Edmund Bradford says they want to relate the subject of ESG to the marketing profession. Pooja Khosla says that marketing people will be like the captain of the ship because they have to find out product ideas, that bring sustainability. Edmund and Pooja say that science has to meet business to create good growth. Edmund says that marketing has a huge impact because they are talking to customers continuously. Pooja and Edmund discuss the power of marketing to spread the message that sustainability is in everybody’s interest. Edmund says good marketers are multi-skilled and cross-organizational. Pooja says they need an agreement from the executive team to start the mission of sustainability. Pooja says marketers will look into how to add sustainability venturing into new markets.
Transcript of Why should marketers care about ESG
[00:00:09 –> 00:00:38]Edmund: Hello, everyone. I’m Edmund Branford, director of the Good Growth Academy. And in these short videos, we’re talking about the subject of ESG. And now in this video, I want to relate it a bit to the marketing profession where we have a lot of contacts and a lot of viewers. And I’m delighted to have with me Dr. Pooja Khosla, who’s Vice President of Client Development at Entelligent, good morning.
[00:00:38 –> 00:00:40]Pooja: Good morning Ed.
[00:00:40 –> 00:01:04]Edmund: Thanks for joining us again. And Yes, I know you’re not a marketer yourself Pooja, So you’re talking about this issue from outside the marketing profession, but why should marketers stand up and pay attention to this horrible acronym called ESG? Why does it matter to them?
[00:01:05 –> 00:02:51]Pooja: So I would say that you’re right. I’m not a marketing person by training, but definitely, I am learning marketing every day to learn and to spread knowledge of ESG more and more. Because if we talk about the ship of sustainability in an organization, I believe marketing people will be the captain of this ship. The marketing team will be the sailors on the ship to ensure that the ship is moving towards good growth because they have to find out product ideas, not only product ideas that bring revenues, but product ideas that bring sustainability. They have to be inventors of not just the product use, but consumer satisfaction also. That’s okay if I buy this product, how I am contributing to the environment, or what I am not extracting from the environment. To be very honest, I live in a really interesting town, Boulder (Colorado) where people do not look at price tags. Rather, they look into how much emissions have been produced using or getting that product to them. They are very aware and I know that this is going to spread. This is going to spread more and more as we sail towards sustainability. And now it’s time when marketers have to think like a scientist.
[00:02:53 –> 00:02:55]Edmund: That’s a very dangerous concept (ironic)
[00:02:56 –> 00:03:41]Pooja: So that’s right now they have to think like scientists in a way to innovate, messaging product future pathway of a company where they are not only increasing this revenue of the sales, but they are also bringing into concepts where people feel proud to possess those products because it is not only to satisfy a need, but it is also minimum impact on the planet. It is also a contribution towards management. So I think now it’s time where science has to meet business to create good growth.
[00:03:41 –> 00:05:21]Edmund: Actually, I think that’s a wonderful, wonderful idea. So I think many marketers maybe come in with a Master of Art background on a Bachelor of Arts background. And of course, through digital marketing, there’s far more science getting into marketing as well. So some of them are far more quantitative than they used to be. We know that understanding financials, it’s very important for markets as well. And I think from a wide perspective, there’s a huge impact that marketers can have in this area because they are talking to customers or should be talking to customers continuously. They need to be kind of helping to change the behavior of customers, nudging them more towards green options, maybe in the B2B area, you know, deprioritizing dirtier clients and prioritizing greener clients. And I would guess the more they can point their ship towards these better customers, the more it sends the right demand signals right through the supply chain, doesn’t it? People pay more for better products, higher-value products, more sustainably sourced, et cetera. That makes it easier. There’s enough for the supply chain guys to execute what needs to be done. So I think in my own saying that marketing has actually got a very big role to play here and making this happen.
[00:05:22 –> 00:06:35]Pooja: Absolutely. If we have to bend the temperature curve towards Paris goals (1,5-degree Celsius), if we really want to accelerate the speed of sustainability and we will need behavioral changes, we will need a new definition of value. And who can do that better than a person In marketing? They have the power to influence. They have the power to change how people think they have the power to create the demand for the product, even if the demand doesn’t exist yet. So I think they have to use their superpowers now to change it from inside the behavior to spread the message that sustainability is inside everybody. It is just like they have to look deep inside them and find ways how they can contribute. And I think that will come from our captains that are the people associated with marketing, people who have the power to change.
[00:06:36 –> 00:07:40]Edmund: I suppose if you’re taking your analogy of the ship as well. I mean, if the CEO is the captain of the ship, you say then maybe the marketer should be the Navigator, the kind of chief Navigator, and in your early video, you’re talking about ESG being the GPS of sustainability. The nice thing I think about good marketers is that they are multi-skilled. They’re used to working across functions with product development, finance, sales, operations. They are cross-organizational. So they used to deal with customer organizations, distributors, wholesalers, third party relationships, and actually, all those skills of dealing across the whole organization and between organizations can be applied here to try to turn this to your own company around and make it point it and help it to move to better greener water, better value market waters, as you would say.
[00:07:40 –> 00:08:47]Pooja: That is absolutely correct Ed because definitely, you are right. We need an agreement of the executive team to start with, but then this mission of sustainability value mix navigators, navigators, not only looking into where a company will progress often be the new products are who will be the new consumer targets, but navigators which will look into how we can add the sustainability venturing into new markets, how we can develop new products that we can associate closely with the change towards sustainability. So this navigation is very important, and it will become very critical to the organization moving forward.
