The new sustainability

Strategy tapped experts and members of its CMO Council to examine the new realities of going green.
New Sustainability
Consumers are smart, sophisticated and can smell greenwashing a mile away – which means sustainability efforts need to be genuine and they need to run deep. Strategy tapped experts and its CMO council to examine the new realities of going green.
 

It would have once been considered an innocuous mistake. In an Instagram post in late 2019, actor Chris Pratt posed flexing next to exercise equipment, announcing a partnership with Amazon – while holding a single-use plastic water bottle. After being called out by Jason Momoa of Game of Thrones, Pratt apologized and clarified that he simply needed something to occupy his hands for the shoot. He typically takes a reusable bottle to the gym.

Pratt’s faux pas was raised during strategy’s first meeting with its inaugural CMO Council, an editorial advisory board, as a reminder of how hard and fast the tides have turned against a material ubiquitously used in household and consumer goods.

“I’ve never seen an issue move faster than that one,” says advisory member Matt Kohler, who is also the VP of marketing at The Clorox Company. “On the business side, on the consumer side, on the government side – it feels like everyone is universally against single-use plastics now.”

Research by Dalhousie University in June 2019 found that nearly 94% of Canadians want to reduce their consumption of single-use plastic food packaging. Nearly 90% were in favour of government regulation to help them achieve that goal, while more than 70% supported banning plastics entirely.

The province of Prince Edward Island and the cities of Victoria and Vancouver passed laws restricting certain items, such as plastic bags and straws – though Victoria’s has since been struck down in court – while the federal government has proposed taking similar action as early as 2021.

While legislation catches up to consumer sentiment, some companies have taken initiative: AB InBev, Walmart, Nestlé, PepsiCo and Clorox are but a few of the giants that announced new or expanded plastic waste-reduction targets within the last year. And in early 2020, Loblaw will bring Loop – a TerraCycle recycling program – to Canada, joining a chorus of CPG companies with similar plans, including P&G, Unilever and Nestlé.

It’s worth asking why single-use plastics has seen such swift consumer backlash, when there are arguably more impactful targets than straws and grocery bags. One reason might be that plastics invoke a “deeper sense of, frankly, anxiety” in consumers and are seen as one of the easiest ways to take immediate action on environmental issues, says David Photiadis, senior advisor with the Delphi Group.

But removing single-use plastic is really only the tip of the iceberg. Going green is a goal that now spans every aspect of a company’s operations – from the people responsible for applying packaging best-practices, to the truck drivers delivering product, and everything in between.

“It’s not [commonly] recognized how long this journey actually is to get to a point where you start to see the genuine results and potential differentiators [for your brand],” Photiadis says. He adds that he’s seen companies venture down the path toward sustainability and then take a different tack after not seeing immediate results. “Sometimes you start over three or four times before it really starts to stick.”

Sure, the upfront monetary investment is big. But the time investment is just as important, Photiadis says. And this also applies to companies that have been investing in sustainability for a decade or more: “You’ve hit the low-hanging fruit [like eliminating plastic straws]. Now what’s next? There’s a whole other level of strategic thinking and innovation that goes into hitting these deep reduction targets that companies are setting and society is increasingly asking for.”

Achieving organizational change requires leadership from the CEO, say the advisory board. The companies that have progressed the most on this issue – Unilever, Lego, IKEA, Aldo, Danone – have done so under the leadership of CEOs with a vision. However, the experts agree that getting buy-in from the c-suite remains a challenge, because ROI can be difficult to prove.

Sustainability

“Getting going can be really hard,” says Jackie Poriadjian-Asch, former CMO at Ecobee and strategy advisory board member. It can take years before an ROI becomes evident. “You hear a lot about triple bottom line – and the idea of sustainability being a win-win – which I believe is true but can sometimes be translated into expectations that programs are ROI positive from day one; right out of the gate. I’m not sure that’s realistic or sets companies up for success.”

