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March 5, 2009
We’re Entering a New Era of Mutual Social Responsibility
I am speaking this morning at the Wall Street Journal’s ECO:nomics conference in Santa Barbara on Green Marketing. I’m discussing how we are now entering a new era of Mutual Social Responsibility, in which people (formerly labeled as ‘consumers’ by marketers!) contribute to society’s sustainability and well-being in partnership with business, government and non-governmental organizations. But they demand a seat at the table and real voice in the discussion. The democratization of communications will require a more public vetting of the assumptions behind environmental marketing – from green brands to new power plants. It will also mean a conscious decision by companies about whether to be Light Green (at minimum standard) or Dark Green (a green brand, with ever higher expectations).
We are now in the fourth phase of environmental marketing. The first period, Defense and Response, began in the early 90s, with companies reacting to pressure by empowered NGOs. Examples include Heinz (a client) decision to provide dolphin-safe tuna in StarKist in 1992, and Shell’s (a client now, but not at the time) change in policy in the wake of Greenpeace’s highly visible occupation of the Brent Spar rig in the North Sea. The second phase, starting in the late 90s, Tactical Offense, saw the beginning of partnership between civil society and corporate sector, such as the Chiquita (a client) –The Rainforest Alliance’s Banana Certification Program or the creation of the Forest Stewardship Council ‘s much wider adoption of FSC with Home Depot’s purchasing commitments around certified wood products. The third phase, Business Strategy, was initiated in the middle part of this decade, with GE’s Ecomagination, where GE was explicit about its desire to make “green equal green,” with cost savings on transport, lighting, packaging plus potential for greater acceptance in a stakeholder society.
In the era of Mutual Social Responsibility, we see that companies will Operate Differently, Partner Differently and Market Differently. How will that work?
1) Operate Differently—There will be continual improvement in the supply chain because today’s Dark Green is tomorrow’s Light Green, ie the companies at the vanguard of driving savings through say, less wastage, will set new minimum standards. These changes will be part of the public record; there is no going back. SC Johnson (a client) has taken 61 million pounds of volatile organic compounds from the environmental footprint of its products by using earth-responsible raw materials. Marriott has committed to cutting 25% of its fuel and water consumption per room in the next decade. Dannon (a client) has been working to eliminate unnecessary packaging, such as the plastic overlid their yogurt cups used to have - that saved them more than three and a half million pounds of plastic a year. Companies believe this type of responsible behavior is not optional; they expect people will punish bad actors through their purchase decisions.
2) Partner Differently—Much of the interaction between civil society and business has been contentious. We now see that major NGOs are now willing to work toward a mutually advantageous outcome by partnering with business; by going beyond technical advice to establishment of standards. A good example is Rainforest Alliance which sets and publishes goals for worker safety and environmental stewardship. When companies partner with NGOs, a key part of most partnerships is that the results of the work are made available to other companies. As NGOs are advocates and not consultants, the new best practices that they create are meant to spread across entire industries, magnifying the environmental benefits. This open source solution is good for both partners’ credibility. Note that in the recent Edelman Trust Barometer 2009, NGOs are the most credible institutions in most nations, with respondents by a 3 to 1 margin asking for cooperation among government, business and NGOs to solve key issues such as global warming (as opposed to unilateral action by business and/or government).
3) Market Differently—Brands that establish themselves as green, such as SC Johnson’s (a client) Nature’s Source new line of natural cleaners or Stonyfield Farms’ yogurt, must be able to withstand heightened scrutiny on provenance and performance. They can be priced at a modest premium (according to ASDA, the UK retailer, about 10% premium for ethical brands, not the 45% premium that the retailer observes in many categories), such as Stonyfield’s yogurt justified because of the additional cost of organic ingredients. The brands must also be sold differently, as in the case of Brita (a client), the water-filtration system, whose FilterForGood campaign based on a peer-to-peer involvement—where people pledged to change their behaviors-- rather than classic advertising, model achieved sales increases in a long-established category. Professor John Quelch of Harvard Business School also advises companies “to couch claims in local context. There is little value in global calls-to-action.”