[00:08:48 –> 00:09:02]Edmund: That’s an excellent Puja. Thank you very much. We’re trying to keep these videos short, so that’s all we’ve got time for now. And thank you again. Push for your time has been extremely helpful for anybody that wants to know more about this stuff.
[00:09:02 –> 00:09:02]Pooja: Done.
[00:09:02 –> 00:09:05]Edmund: Just look at the Growth Academy website. Thank you.
Abstract: Can the CMO become a Sustainability Leader?
EdmundBradford says they are delighted to be joined by Stephen Mangham, a branding expert at Master of Scale international. Edmund says they will get down to more of the human level and talk about the person at the center of this, the Chief Marketing Officer (CMO).
Stephen says the CMO must define the sustainability conversation in terms of the customer and the brand in terms of its inherent usefulness. Stephen says the CMO must have an organizing idea that inspires and guides the brand behavior and the brand action.
Edmund and Stephen discuss the key challenges they will face, including getting educated about the subject.
Stephen says consumers prefer products with a social purpose agenda, and that doing good is good for business. Edmund says the risk of doing nothing is more dangerous than the risk of doing something.
Stephen says brand growth depends on memorability and relevance.
Transcript How can the CMO become a sustainability leader?
[00:00:09 –> 00:01:51]Edmund: I’m Edmund Bradford. I’m a director of the Good Growth Academy and in this series of short videos on marketing and sustainability, I’m delighted as ever, to be joined by Stephen Mangham, who’s a branding expert, much more of a brand expert than I will ever be, and also a Master at Masters of Scale International. Now, in the previous video, we’ve talked about sustainability and how it fits into the broad concept of good growth. We also talked about how it can be a real differentiator in the marketplace. But in this particular one, we’re going to get down to more of the human level and talk about the poor person at the center of this (from my perspective in many ways) which is the Chief Marketing Officer. So I think what’s interesting is that I’ve been in marketing for 25, 30 years or something, and I’m fairly new to sustainability in comparison. And I think what I found interesting is how very little in most companies, marketing seems to be involved in the whole sustainability conversation. They just don’t seem to be at the party. They’re sometimes at the end doing the brochures and the messaging about all the changes that the company is doing. But they seem to be like an add-on at the end rather than central to the whole journey. So, I’d be interested from your perspective, Stephen, how can a CMO, (a chief marketing officer), how can they get involved and how can they start driving and leading some of this change, if they can at all?
[00:01:51 –> 00:04:27]Stephen: Good to be on-again, I think it does start with – if you like – with the Board, the C suite, they need to have defined the sustainability conversation in terms of the customer, and that’s when the CMO can help. So if their sustainability agenda is inherently customer focussed, customer-centric: “What is the purpose of our business, our brand, what is its usefulness?” That has to be a customer-facing conversation. If you start there, then the CMO has a chance of success and the CMO is engaged. What the CMO themselves have to do is, there’s a number of things, but perhaps the three most important things: First of all, I think it’s important that the CMO need to define the brand in terms of the brand’s usefulness or inherent usefulness. So they need to – as I mentioned in an earlier video -they need to put sustainability at the heart of the brand strategy. And to do that, they may need to look up various disruptive approaches where they look to re-frame the business they’re in or their role in it. So, for example, Tesla famously says, they’re not in the car business, they’re in the renewable energy business. They just happen to be…. cars are the particular way which they can make a contribution to that agenda. So number one is they need to re-frame the brand in terms of its inherent usefulness to consumers. What is its social purpose? Secondly, I think it’s important, then that there’s an organizing concept or organizing idea that inspires and guides the brand behavior and the brand action so that the integrated marketing communications is consistent with that. And then I guess the third thing is, is that they should have a plan. They should have a plan that says, “Okay, measurable objectives, and what’s our plan of action to get there?”. So I’d say that that’s what CMOs can do, from their perspective, to drive good growth.
[00:04:27 –> 00:04:59]Edmund: And I think we just pick up maybe one or two of the key challenges that they’re going to face. For me, an obvious one is their understanding of the subject. We don’t expect the CMO’s to be sustainability experts. So what do you think could be the first steps that they take in just getting their heads around the subject, getting educated in this area?Any thoughts on that?
[00:05:07 –> 00:05:40]Stephen: Well, listen and learn. There’s a lot of expertise out there. There’s a lot of informed opinions. I recently read a book (I am not looking to plug it particularly) called Greener Marketing, which is a fantastic place to start in terms of helping someone reassess the role of marketing in promoting the sustainability agenda and creating that good growth.
[00:05:41 –> 00:07:05]Edmund: Excellent. And if we’re doing book plugs, I think the one I really like is Rethinking Capitalism by Rebecca Henderson. It’s not about marketing, but it’s a very good business book. I completely agree, Stephen. I think what we should do as marketers – in a way – is just get educated a little bit about the subject and picking up a good book and getting better and looking for short courses and attending events. I’ll give a little plug for some of them: the Economist runs really good events. There are some really good speakers, like Unilever by the way that we mentioned, who talk at some of these events. So without much of an outlay and without committing yourself to a whole year of a Master’s on sustainability, you can actually get yourself up to speed with some of the key concepts. So there’s definitely an education challenge, I think, but they don’t need to become experts. They just need to know the basics. I would say. The other challenge, I suppose, Stephen, what about, let’s say some of the real challenges where you’ve got maybe a Board that isn’t that receptive to the green agenda. Any thoughts about how marketing or the Chief Marketing Officer (or the marketing official) can use the power of the customer?
