ACTIONS, NOT ADS: How Your Company Can Both Increase Sustainability and Grow Your Business
Many consumers say they prefer sustainable products and do not want to support sweatshops, but they still often buy the cheapest clothing and running shoes made in such places anyway. Companies today want to do better, but they are getting such mixed signals from customers. In this keynote, Samuel will show how companies can navigate this complex environment and both help the world and sell more products at the same time. The key to understand: Actual sustainability goes far beyond just saying nice stuff in ads, and the benefits go far beyond just selling more stuff — it can help the world at the same time
Actionable takeaways:
— See examples of companies in various industries and countries that are helping both to increase sustainability and to grow their businesses at the same time.
— Optional: Connect those examples to improving efforts to recruit and retain Generations Y and Z
See a example presentation at Slideshare here: https://www.slideshare.net/secret/gGkdP6NMyetpeU
Example Full Text
So, what is the deal with brand purpose? On one side, many marketers strongly believe that by simply advertising a company’s political or social values, customers will come running. On the other side, cynics say that it is just public relations and that any real brand purpose should COST a company money rather than MAKE it money.
Well, I think both sides are wrong. In this talk today, I will show you the intersection of profit and purpose. I will show you examples of companies from a wide variety of industries that are both helping the world and their businesses at the same time. And I hope that those companies will inspire you to find a way to do something similar.
But first, an example of how NOT to do brand purpose — saying something in advertising but not actually doing anything. Or even worse, doing the opposite.
Fearless Girl. For International Women’s Day, a confident young woman staring down an angry bull. A girl standing up against the patriarchy on Wall Street. State Street Bank in the US showing its support for women. And from a marketing standpoint, State Street using the statue to promote an index fund comprised of companies that have many women in senior leadership. The tagline: “Know the power of women in leadership. SHE — the ticker symbol S-H-E — makes a difference.”
Wonderful, right? Well, there was just one problem.
State Street Bank in the US was being completely hypocritical. The same year that they created Fearless Girl, the bank paid $5m to settle US government charges that the company paid female senior executives lower salaries and bonuses. The company did not even go to court to try to prove its innocence.
There are many ways to do brand purpose wrongly, and this is one of them. Brian Millar once put it perfectly. He said: “Purpose is something you believe, not something you make up one day as a marketing strategy.” To use a line from the tech world, we need to do better. And I think I found out how.
But first, we need to talk about the paradox of brand purpose.
For years, we have seen all the headlines. Consumers want to buy from purpose-driven brands. Millennials and Gen Z demand that companies have a purpose besides selling money. And so on.
Some have even gone as far to say that marketers should just stop advertising and have only a brand purpose.
But is that true? What is more common than brand hypocrisy like State Street is when companies want to do brand purpose but don’t know how to do it. Why? Because consumers — the people who buy our products — send mixed messages.
In a test, a group of academics once asked a focus group if they would buy an organic and free trade apple for $2.60 over a regular apple for 35 cents.
70% of the focus group said yes.
But when the academics anonymously observed human behavior in stores, they saw that 98% of people actually bought the regular, cheaper apple. Here’s why.
If I ask you in public, in front of everyone, if companies should help the world, of course you will say yes. You don’t want to look bad. But what you will actually do in private is another story.
As ad legend David Ogilvy once put it, “People don’t think how they feel, they don’t say what they think, and they don’t do what they say.”
All of the headlines we see are self-reported consumer beliefs. The articles are reporting what consumers are SAYING. Not what consumers are DOING.
And the percentage of US consumers reporting that they actually BOUGHT something from a socially responsible company reached an all-time low in 2020.
And a company’s purpose or mission is now the least important thing on consumers’ minds.
So, is brand purpose or even “brand love” a real thing? To me, the phrase “brand love” sounds like something you would do with a baguette that would get you arrested.
Personally, I don’t think brand love exists. Most consumer purchases are made simply out of habit without giving the product a second thought. But in a consumer world that is seemingly schizophrenic, I have good news: There ARE ways to use brand purpose to help your companies and the world BESIDES just using it as a way to get people to buy your stuff.
So, let’s go.
When most marketers think about brand purpose, they assume that it means making expensive changes to products and supply lines. But here is an example of a small business that did neither.
This is my favorite example of a purpose-centric business. Mason Wartman was a Wall Street stockbroker. But his dream was just to run a local pizza place. So, he did that with Rosa’s Fresh Pizza in Philadelphia.
One day, a customer bought a slice for a homeless man outside. And that gave Mason an idea. People could “pay it forward” by paying for slices in advance for people in need. One slice would be one post-it note on the wall. Anyone could come in, take a post-it note off the wall, and get a free slice. No questions asked.