How will the recession affect behavior of people, and therefore companies, governments and NGOs? Seven of ten interviewed this fall for the Edelman Good Purpose Survey said they would be prepared to pay more for eco-friendly products. But Professor John Gourville of Harvard Business School (yes, I unashamedly go to my alma mater for quotes whenever possible!) suggests that while people aspire to good behavior, “When times are difficult, final decisions are made on bottom line cost.” His research on car purchase behavior indicates that while people are interested in miles per gallon they are unwilling to sacrifice comfort and styling. Several clients shared findings from their research which found that people are interested in living more green but unwilling to sacrifice convenience and effectiveness. People today expect a company to ensure their brands to be, say, environmentally sustainable, and they are not necessarily willing to pay more.
What is the job of PR people in this evolving marketplace? We need to offer people a full set of information on brands, their ingredients, their efficacy and the manufacturing process, while securing their continued insights and help. We can help ensure that business is values based--we can do the right thing for customers, communities and people-- that these values are part of clients’ DNA, affecting every part of how a company operates. We can partner companies with NGOs, who are constructive critics and advisors on supply chain or communications. Since mainstream media (68%) is the most trusted source of information on a company’s sustainability activities, interaction with reporters is essential. For example, a Unilever (a client, but we do not work on this brand) can benefit from publicizing a long standing product, such as Hellmann’s “Real Mayonnaise” as a food made simply from oil, vinegar and eggs, yielding higher sales and stronger corporate reputation. We can explain the role of newer players such as the IT industry, which could improve energy use in buildings or design smart highway grids, while offering server farms that are more efficient than individual corporate facilities.
Here is an interview with Wall Street Journal's Jeffrey Ball: http://online.wsj.com/article/SB123655198432165465.html See also this article in the Boston Herald.
I would appreciate your views as always.
Posted by Edelman at March 5, 2009 9:41 AM |
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Comments
Hi Richard, Sometimes, pressing the message of being more responsible, green, engaged, secure, etc., is seen as having no real benefit to profitability. But as you've outlined, the benefits can be huge in terms of cost savings and brand goodwill. As an added example, I'd point to the challenge of convincing companies to ramp up security in their companies, prepare for worst-case scenarios -- natural disasters or cyber/security breaches, etc. Early post 9/11, most CEOs and CFOs discounted the notion that investment in security was good for business. There was still a "it won't happen to my company" mentality; "it's too costly," etc. What's been found, however, is that security investments (embedding secure technologies, improving communication, implementing crisis training, securing data and streamlining IT) are not only improving security, data protection, etc., but also improving greater collaboration, efficiency, productivity and, ultimately, the bottom line.
In my view, one of the best contributions PR people can make to foster a mutually social responsibility climate is to continue to educate our clients/executives on this notion. As communicators, we know that socially responsible corporate behaviors connect with consumers – even, to some degree, those consumers holding on to convenience and style. But we need more executives within our corporate community to understand the value of that link. By "managing up," we can help our executives and clients understand that the ROI of socially responsible behavior can contribute to a better, safer, greener world...and make for a more prosperous and profitable one, too.
Posted by: Michele Nix at March 6, 2009 4:04 PM
"Since mainstream media (68%) is the most trusted source of information on a company’s sustainability activities, interaction with reporters is essential."
Since the ways in which we receive information from the media are changing (newspapers shrinking/collapsing, social media influence), is there currently any way to tell how these changes will affect the trustworthiness of these mainstream news outlets?
Posted by: Scott Lansing at March 10, 2009 2:47 AM
It is sad that society feels most socially cohesive when trespass and violation has occurred. It is disappointing that the ego runs amuk in times of "supposed" affluence of accumulation. How many times does society need to be brought to its knees before the message becomes clear(er) - social responsibility should be the norm (the status quo) not the "newest fad". Let's hope that this phase lasts long enough to instill some ethical mores of contributing to society for generations to come...alas we can only hope. :)(
Posted by: INGRID EDELMAN at March 22, 2009 12:06 PM