Given the complexity of the challenges, tracking emissions is often a good, albeit expensive, place to start for many organizations. Measuring your brand’s environmental footprint often requires hiring third-party consultants (or internal staff with science degrees) and can take years to master, as Aldo learned when tackling its Scope 3 emissions.

“The first biggest challenge [is] choosing the correct metrics and figuring out how to measure where you are today,” says Kohler. “Once that’s done, you can set ambitious targets and begin to close the gaps. But you have to know what you’re trying to measure and where you stand in order to make progress.”

“If you’re serious about sustainability, you’ll realize very early that a significant portion of your impact happens outside your building,” Kohler adds, speaking of the role manufacturers and suppliers have to play. “For most businesses, the environmental impact of their business can be something that they don’t own or control. And if you’re serious about it, you’ll lean on those folks as well.”

Once a brand understands its footprint, it can lay out its vision for the future. Marketers then face the challenge of communicating those CSR initiatives (many of which involve science-based targets) in a tangible way for consumers to understand. Is a 30% reduction in emissions over ten years a meaningful goal to have as a global conglomerate? How do you tell that story in a compelling way when competitors are boasting a 35% reduction?

Poriadjian-Asch, Kohler and Photiadis agree that as consumers become more discerning about sustainability claims, and as investors show more interest in genuinely green businesses, greenwashing is happening less frequently. The challenge for an organization is ensuring that it meets consumer expectations before they begin to talk about their sustainability efforts – otherwise they risk backlash.

“Fundamentally, our role as marketers is to celebrate and elevate the great work that’s happening within the organization,” says Poriadjian-Asch. “I think it’s troubling if sustainability initiatives live solely within marketing – it should be a company-wide commitment with innovation coming from everywhere. Incidentally, the best opportunities come from places like product development and manufacturing, often outside marketing as well.”

For now, sustainability is a purchase consideration for consumers – but for the most part, price and convenience remain the heavyweights. “Everyone wants to do good,” notes Poriadjian-Asch. “We see that consumers do value brands that are sustainable. And they say they would pay more for it. But then when you actually look at the receipts, it doesn’t always come through that way. So that’s the struggle.”

Consumers generally look for green products of the same quality, that offer the same functionality and at a similar price-point as their non-green equivalents. But there are signs that they may be willing to open their wallets for sustainable goods in the future: a 2019 study by Nanos Research found Canadians were willing to pay more for sustainable versions of everyday items such as coffee cups, however only by a slight amount. Over two-thirds said they would pay at least 1% more – 31% would accept a hike as high as 5% – while a quarter did not want to see prices budge at all.

In the future though, the experts believe brands that offer longer-lasting goods at higher price-points are poised to succeed, as consumers grow increasingly interested in craftsmanship, heritage and keeping the same products around for the long haul. “You’re seeing a lot more pride in craftsmanship and specialty small batch brands drawing in consumers,” says Poriadjian-Asch. “An appreciation for that level of care and quality leads to a willingness to pay more. Part of what we are witnessing alongside sustainability is minimalism – people are choosing fewer things that they love and that they plan on keeping around for a longer time.”

Rebuilding Lego, one brick at a time

Tim Brooks 01NEWBy Rae Ann Fera

For generations, Lego’s plastic bricks have been an indelible part of childhood. Now, the toyco has taken significant steps to address the fact that, from a sustainability perspective, its toy is a little too indelible for the planet.

Its most public move came in 2018 when it released a range of sustainable botanical pieces, which is made of plant-based polyethylene. However, they’re limited to pliable items, such as Lego plants, and represent 1% to 2% of its pieces. Still, it was a significant step in Lego’s goal to produce wholly sustainable bricks by 2030.

The seeds of the goal to make a lower impact product were sown in 2012 when the company conducted an environmental profit and loss study that looked at the overall impact of Lego’s life cycle. The findings revealed that focusing on materials could yield the biggest impact and led to the 2015 declaration of that 2030 goal.

“We want to bring learning through play to children everywhere. In order for us to do that we knew we needed to make a product that isn’t affecting environmental sustainability,” says Tim Brooks, VP, corporate responsibility at Lego Group. “If we want to inspire and develop the builders of tomorrow, we can’t compromise the future they will inherit.”