[00:07:05 –> 00:07:57]Stephen: I think the answer lies in your question, the power of the customer. If I was a CMO, I’d be showing, as I said in an earlier video, there’s a wealth of evidence out there that consumers prefer products that have an articulated social purpose agenda. So there’s some very strong business arguments to be made to the Board to say, “We can grow our business, we can protect our business by pursuing this agenda.” So it’s not simply a nice to have or some form of do-gooding CSR exercise. It can be very hard-headed. Doing good is good for the business agenda.
[00:07:57 –> 00:08:24]Edmund: Yeah. Absolutely. I think it’s one thing I like about the examples of Rebecca Henderson talked about is that actually what we get to the point of doing is saying, actually, the risk of doing nothing is more dangerous than the risk of doing something. And the status quo, the “do nothing” option is no longer on the table. These changes are happening and we need to respond to them.
[00:08:24 –> 00:08:43]Stephen: Absolutely.I mean, it’s an old saying: if you don’t stand for something, you stand for nothing. And there are plenty of disruptors in business today who will eat your lunch if you take the soft approach and do nothing.
[00:08:43 –> 00:09:11]Edmund: Yeah. So, of course, that’s a whole area, isn’t it, of competitiveness? I mean, we talked about the power of the customer, but the other area the CMO should be very attuned with is the competitor activity, and there’s a danger in any industry I think that the organization that’s the least is left behind in the marketplace. And it suffers accordingly.
[00:09:11 –> 00:09:25]Stephen: I mean, brands grow or don’t on memorability and relevance. And if you’re not memorable because you’ve got nothing particularly strong to save, you’re not relevant. You’re going to wither on the vine.
[00:09:26 –> 00:09:48]Edmund: That’s excellent, Stephen. That’s all we have time for now but in the final little video in this series, we’re going to just pick up on this subject a little bit more and talk about the tricky issue of implementation. So thank you very again, Stephen, for your support on this and I look forward to our next video together.
Environment Social Governance and Good Growth companies Abstract
Pooja Khosla and EdmundBradford discuss the concept of good growth and how it fits into the concept of being a good company.
Pooja says that ESG is designed to provide standardized metrics to measure how an organization impacts all the creatures that live on the planet, including human beings.
Edmund says that investors are stepping up to utilize this knowledge to support Good Growth which is beyond and better than regular growth.
Transcript How does ESG fits into Good Growth
[00:00:08 –> 00:01:11]Edmund: Hello, everyone. My name is Edmund Bradford. I’m director of the Good Growth Academy. And in these little videos, we’re looking at the subject of, ESG which is a major term used commonly when talking about sustainability, especially by the investor community. Today we’re going to be thinking about how ESG fits into the concept of good growth. And to help you with that, I’m very pleased to welcome Dr Pooja Khosla, who’s vice president of client development at Entelligent. Good morning Pooja thank you for joining us. So we talked to the last video about what ESG is, how it’s different from sustainability, and why it’s important. What is it designed to do and how does it fit into the kind of concept of being a good company?
[00:01:13 –> 00:02:11]Pooja: So Ed I would say that ESG is designed to measure to standardize for metrics of part of which is just sustainability. Pretty much why do we need accounting? Accounting, make sure that the financial goal of an organization was achieved. ESG is the accounting of environmental, social, and governance causes of the organization. When we talk about growth, growth alone is an incomplete concept. Growth needs a partner, a partner where the growth is beyond the financial fact sheet, where the organization can show growth from inside out in their systems, in their governance, in their contribution to the society, to the planet.
[00:02:12 –> 00:02:25]Edmund: It’s not just about this is a thing that I found interesting when delving into ESG, that it actually is not just about looking at an organization’s impact on the planet. Is it’s far more than that?
[00:02:26 –> 00:03:59]Pooja: It is far more than that. It is also looking at organization impact on the creatures that live on the planet, including as human beings. So it’s beyond environmental, how an organization takes its employees, how the organization takes its consumers, how it basically sets and grows the trust of the community that supports that organization. So it is much beyond just contributing to the planet. It is contributing to the people on the planet as well as to the other creatures. Like, look at the impact on biodiversity. So it contributes to everyone, every creature that lives on the planet. So in order to make sure that we achieve good growth, it is time when we think beyond financial returns. I know financial returns are the fiduciary responsibility of everybody, but we have to consider environmental returns, social returns, governance returns pretty much on par with financial returns. If we have to focus on good growth and good growth is the best way to grow, it is to grow with trust. It is to grow with confidence. It is to grow with the value creations of all stakeholders rather than just value extraction.
[00:04:00 –> 00:04:39]Edmund: From your work with the investor community. Have they suddenly all become angels now, the investor community? As I said, well, we’re doing this because actually, we all want to be good investors, et cetera. Or is there just some really hard business cases out there and evidence and research that suggests that having a company with really good leadership, I’m thinking about companies like, Unilever than really trying to become a good company? Is there more and more evidence now that investors are seeing that most of the companies or actually give them better returns?
