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Why sustainability professionals should drive green consumerism

Most people’s wallets are slammed shut right now, and an unthinkable number of people face unemployment and loss of business. The coronavirus pandemic offers a painful and unique opportunity to re-envision the economy we want and how we get there.

Business is driven by consumer demand. When there is a great demand, business expands. When there is little demand, business contracts. Government policy aside, this is what shapes the economy.

The good news is that the majority of U.S. consumers want to buy purpose-driven brands that support sustainability. However, despite our intentions, the vast majority of us don’t consistently shop in a way aligned with our values or desires for a sustainable economy.

Here’s how to think about changing consumer demand: Imagine a rider on top of an elephant, trying to get the elephant to go down a specific path. Our mind, intellect and will power (the rider) and our emotional body (the elephant) need to be aligned to make any progress.

When the elephant doesn’t want to budge, the rider is powerless. Likewise, a directionless elephant probably cannot make it down a path without the guidance of a rider.

We can’t spook the elephant or wear out the rider by making it too hard to do “the right thing.” The path also needs to be clear, with no obstacles, boulders or rocks.

This clever behavior change model was developed in “Switch,” by Chip and Dan Heath. It’s our job as sustainability professionals to carve out a new, clear path so that people can shop in a way aligned with their preferences for a sustainable, healthy planet.

This series of columns on GreenBiz will explore why consumer demand for sustainable, climate-friendly products remains insufficient to drive systemic change. In this series, I will examine the consumer’s elephant, rider and the path. And ask: What can we do about it?

With many businesses shuttered, and citizens around the world sheltering in place, economies are dramatically being reshaped. What if we came out of this crisis with a new perspective on our collective impact on the economy, the environment and one another? What would happen if more people than ever before demanded goods aligned with a sustainable, low-carbon economy?

Our economy would transition swiftly.

Consumer spending drives almost 70 percent of the U.S. economy. If we don’t consistently shop and bank in a way aligned with our values, we send the market mixed signals to 70 percent of the economy. Of course, government policy plays a big role, and the playing field isn’t level in terms of tax incentives, subsidies and bailouts. Yet, the power lies in consumer demand.

It’s time to shift our focus as sustainability professionals.

First, we have an utterly unique moment to reconsider our relationships to what and how we consume products and engage services. What do the elephant and rider need? How can we make the path easy to navigate?

Second, it’s time to shift our view as sustainability professionals. My job always has been to help companies produce eco-friendly widgets and services. In other words, my work has been 100 percent supply-side focused.

It’s time to focus on the demand side. Let’s take a deeper look into behavior change and figuring out how to shift the demand and support marketing, corporate communications and customer experience, amongst others.

My hope is that this series will spark an important dialogue that is swiftly followed by action.

Some good news

Pre-coronavirus pandemic, research indicated:

  • We have increased our collective demand for sustainable goods. Kronthal-Sacco and Whelan (PDF) found that despite the fact that sustainability-marketed products are 16 percent of the market, this segment is responsible for more than half of the growth in consumer-packaged goods (CPGs) since 2013. 

  • We want more meaningful relationships instead of accumulating material possessions. Furthermore, BBMG’s recent research show that we want brands to solve the big challenges of our times.
  • Emotions are kicking in around climate change and our own behaviors. A new Getty Images survey of more than 10,000 (PDF) consumers and professionals across 26 countries found it’s now shameful not to show what your company does to help the climate crisis.

In summary: The shift in behavior and expectations pre-pandemic indicated movement towards consumers taking action, with the potential of significant impact within our grasp.

The quandary remains

While there is movement towards “green goods,” a minority of people report positive attitudes toward eco-friendly goods and actually follow through with their wallets.

In fact, the percentage of consumers who reward companies for being responsible hasn’t shifted much between 1999 and 2010 (GlobeScan). This may not be apparent from our vantage points as sustainability professionals. But the data holds.

The paradox is captured perfectly by a recent Harvard study. Consumers’ intentions are good, but behaviors lag intent.

In one recent survey, 65 percent of consumers said they want to buy purpose-driven brands that advocate sustainability, yet only about 26 percent actually do so.