Brooks says this sustainability mandate is both top-down and bottom-up. From the top, there’s an unwavering commitment to the goal, and from the bottom, there’s the understanding that materials are where most of the impact lies. It’s also not a financially driven decision, he says, but it is financially anchored.

“We want to spend on sustainability therefore we need to figure out where we get the biggest bang for our buck, what is the most sustainable and biggest impact we can have,” he says. “What makes the challenge interesting is, if you want to change the materials, you have to change the design of the project, the packaging, the way you sell, the way you take [the product] back at the end of its life. [It’s] not just simply finding a new plastic material.”

The biggest challenge for Lego is finding a sustainable alternative to the 20 different plastics used in the production of its 2,350 elements. The most pervasive plastic and most difficult to replace is acrylonitrile-butadiene-styrene (ABS) and is used in roughly 80% of its pieces. ABS is what provides Lego’s legendary clutch power (the ability to stay sturdy while being easy to pull apart), colour consistency and shine – qualities that sustainable alternatives have yet to provide.

Lego’s lofty goal revealed easier-to-achieve opportunities. Brooks said the company looked at packaging, which is a significant proportion of the company’s environmental impact, and realized change could come sooner. So it committed to sustainable packaging by 2025. “That means renewable and recyclable packaging, which means getting single-use plastic out of our packaging as well,” he says. “It’s hard but less hard than the bricks.”

If making materials sustainable is one part of the equation, Brooks says company policy that addresses climate change is another. Lego announced in 2017 that it had reached its 100% renewable energy target three years ahead of schedule. It now has three wind farms and solar panels on all its buildings, while new builds are made to be sustainable from the ground up.

It’s also educating consumers on how to reuse their bricks versus recycling or throwing them out. To do so, it launched a pilot project in the U.S. called Lego Replay where people turn in unused bricks that are then sent to charity for reuse.

“Lego is one of these rare things that have been compatible for generations,” says Brooks. “It’s that level of amazing compatibility that means those bricks can be reused.”

Aldo plays the long game

By Rae Ann Fera

2015 ALDO Community Day

Aldo has made great strides in demonstrating its commitment to fighting climate change. In 2019, it launched a marketing push that touted the fact that the company had achieved climate neutrality. It also launched its first sustainable shoe collection, RPPL (pronounced “ripple”), eliminated plastic bags from its stores, launched a circularity donation program, and its Call It Spring brand became completely vegan.

These changes didn’t happen overnight, of course. In fact, Aldo’s journey towards sustainability began nearly a decade ago.

The first significant step toward climate neutrality followed Aldo’s first CSR strategy from 2012 to 2017. A year after prioritizing sustainability issues, the company measured its carbon footprint to set a baseline for improvement. That led to energy-efficiency changes that significantly reduced store and office emissions, such as using renewable energy, as well as improvements to its packaging and supply chain.

It was later under the leadership of CEO David Bensadoun that the Aldo Group became Climate Neutral for its offices, stores, distribution centers, e-commerce and product transportation.

Valérie Martin, VP, communications, culture & CSR at the Aldo Group says climate change is a universal problem that affects everyone, which was enough to convince the company to implement change. “The decisions made in the fashion industry – from both businesses and customers – dictate the impact on people and the planet. When the CSR team put together a sustainability strategic plan and presented it to David, there was no hesitation to give the green light. Now, our purpose and CSR goals are fully integrated in our business strategy. We want to be a brand that proactively works to find sustainability solutions in fashion.”

Martin says Aldo’s sustainability progress also comes from recognizing the opportunities that come with being a leader. “Social consciousness has always been infused in the Aldo Group’s actions,” says Martin, pointing to the company’s early history advocating for AIDS research in the ’80s when few were willing to be publically associated with the issue. “We are aware that we still have a lot of work to do, but we strive to be an agent of change and influence society not only in fashion but also in social responsibility.”