And that gave food to so many hungry people. But it did more than that.
You see, Mason never sought publicity. But customers started talking. Eventually, the local media found out. He got press coverage. And that is what happens when businesses truly want to DO something to help the world rather than just SAYING that in advertising.
Eventually, talk show host Ellen DeGeneres asked Mason to appear on her nationwide TV show. And his little pizza place became famous. If you pay attention to this clip, you will see that Mason has advice on how similar businesses can do the same thing.
Now, he mentioned Chipotle in the US. But the restaurant chain did not copy Mason’s idea (as far as I know). But they did create the Real Foodprint, like an environmental footprint, which shows how each customer order leads to a more sustainable world based on how the restaurant chain sources and uses its ingredients.
Now, here is an example of a company that DID change its product and supply line.
KFC in the UK and Ireland wanted to treat their chickens more humanely because the company found in 2019 that more than 1/3 of the chickens on supplier farms in those had footpad dermatitis, a painful inflammation that is usually caused by poor ventilation and poor litter management. See the right.
And there is more. 10% of chickens had burns on their legs caused by ammonia from the waste of other birds.
Within the industry, the average chicken mortality rate on these farms is 2 to 3%. KFC? 4%. Just do the math and think about how many thousands or millions of more birds have been dying.
So, KFC decided to do better by improving the lives of chickens — and drawing attention to that effort.
So, what did KFC DO?
First, the company is transitioning its 34 suppliers to use slower growing chicken breeds because those breeds are generally healthier. Second, KFC is reducing stocking density on farms — literally giving the chickens more space. And third, the company is signing up to the NGO-led Better Chicken Commitment (or BCC) to improve welfare standards. To do this, KFC is tracking metrics including mortality rates, antibiotic use, and stocking density. The company aims to complete all the changes by 2026.
Now, KFC started these product and supply changes only in July 2021. So, we have not seen the specific results yet. But stay tuned — KFC UK might just be a test of whether consumers will buy more of their chicken if they know the chickens are treated more humanely. And it will also be a test of whether KFC UK will have to increase prices to cover any potential higher costs.
But there is more. We will also have to look at the supplier side. The same month that KFC announced the changes to its chicken treatment, one of its main suppliers saw a massive increase in profits. Will that continue? And if so, will it even be related? We will see.
Now, one issue in the business world is that the problem of climate change seems so big that people think entire industries will have to be eliminated. Airplanes emit greenhouse gases, so we should all stop flying. Cows emit methane, so we should all become vegans and stop drinking milk and eating meat. And there goes the entire airline and cattle industries.
Well, I have some good news. We probably will not have to give up meat and milk. If you like cafe au lait, you can still have the au lait. The cattle industry can both reduce greenhouse gas emissions AND make more money. Here is what they are doing that in Australia.
When cows eat food, they produce milk. And they also produce greenhouse gases such as methane and ammonia as waste. The milk is stored in their udders, and the gases are expelled out both ends. Yes, through burps and farts. A single dairy cow can generate three tons of CO2 equivalents every single year.
But here is the key. Milk. Methane. HANDS. The more milk a cow produces, the less methane it produces. The less milk a cow produces, the more methane it produces. So, the issue is a question of efficiency. How can our cows produce more milk?
Within the large Australian dairy industry, there are many opportunities to reduce greenhouse gases and increase profitability at the same time.
Now, the Australian dairy industry has made a commitment to reduce greenhouse gas emissions 30% by 2030.
And there are many ways they are doing so — ranging from feed supplements to land and manure management to improved animal husbandry practices. Basically, it comes down to changing how you deal with your cows, your land, your soil, and your machines.
The biggest part, of course, is the cow. Some breeds emit more methane than others, so farmers are selectively breeding them to reduce emissions.
Further, scientists have discovered that comfortable cows create more milk and less methane. So farmers are creating shade during summers and building shelters during winters for them. And the next part is the food that cows eat.
Over in Holland, the company DSM creates various animal feed items such as Bovaer.
Just a quarter teaspoon per cow per day suppresses the enzyme that triggers methane production in cows. It reduces methane emission by approximately 30% in dairy cows and up to 90% in beef cows.
And in addition to carbon dioxide and methane, nitrous oxide is another greenhouse gas. And humans contribute that gas to the problem by using synthetic fertilizers on soil.
Currently, farmers are exploring how to apply nitrogen at only the right time, in only the right place, with only the right product, and only at the right rate to improve on nitrogen use efficiency and reduce GHG emissions.
On the human side, it comes down to making the machines more efficient. In just one example, electricity for the lights at one farm in New South Wales cost $230,000 per year. After an energy audit, the farm upgraded the lights. The new cost was only $105,000 per year. That is more than a 50% reduction in energy use and a 50% reduction in costs.
