Change for Good! Sustainable commitment as a driver for the transformation of brands

 

Capitalizing on sustainable engagement as leverage for value creation: a return to the sources of entrepreneurship?

Marches for climate, biodiversity summits, student protests, not to mention the “yellow vests”… The time has never been more conducive to action. All the indicators of a “citizens revolution” have gone green and bear witness to an emergency that has become institutional. However, with the inability of governments to make the necessary policy decisions and the distrust of citizens for institutions, this demand is aimed primarily at companies and especially their brands. Thus, in 2018, 64% of consumers report choosing a brand based on its commitment to major social debates*. Even if these good intentions are to be put in perspective according to the stakes, they keep on raising (+17% vs 2017). Today, being a quality brand means working on commitments.

 

To be committed, many brands are still not equipped…

So companies are on the front line and it is a tremendous opportunity for them. However, such an opportunity does not go without duties. The CSR, the acronym which is essentially a constraint, remains unknown for many people (49% of French people) and outside the CAC 40, the function is still under-represented in France (46% of the small companies and 19% of the SME). Moreover, for many companies, CSR still serves as an excuse when they go for a little philanthropy and a pretending-to-be-concerned communication. Playing that game is highly risky. Just have a look at the “Conscious” campaign by H&M: opportunistic communication will immediately be assimilated to greenwashing and sanctioned by the consumer. It is then far beyond regulatory aspects or a mere communication drill, as skilled as it might be, that we have to look.

 

How to reconcile economic performance and sustainable development?

Taking a stand on sustainable development requires to accept questioning one’s model. From the traceability of purchases to the carbon footprint and the relations with internal and external stakeholders, the issues are huge and imply mobilizing all the energies and resources and a real will to change. Therefore, it is the whole myth of economic theory that must be challenged since the liberal dogma has set a negative correlation between profit and social performance.  

The good news is the demonstration by Barnett and Salomon that, in 2012, establishes a link between value creation and KLD scores (integrating the main issues of sustainable development). This demonstration paves the way for new models of “conscious capitalism ” reconciling both worlds on the assumption that a respectfully treated ecosystem generates a strong commitment from both employees and customers.

New performance indicators that integrate other dimensions than those of profit, from CSR to SVC (shared value of the company) are emerging. It is the same conviction that underlies the PACT law, a clear encouragement to develop mission-based enterprises.

 

But in practical terms, can virtue really create value for businesses?

Studies are beginning to measure the impact of sustainable development on company results: France Strategie assessed the positive deviation at 13% in 2016. Of course, improving goodwill is an essential part of it. But, most importantly, the ability to attract and retain employees is strengthened (70% of employees are more loyal when their firm engages in sustainability, according to the same study).

So how can this be achieved in practical terms? First, we need to go beyond pure communication, both inadequate and risky, undertaking specific actions: it is above all what individuals expect. But be careful, not just any actions: actions that are consistent and coherent with the company’s purpose, its vision of the world.

This reflection on the “why”, according to the expression of Simon Sinek, is often the prerogative of the new brands born in the digital age that are defined first by their purpose and meaning and endeavour at the outset to integrate sustainable development in their DNA. This is the case of Veja,  built up as a counter-model of Nike, or Jimmy fairly with the “buy one give one”, or Chobani.

However, brands from the old world can also prosper. Patagonia has stuck to its original mission of respect for the planet. This commitment is now its main source of added value by capitalising on the lifetime of its products (+30% turnover in 2012 after the launch of the “Common Thread” program) and on innovation (development of new “hardshell” materials with benefits for both the consumer and the planet). A virtuous position that creates value since after 50 years, Patagonia has never been in such great shape.

In the same way, Danone has moved from communication on its philanthropic actions to a true journey of commitment brand by brand, activity by activity, from the BCorp certification to the reduction of its carbon footprint: an approach initiated by a customer-centric reflection on the future of its business (more organic products, more traceability, questions on plastic-related issues), becoming a company commitment project with strong implications for governance.

 

Sustainable commitment, innovation and transformation driver

Paving the way to sustainable change is therefore not only desirable but possible – even necessary! Of course, this is not an easy path because it concerns transformation and vision. Thus, when asked the question, the new directors of CSR, members of COMEX, confirm this: it is less a question of resources than of will. This will must anchor itself in a sustainable way for the company and driven at the highest level, like Emmanuel Faber for Danone.

Such leadership is indispensable for changing mentalities and the rules of the game at all levels of management by integrating sustainable development as a goal to be achieved at parity with financial objectives, evolving models of governance, greater transparency, integrating responsibility issues into all innovation processes… The other key point to this approach is the active participation of employees who find pride in belonging by responding to their quest for meaning, a fundamental expectation for all employees and even more Millennials: towards employee-centricity?

A purpose that exceeds the objective of financial performance, a vision of the world that does not stop at business, a long-term view… What if we were simply re-inventing the nineteenth century model of companies?

 

Sophie Romet, Associate Director
Kim Hartmann, Strategic Planner