[00:04:39 –> 00:05:57]Pooja: So and I would not say angels and demons over here, rather, I would be scientific being a scientist, it’s about information. Like even when we talk about efficient market hypothesis, perfect information is very important. Before today, before the ESG, there were a lot of blind spots. But today, because of a lot of forms, a lot of data and research companies jumping in to measure the impact of the organization on the environment, social, and governance with respect to recent technology, Artificial Intelligence, and big data. With respect to regulatory push on reporting, more companies are reporting than ever before. There is a lot of information now with this rich information. Investors have more knowledge, more guidance than they used to have before. And investors are stepping up to utilize this knowledge, this guidance to support good growth that is beyond growth and better than growth.
[00:05:57 –> 00:06:36]Edmund: Thank you, Pooja. That’s excellent. That’s very helpful. I feel like we should talk about this all day, but I think that’s really been helpful so far. In the next video, we’re going to be talking about one specific area of business with which we were involved, which is marketing, and why ESG is particularly impactful for the marketing profession. But until then, thank you very much. Put of your time. Very helpful as ever. And I look forward to our next video.
When discussing sustainability, “ESG” often comes up. What is it and why should we care about it?
To help answer these questions, I interviewed Dr Pooja Khosla, Vice President of Client Development at Entelligent.
Her thoughts can be summarized in three key points:
“ESG” is about measuring how the actions of companies, consumers, investors and all stakeholders impact broader society.
Before the industrial revolution, companies were focused on value creation. After the industrial revolution, the focus shifted to measurements of financial results and therefore value extraction.
If “sustainability” is the destination that stakeholders want to reach, then “ESG” is the measurement of progress towards that destination.
The timings are shown to help you jump in to the video at the right point if needed.
[00:00:09 –> 00:00:48]Edmund: Well, Hello. I’m Edmund Bradford. I’m a director at the Good Growth Academy and in these short videos, we hope to help give people an understanding of some of the key areas around sustainability. In this little video, we’re going to talk about a term that you hear quite a lot when people are talking about sustainability, which is “ESG.” To help me with that, I’m delighted to welcome Dr Pooja Khosla, who is Vice President of Client Development at Entelligent. Good morning to you.
[00:00:48 –> 00:00:50]Pooja: Good morning, Edmund.
[00:00:50 –> 00:01:17]Edmund: Welcome to this little video. ESG is something that we hear all the time, and it’s a big abbreviation. It’s used a lot by a lot of people. Would you like to just give our viewers some background as to what it is and why, if you haven’t heard of it, why you should take ESG seriously?
[00:01:17 –> 00:03:17]Pooja: So, Edmund, I feel that when we started trading, when we started development, when we started to learn about business, ESG was always there because of all business. Initially, I’m talking about the Greeks. I’m talking about the era before the Industrial Revolution. All businesses were created for the purpose of value creation. There was always an exchange of value and how value can impact society, how value can improve or develop our state of living, or can add to our current living standards. But after the Industrial Revolution, there was a lot of focus on profits, the balance sheet indicators. The financial back sheet got more attention than the sustainability and development back sheets. Then there was a switch. Instead of value creation, people started believing in value extraction. That is what we see was happening earlier. Lots of value extraction . That is why we have to go through the climate emergency issues, exploitation, labor exploitation issues, lack of governance issues. I believe now it is time to take a U-turn. It is time to go back to the original concept that is value creation, because that is a pathway of sustainability, and we have to do it soon. We have to do it fast. We have to make a U-turn today and not wait for tomorrow.
[00:03:18 –> 00:03:47]Edmund: That’s very interesting Pooja. By the way. I have spent the last 25 years of my life working with companies and students trying to help them understand the importance of value. Value is such an important term in marketing as well as in shareholder value, etcetera. So I think it’s absolutely a very good point. And so what does ESG mean to start with and where does that fit into value creation?
[00:03:47 –> 00:04:16]Pooja: So ESG means Environmental, Social, and Governance. That it is much broader than the full form of this acronym. It is how actions of corporations, companies, consumers, investors and all stakeholders impact the broader society. A lot of people confuse ESG with sustainability, but they are very two different concepts. Sustainability is the destination that we want to reach by our actions. ESG is a pathway, a GPS, to this destination.
[00:04:45 –> 00:05:17]Edmund: And by the way, you’ve done a very good article on that whole point, I know, for us. So on that very point, Yes, people, please do read this article, which is on our Good Growth Academy blog. You were helpful in helping me understand this. So would you say that ESG is kind of the measurement of our progress to that destination? Is that what ESG is trying to do?
[00:05:18 –> 00:05:51]Pooja: Absolutely. ESG is how we can measure how we can look into that RV on the trajectory that we intend to be on our sustainability course, to set metrics, to set measurement, to set standardization, to set compliances. And we all know that what can be measured can be managed. So ESG is the first step to manage sustainability.
[00:05:52 –> 00:06:17]Edmund: Absolutely. And I think from my point of view, looking at it fairly new, I think, in comparison to you Pooja in the sustainability area, it seems to me that not only has there been an explosion in interest in sustainability, but of course, also the whole metrics around how you measure sustainability has also exploded hasn’t it? Which is why we hear ESG mentioned so often, especially by investors, for example.
