Brands need to establish sustainable business credentials, broad claims about being green aren’t enough anymore.
Climate disclosures and stringent ESG compliances is what lies ahead for big companies the world over. While EU has been leading the way, there have been interesting developments in the US, New Zealand, Russia and India as well. This shift is being led by public policy, disclosure requirements, compliances and investor requirements.
Sustainable business practices are no longer niche. As they break into mainstream markets, brands will need to find new ways to compete, and to demonstrate their sustainable credentials. Broad claims about being green aren’t enough anymore.
Customers want responsible brands
There are also shifts happening in customer expectations. Studies across the world reveal a clear, unmet consumer demand for sustainable products. Consumers also want to know what they can do to alleviate the impact of their choices on the environment. In fashion, consumers are looking for increased transparency in supply chains, while at the same time demanding seamless fulfilment from mobile shopping to drone delivery. In other consumer categories too, more than two-thirds of respondents consider sustainability when making a purchase and are willing to pay more for sustainable products. For instance, in Singapore sustainability is a key concern for customers as four out of five consumers say they care about the environment. A third of consumers would make most purchasing decisions based on product sustainability and environmental impact. Similar consumer trends exist in India too within certain socio-economic profiles.
Shifting consumer values are leading to growth in newer markets, innovative new products and emerging categories. Etihad Airways piloted its first Greenliner flight to test eco-friendly initiatives in support of sustainable aviation. These flights consist of a variety of measures to reduce waste and offset emissions and will subsequently include offering guests carbon offset options for their journey. Zara has created the Join Life label which has the most sustainable raw materials and/or processes.
Companies are therefore shifting their mindsets and ambitions to re-invent who they are and what they offer. Diageo’s purpose is to celebrate life, every day, everywhere. This requires the company, to do its best at work, at home and in the community. It means engaging with stakeholders, listening to their ideas and concerns and working constructively with them to find solutions to shared challenges. Diageo realizes that its reputation is not just an outcome of its commercial performance. It needs to earn trust and respect through actions and work. Hence both financial and non-financial metrics matter and the company has launched the Society 2030 program.
Organisations are either transforming existing product portfolios or creating new ones. ‘Sustainable brands’ are emerging that take the promise of responsibility to customers. Sustainable packaging, environmentally friendly and healthy ingredients, responsible supply chains, cruelty free formulations with no animal testing are just some of the product attributes that are being built into brands.
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