Why a Sustainable Marketing Plan is Essential

Marketing Sustainability
Marketing Planning Sustainable

In brief:

  • 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.

Eco-Activism-marketing sustainability

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.

Conclusion

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.

We are currently developing such a tool.

3 Simple Words to Sustainability

ESG Sustainability
Sustainability

An interview with Pooja Khosla of Entelligent

Summary

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.

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