[00:06:19 –> 00:07:37]Pooja: That is so true. That right now, especially during the Covid era and two years before that, the interest in sustainability has exponentially increased. To be very honest, I am in this field when this field was called development economics, and then we graduated into fancy acronyms like ESG, SDGs, SRI, PRI, and all but the hard nice in development economics, how we can make our economy, business and finance revolve around real development. Development is very different from growth. Growth can be measured because it’s a monetary term. It’s the financial faction: growth accompanied by contribution and improvement and standard of living, lifestyles, betterment of humanity, betterment of the environment, betterment of governance. That is development. So absolutely, we need to look into ESG from “transparency towards development,” which is growth! Growth is a part of it.
[00:07:38 –> 00:08:07]Edmund: That’s excellent. Thank you, Pooja. And that’s been a really useful conversation for me as well. We will pick up on this subject of growth in our next video. So hopefully that has helped people understand ESG, why it’s important and how it’s different from sustainability. We’ll look at how it links to good growth in our next video. So thank you, Pooja and I look forward to connecting with you again soon.
[00:08:08 –> 00:08:11]Pooja: Thanks. It was a pleasure being here with you today.
The marketing function is often seen as the greenwasher of sustainability. Some would say that the other functions do all the hard work of making real progress and the marketers simply share the stories!
Yet, marketing and sustainability actually have a strong connection. In this interview, we explore the subject of sustainable brands with Stephen Mangham.
The timings are there to help you dive into the video at the right point if needed.
[00:00:05 –> 00:01:02]Edmund: Hello, everyone. I’m Edmund Bradford. I’m a Director of the Good Growth Academy and today we’re going to be talking about sustainability and marketing, which I think is a really interesting area. I’m delighted to have with me Stephen Mangham, who is a branding expert and also a Master at Masters of Scale International. You and I, Steven, have chatted a little bit in the past about branding, sustainability and another concept that we’re kicking around called “good growth.” It’d be really interesting to get your thoughts on what we mean by Good Growth, a good growth brand, and how that is different to other brands that are out there. So any thoughts are very well received!
[00:01:02 –> 00:01:29]Stephen: Okay. Thanks. Well, the purpose of marketing has always been to produce growth. So in today’s world, I’d argue that the role of CMOs is to produce good growth, where sustainability is a strategic imperative at the core of their brand strategy.
[00:01:31 –> 00:01:40]Edmund: When we talk about good growth, do we mean sustainability? Is that something different to sustainability?
[00:01:40 –> 00:02:29]Stephen: We do mean sustainability. But I’d say two things about it. First of all, that it is where sustainability is at the core of the brand strategy. It’s defining the brand in terms of its social purpose rather than being an add-on or an addendum or a part of the brand, it’s core to the brand. Arguably, it goes further than simple damage limitation or mitigation. It’s about the idea of being that good that you put in more than you take out. When you define a brand in terms of its social purpose, ultimately it’s putting more into the ecosystem than it takes out.
[00:02:29 –> 00:03:02]Edmund: That reminds me of something that I saw a couple of weeks ago from Professor Steve Kempster, who’s a Professor at Lancaster University. He was telling me about the fact that we now talk about a regenerative company as being a higher goal. You’re thinking there about being “net good”. Is that a higher goal than just being sustainable?
[00:03:02 –> 00:04:12]Stephen: Yes, I think it is. Net-zero is a very laudable target, don’t get me wrong. But it’s about a different way of looking at your business as your brand. It’s about the idea that it isn’t looking at sustainability in terms of damage limitation or defining it in terms of mitigation or what steps can we take to mitigate the impact we have on our world. It’s looking at it in terms of what is the inherent usefulness of our brand or our business? Where is it actually a promoter of good things in some way? And it’s about looking in terms of the brand as saying, on balance, that it has a strong social purpose that is inherently useful to society in some way. It’s taking all the right steps in terms of its impact on our world, both in positive terms as well as negative terms. But at the end of the day, it’s actually about being net good.
[00:04:13 –> 00:04:24]Edmund: Which companies would you put down as at least attempting to do this in a proper fashion?
[00:04:24 –> 00:05:00]Stephen: There are so many companies that are doing that at the moment, and obviously, there are some companies that were created from scratch with a sense of social purpose. Who Gives a Crap, for example? But actually, there’s also a large number of the larger companies who are taking significant steps. So if you think of Unilever, for example, Alan Jope has famously gone on record as saying that if a brand in their stable of brands doesn’t have a social purpose that they can define, they’ll sell it.
[00:05:01 –> 00:05:04]Edmund: Yes, that’s right.
[00:05:05 –> 00:05:19]Stephen: They’re taking major steps in terms of giving all of their brands a defined social purpose and measuring the impact and the success – or otherwise – of that purpose.
[00:05:20 –> 00:05:38]Edmund: Excellent. And I think when we’re talking about a kind of good growth brand, it’s a brand that can be applied at a company level or could be applied at a product or service level. Do you see that? Or is it only a corporate level where this works?