For all of these initiatives and more, Dairy Australia will be releasing more reports next year.
But this is what is important. All of this is being done without saying anything in advertising or even thinking about the customers. The customers — Australians who buy milk, beef, and cheese — have nothing to do with any of this. So this example of brand purpose comes from just making your business more efficient. Australian dairy farmers are reducing greenhouse gases and producing more milk to sell at the same time.
Now, here is a retail company where brand purpose did NOT increase sales. But it did help something else. Introducing Warby Parker.
Now, here is an early version of Warby Parker’s website. The messaging about how they give eyeglasses to people in need is very prominent.
But sadly, the company learned in focus groups and surveys that customers did not care that much.
Here is the website today. The mentions of brand purpose have been moved to a page deep inside the website. You cannot even see it on the home page.
In the focus groups and surveys, the company learned that people care first about style. After all, glasses are one of the few accessories people wear on their faces. Customers want to look and feel their best while wearing them.
Second, customers cared about having glasses that were comfortable. Again, these are things that people wear on their faces all day, every day.
Third, came the price. Warby Parker found that customer interest declines as soon as the price hits $100, so they priced their glasses, made with premium materials, at $95.
Only at the end did customers care about the Buy a Pair, Give a Pair program. The company found that customers certainly love the fact that they give back — but at the end of the day, it was not a critical factor in deciding whether to buy a pair of glasses.
So, did Warby Parker’s brand purpose fail? No. The company found that the purpose did not attract customers — but it DID attract and keep employees.
Here is what the co-CEO said: “We didn’t realize how fundamental that would be in attracting and retaining talent that would also be driven by these goals around impact.”
Now, for this talk, I spoke with Warby Parker. Here are some numbers that they shared with me.
The retail industry is tough. According to the US Bureau of Labor Statistics, the average employee retention rate is around 40%. That means 60% of people leave in any given year. But Warby Parker’s retention rate is around 80%. And why is that?
91% of employees said that they are proud to work for Warby Parker. 89% said the company creates a more equitable, inclusive, and diverse workplace.
And THAT is something else that can come from having a brand purpose.
But there are a few other ways that your companies can truly help the world.
Businesses have shareholders and stakeholders. Shareholders are the owners. Stakeholders are anyone who the business affects — the workers, the community, the environment, and so on. In general, European companies care more about all of the stakeholders than US companies. In America, all companies care about is making the owners a lot of money at any cost to the other stakeholders.
We need all companies do adopt the European model.
Because actual brand purpose goes further than the marketing department. It is something that the entire business should embody. HR policies. The supply chain. The product. Legal. Finance.
Here are some examples. You advertise that you support gay rights. But does HR grant full marriage and parental benefits to same-sex couples even if it is not mandated by your country’s laws? Does your supply chain use child or slave labor? Do you pay men and women equally? Do you have zero tolerance for sexual harassment? Do you pay a fair amount of taxes? And do you include these activities in your annual reports and shareholder communications?
Do not look at what companies say in their advertising. Look at what companies actually do.
Here’s a big picture example. Do you have a B Corp Certification? The global non-profit organization measures a company’s entire social and environmental performance from its operations and business model to its workers, community, environment, customers, supply chain, input materials, charitable giving, and employee benefits.
Certified companies receive benefits such as a listing in the B Corp Global Directory, a registry of 2,750 businesses in 64 countries that consumers can use to determine where to spend their money. If you truly believe in doing good, this certification is the only place to start.
Because we are rapidly entering a world where companies will have to include so-called Stakeholder Capitalism Metrics in their financial reports.
At the 2020 Davos Meeting, 120 of the world’s largest companies supported efforts to define common metrics for sustainable value creation. Here are some of them.
Reporting on greenhouse gas emissions in metric tons of carbon-dioxide equivalent and the implementation of the recommendations of the Task Force on Climate-related Financial Disclosures.
Reporting on company land use in or next to protected areas as well as on water consumption.
Reporting on company diversity, pay equity, wage levels, and risks of using child or slave labor.
Any my personal favorite: Reporting on the total global tax paid by the company.
Still, brand purpose is not only about helping the world — in the end, it is about helping people.
If your company truly believes in helping people, then might I make a suggestion? Pay your agencies, suppliers, and freelancers immediately rather than wait 30, 60, or even 90 days. I guarantee that they will love you and will do their best work for you. And they will prioritize their work for you over everyone else.
In the end, true brand purpose is not SAYING in advertising that you support something. True brand purpose is DOING something to help the world — and the key is to figure out how to do so in a way that helps your company at the same time. And it is difficult because we do not always know whether consumers actually care.
So, I hope these examples will give you some inspiration for your own companies.