Another survey uncovered an ugly truth: 48 percent of Americans say we should be should care more about the environment, but convenience is more important. Anecdotal evidence suggests that right now, during the crisis, convenience trumps other concerns for most people.

Furthermore, in terms of market share, we’re talking about a small part of the overall consumer goods market. The NYU Stern research found only 16 percent of CPG goods are marketed as sustainable. (And of course, we might be skeptical as sustainability nerds about what percentage of those goods we’d consider truly “sustainable.”)

So, what happens next?

In the tabula rasa moment ahead, we have a unique opportunity to re-imagine how people communicate and shop. Why would we come out of the coronavirus pandemic and replicate the environmentally damaging consumer behaviors that went before?

It will take all sustainability professionals pulling together to effect this change. How should we proceed? I look forward to hearing your thoughts: [email protected].

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When it comes to messaging, it’s all about ESG

For the last two years, I’ve been scratching my head about something: Americans have made it very clear that they want to buy from good companies. And when you ask them what’s good and who’s good they give a range of answers that lump together “good for the planet” and “good to people.”

Yet Corporate America has insisted on keeping those two things separate. The sustainability team has lived on an island by itself, or possibly in an EHS department, tasked with environmental compliance and reducing environmental impact — doing less bad, essentially. Meanwhile, the corporate social responsibility people have lived in another department, typically HR, and have been charged with spreading goodness — community projects, philanthropy, diversity and inclusion.

The separation hasn’t been good. It’s meant duplication of effort and competing messaging. In one case, we watched a bold company commitment flounder for over a year because it included both environmental and social impacts and the two separate departments struggled to determine who should “own” it.

This all changes with environmental, social and governance (ESG) as a framework, and that’s a good thing.

Or at least, it should all change. Here’s why:

1. It’s just a matter of time

If you work in communications or sustainability at a publicly traded company, somebody on your executive team or your board will come to you very soon, if they haven’t already, and say, “Why is our (fill in the blank with the name of the rating agency here) score so low?” This is often, in my experience, how ESG gets on Corporate America’s radar. An investor or board member brings up one of the company’s ESG scores or a ratings agency reaches out to the right senior leader and starts asking lots of questions the leader can’t answer. Bottom line: As much as some companies are driven by purpose, all companies are driven by profitability. And when Wall Street starts asking questions they can’t answer, they move quickly to rectify that.

2. It makes sense to streamline your messaging

There are dozens of ESG ratings agencies out there. (I’ve seen the number put at 100-plus, but five to 10 “usual suspects” come up in conversations I have with senior company leaders including ISS, Sustainalytics, CDP, Bloomberg, RobecoSAM and MSCI.) I concur with the lamenting of folks who deal with these: It’s a lot to manage. They all ask different questions/are looking for different things, and one could spend half or more of their work time responding to and managing the ESG ratings process. The thing is, ESG ratings are about companies being good across the board (on ESG indices), much as Americans already are wired. So if you’re the sustainability person, you have to work with the CSR person and somebody in corporate governance (legal and/or accounting) to get the questionnaires answered. Better for that to all be streamlined in one department for sheer ease rather than scattered throughout an organization.

3. This is not a check-the-box exercise

And this isn’t just about “gamifying” the ESG scoring, which is kind of how it seems the C-suite often views it. Companies shouldn’t look at ESG scoring as a check-the-box exercise that they “handle.” They should look at it as a framework through which to manage climate risk and financial risk — a tool to steer the company to profitability. That’s why Wall Street is increasingly interested in ESG. It’s about money. Companies that have no idea what will happen to their supply chains and human capital when the waters rise will be caught off guard and unable to stay profitable through climate events. Companies that are aware of their risks and shifting and managing their organizations, as a result, are better investments.

This is all top of mind for me, having just attended the GreenBiz 20 conference earlier this month. ESG was brought up many times, as was diversity and inclusion (D&I). My takeaway is that companies need to reorganize so sustainability, social good (including D&I) and governance all live in the same department under the same senior leader. And that leader needs to use ESG ratings, rankings and reporting tools as frameworks for managing their climate risks and driving their company to profitability in a climate-resilient world.

Source: GreenBiz.com
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