[00:05:38 –> 00:06:52]Stephen: It can work at a corporate level. Of course, it can. It must because you have to look at the way you do business as an organization. But I guess what we’re talking about here more specifically, is defining your brands in these terms. By doing that, you are looking at your brands. At the end of the day, you define your brand in terms of consumer appeal, and a brand lives or dies. Of course, in terms of how strongly it resonates with customers and how it persuades more consumers to buy it more often. So when you’re looking at sustainable brands as opposed to sustainable companies, you’re defining it in customer-facing terms. How is the brand inherently useful for its customers and defining it in terms of social purpose? How will a brand, as a result, be more relevant to consumers, drive talk-ability, even protect its price elasticity, for example? So with brands, we’re talking about a customer orientated centric conversation.
[00:06:53 –> 00:07:06]Edmund: Excellent. And that, by the way, is a great teeing up for our next video, which is going to be all about differentiation. So many thanks, Steven. And I look forward to another conversation with you shortly.
[00:07:06 –> 00:07:08]Stephen: Thank you very much. Great to talk to you. Ed.
Sustainability is a rising business issue that needs to be included in your marketing plan
Customers are demanding more transparent sustainability in choosing their provider
We explain why and how including it will help you and your brands to grow
The rise and rise of sustainability
Global investment in sustainable companies (also known as ESG) has risen dramatically over the past seven years. In 2014, less than $20 trillion was held as assets under management. In 2020, this had risen to over $30 trillion.
There are now more funds being invested in sustainable companies than in other companies. This rise in investor interest in sustainability shows no sign of stopping. This is a major driver to work on a sustainable marketing plan.
By 2025, Bloomberg estimates that over $50 trillion will be invested, which is about one-third of forecasted total global assets under management (see ESG assets may hit $53 trillion by 2025, a third of global AUM by Adeline Diab and Gina Martin Adams). The rise of ESG as an accepted measurement system for sustainability has been a key driver in the rise of investor confidence.
At a Government level, there are trillions of dollars being invested in sustainability. For example, in December 2020, the European Union agreed a €1.82 trillion Green Deal to support a green recovery. In February 2021, U.S. President Joe Biden announced a $2 trillion Green New Deal. The UK Government has committed itself to legally binding targets in its 2008 Climate Change Act and will showcase its efforts at the COP26 UN Climate Change Conference in Glasgow, Scotland this November. There is also rare cooperation between Western Governments and China on sustainability.
Consumers are also forcing change. A recent report by GfK has shown how environmental awareness and eco-activism are rising across global consumers. For example, 24% of consumers are now taking prompt measures to cut their plastic waste (see “Eco-activism in FMCG is rising” image below from research done by Growth From Knowledge https://www.gfk.com/). Moreover, the Covid pandemic has driven an increase in environmental awareness as people breathe cleaner air and rediscover nature.
These changes are driving more sustainable practices throughout supply chains. In the B2B area, work is being done by procurement teams on how to measure supply chain sustainability. Unilever is one company driving its supply chain to become more sustainable and amongst many activities has recently announced that it will be asking its suppliers to add their carbon footprint to their invoices. Joint programs are underway in many industries to reduce total waste. For B2C consumers and B2B customers, sustainability is becoming a key need alongside needs like cost and brand experience.
Why sustainability needs to be taken seriously by marketers in their plan
Sustainability is reshaping the marketing landscape.
Changing customer needs
Firstly, it is changing customer needs. Research by GfK (Crisis as Catalyst report, 28 Apr 2021, by Growth From Knowledge ) suggests that consumer needs such as lower waste, preserving nature and more energy efficiency are rising in importance. In the B2B space, customers like Unilever are demanding better marketing plans and more accurate measurements from suppliers about how they will become more sustainable. Failure to produce viable plans and track implementation progress could lead to deselection as a supplier.
Sustainability is changing customer demand
The most obvious example of this is in the Electric Vehicle (EV) market where the IEA expects a 13 fold increase in the number of EVs on the world’s roads by the end of this decade. But this is not just happening in the automotive market. According to a 2020 report by Deloitte (Shifting sands: Are consumers still embracing sustainability?) between 28-45% of consumers have already bought more locally produced goods, or actively chosen sustainable or ethical brands, or stopped purchasing brands because of sustainable or ethical concerns. The change in demand is already happening.
These changes are driving the appearance of new segments, new products/services and new competitors.
So where is sustainability in the marketer’s world? Change is being driven by CEOs, by CFOs, by procurement, the supply chain function and new Chief Sustainability Officers, but rarely by marketing. For the worst companies, marketing is tasked with talking up the meager investment being put into sustainability as a mere tick-box or greenwashing exercise. For the average company, marketing is left with the role of communicating to customers (and other stakeholders) the work being done by others. But for the best companies, like Unilever and Pepsi, marketing plays a key role in re-shaping the sustainable market strategy of the firm and its entire supply chain.
Stephen Mangham, a branding expert and Master at Masters of Scale International, summarizes this well when he says, “The purpose of marketing has always been to produce growth. The role of CMOs today is to produce ‘good growth’ where sustainability is a measurable, customer-driven strategic imperative.”
Why we need sustainable marketing plans
After all your communication efforts over the years, how trusted is your brand on sustainability? Very trusted? Somewhat trusted? How about not trusted at all! Sadly, according to the GfK report, only 25% of consumers trust businesses to tell them the truth. This compares to 64% who trust academics, 34% who trust the media and is only two percentage points above celebrities!
