonia’s Footprint Chronicles is another example of corporate transparency, providing detailed information on 90 percent of its products’ social and environmental impact, wrote Nayelli Gonzalez, managing supervisor of the CSR & Sustainability Practice Group at FleishmanHillard. The Patagonia website provides the public with an interactive world map that highlights every textile mill and factory in Patagonia’s supply chain. It profiles key suppliers and includes videos that explain aspects of its manufacturing process.
Mexican food chain Chipotle offers another level of transparency with the nutrition and supply chain facts it provides on its corporate site, along with an interactive map that shows where the vegetables and meat used in its menu are sourced throughout the country. “The more information you provide about how your product is made, the more consumers will trust your message,” Gonzalez says. “Brands… must recognize consumers’ predilection for consistency, transparency, creativity, and values-driven audaciousness.”
Inspiring Consumer Behavior
Though studies suggest that consumers care about sustainability now more than ever, corporations can go a long way toward improving the success of their sustainable products by inspiring consumers to adopt new behaviors.
P&G’s Tide Coldwater product, for example, encourages consumers to behave in a more sustainable manner by switching to cold water washing, says Sauers.
Patagonia’s founder, Yvon Chouinard, also strives to influence consumer behavior. The company has launched a series of essays written by Chouinard and Rick Ridgeway, the company’s VP of Environmental Affairs. The essays in the Responsible Economy campaign encourage consumers to change their way of thinking. “Can we even imagine what an economy would look like that wouldn’t destroy the home planet? A responsible economy?” Chouinard asks. The Responsible Economy website urges readers to help “seek out the stories, solutions, examples, and new leaders of the responsible economy.”
Creating sustainable products while offering transparency and changing consumer behavior leads to success, the Verdantix study shows. Among the firms interviewed for the report, at least 80 percent achieved cost savings on logistics and materials, while 67 percent mitigated resource scarcity risks and regulatory risks.
This article is sponsored by Procter & Gamble.
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