Sustainable Brands 2014 featured key themes constellating around concerns facing global companies and the people they serve:
When it comes to sustainability, what is possible and what is necessary?
What is an appropriately aggressive vision of sustainability?
What are the concrete actions that result in sustainable products and companies?
With new government regulations preventing superficial (and often spurious) claims of sustainability, what is a meaningful path going forward?
Expectations of More
One year ago at Sustainable Brands 2013, the need to be more aggressive was a recurring theme. In writing about the conference, Jo Confino of Guardian Sustainable Business quoted Amy du Pon, head of strategic planning at Havas:
In an age of transparency and empowerment, brands are not meeting people’s requirements. People expect large companies to be involved in social problems and their quality of life but companies are not delivering on this new social contract.
At this year’s meeting, we had a window into how large companies are starting to rise to meetStretch Goals expectations within and outside their walls. Brands must now choose how to respond to a world where shared problems—inequality, climate change and resource scarcity, among others—require more aggressive collaboration than business as usual. Some brands and companies are farther down that path than others.
Stepping Up: Three Indicators
Based on my experience, certain indicators point to organizations that are stepping up to the sustainability challenge. Here is a quick checklist of questions.
Is your organization:
1. Engaging with partners inside and outside both your industry and comfort zone to address sustainability and social impact challenges?
2. Driving collaboration and decision-making deeper into the organization, creating broader ownership of change and breaking down silos across the extended enterprise?
3. Recognizing that “stretch goals” can be used powerfully to create creditable change, attract allies and alter trajectories? (For more on this approach, see Steve Denning’s article, In Praise of Stretch Goals)
No speaker used the term “stretch goals.”
On the other hand, multiple presenters spoke about making commitments significant enough that they could not achieve them alone or with supply-chain-only partnerships. They reiterated that while they did not know today how to reach the objective, the commitment is to find a way.
Jerry Michalski, founder of REX, introduced the concept of the “trusted ally”: Groups that include customers, collaborators and society. That phrase quickly spread on social media and reflects a shift in thinking away from a consumer-centric approach to one that is more aligned with a mutual stepping up together.
New Alliances and Stretch Commitments
In a variety of sessions, executives from Sodexo, Unilever, Microsoft, Coca-Cola and others referenced corporate goals that are driving new partnerships and innovations. To the credit of some companies, the “stretch goal” journey began a few years ago. Efforts now are building on earlier commitments and cooperation with multiple supply chain, NGO and innovation partners.
The role that NGOs play in these partnerships is a complex balancing act. They are advocates for change but alsosustainable business allies must be at the table early to infuse new thinking when corporations are exploring possibilities – as discussed recently in the New Yorker.
Unilever: An Energy Vision
Unilever recently announced that Unilever U.S. would source 100 percent of its energy requirements from renewable energy by 2020. Working in partnership with NRG Energy, this vision exemplifies all three of the stepping up indicators. Jonathan Atwood, Unilever’s VP of Communications and Sustainability, candidly admitted they do not know everything needed to achieve this goal. But Unilever has chosen a key partner and jointly they are working toward the commitment.
Making a commitment of this scale also attracts allies.
Kees Kruythoff, President of Unilever North America, said good progress is being made with the Unilever Sustainable Living Plan in the U.S., “but we must do more to drive system change.”
This transformational partnership with NRG to move all of our U.S. operations to 100 percent renewable energy will make our business more resilient, sustainable, and profitable. It is our hope and expectation that our collaboration with NRG will also inspire a broader acceleration and uptake of renewable energy technologies.
McDonald’s: Addressing the Elephant in the Room
Over the past year, one corporate sustainability journey that has received extensive attention is centered on McDonald’s. Beginning nearly five years ago, McDonald’s has been partnering with its suppliers and the World Wildlife Foundation (WWF) to define and source more sustainable beef.
Other partners include Cargill, JBS and Wal-Mart. And beginning in 2016, McDonald’s will begin a major shift to source more sustainable supplies, a goal that is expected to take more than a decade to achieve. Bob Langert, VP of Sustainability, has been interviewed widely and been consistently clear about both the challenges involved and the importance of taking a lead in this effort.
GreenBiz’s Joel Makower has provided extensive coverage on the multiple ways McDonald’s leadership is engaging an entire industry in addressing the challenges of the resource intensity of beef as a protein source. In one interview Makower asked Langert if the meat-eating public would even care about these efforts. Langert believes they will.
From the research we do, consumers really care about where their food comes from,” he told me. McDonald’s has done private consumer research with the firm GlobeScan. “What comes through very strong is high expectations for companies like McDonald’s across the board in CSR and sustainability.
At the top of the list, he says, are nutrition and obesity. Just below that is food sourcing, such as animal welfare and the use of antibiotics — likely more focused on health and ethics than on planetary concerns. Where the environment is mentioned, the top issue is waste management and recycling. ‘We think they’re going to vote with their feet more and more on this issue,’” said Langert.
Largent’s response suggests that a focus on sustainability will bring customers to McDonald’s door, but it also makes the case that elephant in the roomMcDonald’s must lead on sustainability regardless.
Slowly but surely, the resource intensity and animal welfare challenges of beef consumption will change behavior for some consumers. But for a corporation that serves 69 million customers each day, a proactive drive to be as sustainable as possible is essential.
The Whole Company Matters Now
Many more enterprises are moving in the direction of stretch goals because their customers and allies are asking them to do so.
Piecemeal efforts around sustainability will have less and less impact on customers going forward. That was the core message of John Friedman’s excellent post, They’re Not Buying It—Because They’re Not Buying It:
A trend that Suzanne [Shelton, CEO of The Shelton Group] describes as ‘really compelling’ is that consumer attitudes have shifted from looking at ‘green’ products to ‘green’ companies. Five years ago the environmental reputation of the company was the eighth most important factor in green product decision making. Today it is second. So companies that wish to play successfully in this space need to move beyond offering one or two ‘green’ products and start ‘baking it into your entire corporate story. You have to buy in, green up, your entire operation.’ Therefore, companies have to commit fully to ‘green’ and not just offer it as a secondary or niche product.
Another significant reason that companies should lead and stretch for measurable results is a more pragmatic one.
In a session on Natural Capital Accounting, SASB’s Director of Stakeholder Engagement Katie Schmitz Eulitt announced that SASB is committed to providing data and benchmarks for companies’ environmental and sustainability risk exposure.
Forty-nine standards will be out by the end of 2014, she said. With this data, investors will be able to compare companies and see who is moving to mitigate risks and which risks are most critical. The bottom line according to Eulitt:
Environmental and sustainability issues are not being ignored by investors. They want benchmarks and data that are comparable. Investor actions will drive baking this into the DNA of companies and getting management on board.
Getting on board means addressing critical global issues while stretching to meet expectations that are on the rise. By the time next year’s conference rolls around, the stakes will be even higher.