It’s time for marketers to stop being the brand spin doctors and to become the brave sustainability do-ers. Marketers need to help their firm find the best green segments, introduce and grow new greener products and services, change its purpose and reap the rewards from customers, from investors and from available government incentives. The brand will then reflect the true work being done.
The experience of leading companies like Unilever and Pepsi is that being truly sustainable is not a trade-off between profits and planet, it is a mutually inclusive journey that drives stronger growth.
Dr. Pooja Khosla, Vice President of Client Development at Entelligent Smart Climate Investing reinforces this point: “Many businesses are struggling to define the real and measurable impact of their offerings on the environment and society. Marketers can help achieve this and empower sustainability.”
Sustainable thinking needs to be in most areas of the marketing plan: the mission statement, the financial projections, the market overview, the SWOT, the competitor analysis, the objectives, the strategies, the value propositions, the digital marketing tactics, the resources, the actions, the measurement, and the assumptions.
Doing this develops a better growth path for the company to follow. That is better for the customer, the company, the brands, the supply chain, and the planet.
Developing skills in sustainability is better for marketers as well. The demand for people with sustainability skills is skyrocketing. I have personal knowledge of a recent master’s graduate in sustainability who was recruited by an international engineering firm and is now working with the United Nations on developing better measurement standards.
Going green is not just for the eco-warriors. It makes good business sense. Marketers can play a massive role in making this happen. They need to stop being seen as the greenwashers of the past and act more like the leaders of real sustainable change. Marketers need to move from the edge to center-stage in building real sustainable companies built on “good growth brands.” A key tool to do this is a sustainable marketing plan.
Many leaders would like their organization to be more sustainable. However, the path is not easy and one major challenge is dealing with the short-term demands of investors. In this article, Pooja Khosla, VP Client Development at Entelligent answers the following key questions:
What are the key challenges to organizations becoming more sustainable?
What are the answers?
What are the key lessons for anyone wanting to help their organization become greener?
The key lessons lie in three keywords: Education, Engagement, and Momentum.
Some background of Dr. Pooja
Dr. Pooja Khosla is an economist and mathematician with a deep interest in sustainability and the financial effects of climate change. She has nearly 20 years of experience in predictive modeling, microfinance and designing climate impact tools for investors, banks, corporations and other organizations like the United Nations. She has been working with Entelligent since 2016 developing its data science team, its Smart Climate system and its climate risk related products.
Entelligent (www.entelligent.com) is one of the most respected brands in climate risk assessment. It recently announced a partnership with Société Générale to launch an index to score companies in the S&P 500 on their exposure to environmental issues.
What are the key challenges to organizations becoming more sustainable?
I began the conversation by asking her what the key issues are holding back firms from becoming more sustainable, more quickly.
Pooja: “There is certainly a lack of understanding of the issues. For example, some organizations sign up for a Net Zero commitment without understanding what they have signed up for. They do not realize that the scope of the commitment could include their whole value chain from suppliers down to their end consumers.
There is also certainly a problem with greenwashing. It is easy for firms to aim for minimum acceptable performance, like complying with environmental regulations, and then beefing up their messaging to make it appear that they are committed to sustainability.
90% of S&P 500 Index Companies published Sustainability Reports in 2019, however, less than 11% of the organizations were meeting qualified reporting standards.“
What are the answers?
We then turned to her thoughts about the answers to these challenges.
Pooja: “One thing to bear in mind is that 20 companies in the world contribute to one-third of global greenhouse gas (GHG) emissions. That means that whatever improvements we can make in these few companies and their value chains will have a significant impact on global emissions. Of course, most of these companies are in the fossil fuel business and it is not easy to turn them around. However, we have seen a flurry of recent announcements (for example at ExxonMobil) about a much stronger commitment to sustainability which gives me hope that this sector is now turning.
A key to delivering real change is education. Investors are now much more knowledgeable about climate risk and its financial impacts. More investors understand that sustainability can affect valuations in the short term as well as the long term. They have seen the dire effects of sudden extreme weather events on agriculture, hospitality, and transport and the rapid damage that a consumer revolt can do to the brand of a polluting company.
We should note though that the actual levels of pollution or climate exposure in a firm is not the key metric. What is more important than actual levels is the rate of change. A firm that is maintaining its rate of progress towards sustainability can be more attractive to an investor than one where progress is slowing, possibly because all the easy actions have now been done.
We also need more engagement. First of all, we need more engagement from leaders. There is no doubt in my mind that some firms really are committed to becoming sustainable and are sustainability leaders in their sector. I would put firms like Ingersoll Rand and Volkswagen in this category. They are led by visionary leaders who are engaged with the issue and are driving it passionately. They do a better cost-benefit analysis of sustainability options. They also have a better understanding of the three types of climate risk. These are:
Climate transition risk. This is the risk that the organization does not change sufficiently in the desired time period
Climate physical risk. This is the risk to the organization from climate change including rising sea levels, hurricanes, floods etc.
Climate reputational risk. This is the risk to the organization’s brand reputation from its contribution to global warming.
Then there is the next category of firms that are the sustainability followers. They are keen to progress but lack the understanding and engagement of the sector leaders. Finally, there are the sustainability laggards. These are the slowest to change and see sustainability as a business distraction.
More engagement is also needed from investors. Things are moving in the right direction and we have seen great examples of good investor engagement recently, for example, in the latest annual letter to CEOs from Larry Fink at BlackRock where he makes it clear that he is looking to invest more in sustainable companies and less in unsustainable ones.
We also need more engagement from customers. Consumers and businesses need to tell their suppliers what is expected of them and move their spend to the most sustainable suppliers.”
What are the key lessons for anyone wanting to help their organization become greener?
To conclude, I asked her what key messages she would like to offer any green change agents out there.
Pooja: “I would summarize my advice in three simple words: education, engagement and momentum. By momentum, I mean both the direction of travel and the speed of change. It is no good traveling fast in the wrong direction. Nor is it useful to have high aspirations which are unattainable in our lifetime. It is better to keep moving in a good direction. This will build confidence and experience and is itself more sustainable.”
The journey to sustainability is not easy. However, focusing on these three words will help to ensure your efforts are well invested.
Investors, Governments, and customers are increasingly looking to move their money towards good companies. But are these companies the ones that are committed to sustainability, to inclusivity, to the community or to something else? Where does Corporate Social Responsibility (CSR), Environmental and Social Governance (ESG), Ethics, Profits and all the other myriad of key ideas fit in?
In this article, we will:
Explain what we mean by “Good Growth”
Explain why companies should aspire to achieving it
Introduce a model that captures all the key terms so you can speak confidently about it at your next meeting.
What is a Good Growth Company?
Put simply, a Good Growth Company (GGC) is one that aspires to grow in a good way. That means it is committed to being a force for good in the world and the more it grows, the greater its positive impact on the world.
This can be compared to how companies have grown in the past, where company growth has produced good outcomes but also has produced larger negative impacts on the world. The negative impacts could include greater pollution, more inequality, less ethical behaviour and abuse of market power.
This is not just about becoming a greener company or a fairer company. It is about embracing all the key concepts of being a good company.
Why aspire to it?
Achieving Good Growth is not some new-age dream by environmentalists who do not understand the importance of profits. The concept also includes the pursuit of sustainable profits. Indeed, we are not proposing that profits should be sacrificed to achieve Good Growth. Instead, we are saying that with Good Growth comes greater profits.
One reason why this is so, is quite simple. To do nothing means to accept a greater risk of both falling profits and a declining share price in the future. Why is this? Because investors, Governments and customers are moving against bad growth companies. Let’s look at investors first. In their 2020 report called, “2022 – The growth opportunity of the century” PWC forecasted that over half of all mutual fund assets in Europe will be held in ESG funds. This is up from just 15% at the end of 2019.
Governments too are exerting their power. There is increased funding for GGCs across the world (for example with the EU €750 billion sustainable recovery fund) and increased penalties for Bad Growth companies whether that is higher taxes on polluting activities, regulations on greater reporting transparency or anti-monopolistic intervention (for example with EU and Australian interventions with the big tech companies).
Finally, there is rising customer demand for better corporate behaviour. At the consumer level, we see it in the Greta Generation. At the B2B level, we see it in increasing demand by customers for real evidence of supplier improvement programs and we see it in new specifications of minimum acceptable performance levels on good growth issues.
So, if you are still in a bad growth mode, you really are facing a Perfect Storm against you.
A Model of Good Growth
We have created a model that illustrates the Good Growth concept (Diagram 1 below).
Diagram 1: The 6P Good Growth Model
It covers all the key concepts around Good Growth and is ESG-compliant.
We call it the ‘6P Good Growth Model’ because:
a) It covers the key areas of Planet, Principles of Governance, People and Prosperity. These are the four pillars of ESG measurement.
b) It also covers Purpose-driven Leadership (which is a key driver of Good Growth) and Sustainable Profits (which is a key outcome).
Note that there is a “sweet spot” where sustainable profits are made. This is where all the areas are working together in a combined, integrated and aligned manner. We might look at companies like Unilever and Pepsi Cola to see examples where a multi-faceted approach to Good Growth is being taken, leading to long-term increases in profits.
Fit with Sustainability
How does the model fit with sustainability? The best way to illustrate this is to show how the 17 United Nations Sustainable Development Goals (SDGs) connect to the model (see Diagram 2 below).
Diagram 2: Fit with the UN Sustainable Development Goals
As we can see, the Good Growth model covers all these as well. It can therefore be used to develop and track sustainable growth.
Understanding the Key Terms
Finally, we can also use this model to help us understand the various terms and where they fit in (Diagram 3 below).
We can see that all the key terms fit into the model. For example:
The Triple Bottom line is Profits, Planet and People
CSR covers People, Prosperity and Planet
Social Purpose covers People and Prosperity
We can also see where The Circular Economy, Inequality, Diversity, Ethics and Risk fit in.
Diagram 3: Understanding the Key Terms
If you need a definition of Good Growth, here it is:
“Good Growth means delivering ESG-measured sustainable performance by purpose-driven, collaborative leadership that delivers good, sustainable prosperity while enhancing the planet, treating people inclusively, ethically and adopting good governance principles which produce good, sustainable profits and a positive impact on the world.”
Good Growth is an important, holistic concept that will transform the way you do business. It is based on the research of many key writers on the subject, our own research with academics, consultants and business leaders – and the very latest thinking in ESG. If you want to get your organization aligned around a single vision of how to grow well, this will help enormously. It will also help to introduce and explain the key terms thrown around in meetings.